The top watchdog, which oversees brokerage firms and exchange markets, says 70% of communications about cryptocurrencies may have broken rules aimed at maintaining fairness and balance with the public.
The Financial Industry Regulatory Authority (FINRA) discovered several common themes as it swept through its members, including misrepresentations that cryptocurrencies function like cash or cash equivalents. It also appears that comparing cryptocurrencies to other assets, such as stocks and misstatements, is subject to federal securities laws or FINRA rules that apply to cryptocurrencies. report It was released on Tuesday.
FINRA is regulated by the Securities and Exchange Commission. sweep In November, we were tasked with reviewing our member companies’ communications with retail customers related to cryptocurrencies and cryptocurrency services.
Specifically, FINRA analyzed 500 retail communications and established regulations that require firms to ensure that broker-dealers’ communications with the public are “fair and balanced” and prohibit “exaggerations, promises, unreasonable or misleading” claims. Compliance has been checked. Most potential violations were found in a small number of companies tested.
Cryptocurrency Growth
“Due to the growth of this market and increased interest in cryptocurrency assets, the potential harm from problematic communications has also increased… (I) To have sufficient information to evaluate a cryptocurrency asset investment or service, the risks must be addressed in the communication; We need to be clear, Ira Gluck, senior director of FINRA’s advertising regulation division, said in a statement.
FINRA not only reviews written communications, such as print ads, but also “everything from a company’s 90-minute podcast or 15-second spot during the Super Bowl.” Gluck also mentioned it in a FINRA episode published Tuesday.
Regulators, including the SEC and the Commodity Futures Trading Commission, have also focused on cryptocurrencies over the years. Last year, both agencies imposed enforcement actions against large cryptocurrency exchanges and companies.
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