In yet another indication that the Financial Industry Regulatory Authority (FINRA) is becoming increasingly aware of broker-dealers’ involvement in the cryptocurrency and blockchain space. In July, FINRA published two regulatory notices regarding member firms’ involvement in digital assets and FinTech in general. With respect to digital assets, FINRA indicated in Regulatory Notice 18-20, that member firms should inform FINRA of activity that involves both securities and non-securities related digital assets (i.e., cryptocurrencies).
Notably, FINRA stopped short of declaring that firms’ involvement with trading of non-securities digital assets would require a full Continuing Membership Application. However, firms should inform FINRA of such activity through each firm’s designated Regulatory Coordinator. Firms should likely be prepared to include details of the proposed activity in a manner similar to the Materiality Consultation process pursuant to the Membership Application Program.