A recent investigation by FINRA uncovered a staggering 70% potential rate of violation of its retail communications regulations for crypto-assets. This revelation highlighted the need for strict adherence to regulatory guidelines as firms navigate the complex landscape of crypto-assets.
Under FINRA’s targeted investigation, more than 500 crypto-asset-related retail communications were investigated. Approximately 70% of these communications indicated potential violations of FINRA Rule 2210.
Among the differences were the failure to distinguish between crypto-assets offered by affiliated companies and those offered by crypto-companies, false statements about crypto-assets’ functions and misleading comparisons with traditional assets. These findings raise critical questions for companies involved in crypto-communications.
Following the investigation, firms were encouraged to examine the accuracy of their retail communications involving crypto-assets. According to FINRA, clarity is essential, especially when promoting products and services, as misleading implications can lead to misunderstandings.
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Amy Sochard, the vice president of the advertising regulation division at FINRA, stated, “The crypto-asset market has grown rapidly over the past decade, and product offerings and retail investor participation have expanded. Our update on the targeted examination poses questions for firms to consider as they review and oversee their retail communications about crypto-assets.”
“Any findings of substantive potential violations are evaluated for further review and follow-up, including consideration of whether to refer to FINRA’s enforcement division, as appropriate.”
Crypto assets risks and disclosures
FINRA recently released its Annual Regulatory Oversight Report for 2024, which highlights key priorities including
Cyber security cryptocurrency and communication standards, Finance Magnates reported.
The report introduced emerging regulatory scope, which includes areas such as cryptocurrency, the impact of AI on regulatory obligations and the oversight of out-of-channel communications.
FINRA emphasized the important roles of compliance in cybersecurity, citing the SEC’s regulations for safeguarding customer information, business continuity and incident reporting. The SEC’s rules mandate public companies to disclose cybersecurity incidents.
The report provides a comprehensive cybersecurity checklist, highlighting technology governance, vendor oversight, change management, system availability, data protection, and event handling.
A recent investigation by FINRA uncovered a staggering 70% potential rate of violation of its retail communications regulations for crypto-assets. This revelation highlighted the need for strict adherence to regulatory guidelines as firms navigate the complex landscape of crypto-assets.
Under FINRA’s targeted investigation, more than 500 crypto-asset-related retail communications were investigated. Approximately 70% of these communications indicated potential violations of FINRA Rule 2210.
Among the differences were the failure to distinguish between crypto-assets offered by affiliated companies and those offered by crypto-companies, false statements about crypto-assets’ functions and misleading comparisons with traditional assets. These findings raise critical questions for companies involved in crypto-communications.
Following the investigation, firms were urged to examine the accuracy of their retail communications involving crypto-assets. According to FINRA, clarity is essential, especially when promoting products and services, as misleading implications can lead to misunderstandings.
Keep reading
Amy Sochard, the vice president of the advertising regulation division at FINRA, stated, “The crypto-asset market has grown rapidly over the past decade, and product offerings and retail investor participation have expanded. Our update on the targeted examination poses questions for firms to consider as they review and oversee their retail communications about crypto-assets.”
“Any findings of substantive potential violations are evaluated for further review and follow-up, including consideration of whether to refer to FINRA’s enforcement division, as appropriate.”
Crypto assets risks and disclosures
FINRA recently released its Annual Regulatory Oversight Report for 2024, which highlights key priorities including
Cyber security cryptocurrency and communication standards, Finance Magnates reported.
The report introduced emerging regulatory scope, which includes areas such as cryptocurrency, the impact of AI on regulatory obligations and the oversight of out-of-channel communications.
FINRA emphasized the important roles of compliance in cybersecurity, citing the SEC’s regulations for safeguarding customer information, business continuity and incident reporting. The SEC’s rules mandate public companies to disclose cybersecurity incidents.
The report provides a comprehensive cybersecurity checklist, highlighting technology governance, vendor oversight, change management, system availability, data protection, and event handling.
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