FINRA Asks Firms to Report Activities Involving Digital Assets | Practical Law

FINRA Asks Firms to Report Activities Involving Digital Assets | Practical Law

FINRA issued Regulatory Notice 19-24, requesting that member firms report their activities involving digital assets, including cryptocurrencies and other virtual coins and tokens. The notice extends until July 31, 2020 a request that would have expired on July 31, 2019.

FINRA Asks Firms to Report Activities Involving Digital Assets

Practical Law Legal Update w-021-5094 (Approx. 4 pages)

FINRA Asks Firms to Report Activities Involving Digital Assets

by Practical Law Finance
Published on 31 Jul 2019 • USA (National/Federal)
FINRA issued Regulatory Notice 19-24, requesting that member firms report their activities involving digital assets, including cryptocurrencies and other virtual coins and tokens. The notice extends until July 31, 2020 a request that would have expired on July 31, 2019.
On July 18, 2019, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-24 (RN 19-24), extending FINRA's request that member firms inform their regulatory coordinator if the firm, associated persons (APs), or affiliates are engaged in activities involving digital assets, including cryptocurrencies and other virtual coins and tokens. FINRA's original request, in Regulatory Notice 18-20, issued in July 2018, would have expired on July 31, 2019. RN 19-24 extends the expiration date of this request to July 31, 2020.
FINRA has taken note of the growing market for digital assets and of the growing interest of retail investors in these assets. It has also taken note of instances of fraud and other securities law violations involving digital assets, and the investor protection concerns raised by these violations. It concluded that it was important to stay abreast of these developments by asking member firms to notify FINRA of:
  • Whether the firm, APs, or affiliates engaged in activities involving digital assets.
  • Any changes in the nature of these activities.
The activities of interest to FINRA include, but are not limited to:
  • Purchasing or selling of digital assets.
  • Purchasing or selling pooled funds that are invested in digital assets.
  • Creating or providing management or advisory services for pooled funds invested in digital assets.
  • Purchasing derivatives tied to digital assets.
  • Participating in initial or secondary offerings of digital assets.
  • Creating or managing a platform for the secondary trading of digital assets.
  • Accepting cryptocurrencies from customers.
  • Mining cryptocurrencies.
  • Providing clearance and settlement services for cryptocurrencies.
  • Using blockchain or other distributed ledger technologies (DLT) for recording cryptocurrency transactions.