FINRA Starts Investigating Retail Communication of Crypto Companies

FINRA Starts Investigating Retail Communication of Crypto Companies

FINRA aims to determine whether or not crypto firms were misleadingly advertising their products and services.

The Financial Industry Regulatory Authority (FINRA), a private American corporation that acts as a self-regulatory organization regulating member brokerage firms and exchange markets, has launched an examination of “firm practices regarding retail communications concerning Crypto Asset products and services.”

According to the target exam letter released on FINRA’s website, the authority will be looking exclusively into communication shared between July 1st and September 30th, 2022.

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The FINRA’s investigation applies to all written communication, video, social media, websites, and mobile apps available to more than 25 retail investors over the period of 30 days.

In the notice sent to unrevealed companies, FINRA is asking them to provide all retail communication related to crypto assets, including crypto services like holding and transferring cryptocurrencies.

On top of that, FINRA expects crypto firms to provide detailed information related to retail communication, such as the date it was made public, “whether or not the Communication was filed with FINRA’s Advertising Regulation Department, whether or not each Communication <...> was approved by a registered principal of the firm” and identify each crypto asset or service the communication ''refers to, relates to, or concerns.”

Moreover, FINRA has requested companies to share “written supervisory procedures concerning the review, approval, record keeping and dissemination of Communication.” Nevertheless, crypto firms are asked to unveil compliance policies, training materials, or any written guidelines and provide any contracts made with affiliates that created their retail communication.

Based on some sources, the investigation began on November 14th to determine whether or not some crypto products or services were falsely advertised.

Crypto advertising has become one of the main focuses of regulators across the globe. At the beginning of September, The Office of the Securities and Exchange Commission (SEC) in Thailand tightened the rules for crypto advertising. On the other hand, at the end of August, Dubai’s Virtual Asset Regulatory Authority (VARA) released new guidelines for crypto advertising, promotions, and marketing.

Gile K. - Crypto Analyst

by Gile K. - Crypto Analyst, BitDegree


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