Following last week squabbles over Facebook’s Libra cryptocurrency project and its potential regulation, the U.S. Financial Industry Regulatory Authority (FINRA) has extended its deadline for firms to report their crypto activity.
As at last year, the self-regulatory body for brokerages and exchanges had encouraged that member companies inform their regulatory co-ordinator if the firm, affiliates or associated individuals, engaged or have any intentions to engage in activities related to digital assets. “Digital assets that are non-securities” are also included, that is, cryptocurrencies like bitcoin.
FINRA posted a follow up late last week with respect to the deadline billed for July 31st, extending the deadline to the same date in 2020.
Citing a new policy which stated that:
“FINRA believes on the need and importance to keep open the lines of communication with members on this important topic while securities regulators continue to provide guidance to members as regards the unique regulatory challenges presented by digital assets with reference to Joint Statement on Broker-Dealer Custody of Digital Asset Securities, etc. Activities such as buying, selling and transacting in digital assets, crypto derivatives, ICOs or funds investing in digital assets are included on the activities to be reported by firm to FINRA Others includes accepting cryptocurrencies as payment,
offering trading or custody services, mining cryptocurrencies and offering advisory services or pooled funds”.
“Further more, any use of blockchain technology is also worthy of reporting”, the authority stated.
According to a decision between FINRA and Security Exchange Commission (SEC), for any crypto company application to be approved to become a broker dealer , there would be a number of questions to look into. This was stated earlier this month.
The assets are expected to be treated as securities under the Securities Investor Protection Act (SIPA) of 1970.
The existence of the established laws and practices regarding the loss or theft of a security, which may not be available or effective in the case of certain digital assets are now made possible with the ability of a broker-dealer to comply with aspects of the Customer Protection Rule which is greatly facilitate by the established rules.
While a broker can prove that it possesses the private keys to a crypto wallet but then it would be difficult to prove that no other entity does which poses another issue.
Credit: Daniel Palmer