Summary
Regulatory watchdog FINRA has found that 70% of communications about cryptocurrencies may have violated its rules. It discovered false statements about crypto functioning like cash or cash equivalents, comparisons to other assets such as stocks, and misrepresentations about federal securities laws or FINRA rules. The sweep, conducted by FINRA and overseen by the Securities and Exchange Commission, reviewed member firms’ communications with retail customers related to crypto and crypto services. FINRA analyzed 500 retail communications and found a handful of firms had the most potential violations. The agency emphasized the importance of clear communication about the risks and features of crypto assets.
Key Points
1. The Financial Industry Regulatory Authority (FINRA) found that 70 percent of communications about crypto may have violated its rules to be fair and balanced with the public.
2. Some common themes identified by FINRA in its sweep of member firms’ communications include false statements that crypto functioned like cash or cash equivalents, comparisons of crypto to other assets such as stocks, and misrepresentations about the application of federal securities laws or FINRA rules to crypto.
3. FINRA, overseen by the Securities and Exchange Commission, conducted the sweep to review member firms’ communications with retail customers related to crypto and crypto services. The examination analyzed 500 retail communications and identified a handful of firms with potential violations.