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FINRA Has Its Eyes on The Cryptocurrency Market

Simms Law, P.C. June 14, 2022

In a recent regulatory notice, the Financial Industry Regulatory Authority (FINRA) announced plans to increase its oversight of the digital currency market due to concerns about fraud and other securities law violations involving cryptocurrency. In the notice, FINRA requested that member firms notify it of their involvement in certain cryptocurrency-related activities. Specifically, the self-regulatory organization requested that each member firm alert FINRA if:

  • It trades in cryptocurrency

  • It manages crypto funds

  • It accepts cryptocurrency from clients

  • It participates in the sale of digital tokens

  • It offers advice regarding cryptocurrency

In addition, FINRA’s notice indicated plans to closely monitor the following types of cryptocurrency-related activities:

  • Participation in the offering of digital assets

  • Management or creation of a platform for the trading of digital assets

  • Custody or a similar arrangement of digital assets

  • Acceptance of cryptocurrencies

  • Mining of cryptocurrencies

  • Recommendation, solicitation, or acceptance of orders in cryptocurrencies

  • Sales, purchases, or executions of transactions in cryptocurrencies

  • Sales, purchases, or executions of transactions in a pooled fund investing in digital assets

  • Facilitation of clearance and settlement services for cryptocurrencies

  • Recording cryptocurrencies using ledger technology or any other use of blockchain technology

Additional Information Regarding FINRA’s Cryptocurrency Fraud Prevention Efforts

As the SEC ramps up its efforts at monitoring cryptocurrency scams designed to defraud investors, FINRA is clearly following suit by increasing its oversight of all crytocurrency-related issues. Under FINRA’s new cryptocurrency guidelines, firms that fail to disclose cryptocurrency-related activities may be in a bad position when facing FINRA disciplinary action despite the fact that the notice discussed above isn’t mandatory and doesn’t discuss specific enforcement efforts. Therefore, firms should seriously consider alerting FINRA of its activities involving cryptocurrency as soon as possible. However, if a firm has previously notified FINRA about its cryptocurrency involvement, it isn’t required to prepare a new submission. For questions regarding your firm’s reporting requirements under FINRA’s cryptocurrency notice, please contact an experienced Fort Lauderdale financial advisor representation attorney as soon as possible for guidance.

Fort Lauderdale Financial Advisor Representation

At Simms Law, P.A., we have a reputation in the industry for honesty, integrity, and aggressiveness, and one of our primary areas of practice is the representation of financial advisors who’ve been accused of failing to abide by securities laws, rules, and regulations. Our representation of financial advisors covers a wide range of issues, including the expungement of disclosures through FINRA expungement proceedings, compensation issues, raiding-related claims, and matters pertaining to the successful transition from one firm to another. If you are a financial advisor and need aggressive and experienced legal representation in Fort Lauderdale or elsewhere in the state of Florida, please contact us by phone or through one of the contact forms on our website to schedule a free consultation.