A recent targeted examination by FINRA uncovered a
staggering 70% potential violation rate in retail communications related to
crypto assets. This revelation underscores the need for stringent adherence to
regulatory guidelines as firms navigate the complex landscape of crypto asset
communication.
Under FINRA’s targeted exam, over
500 crypto asset-related retail communications were scrutinized. Shockingly,
approximately 70% of these communications exhibited potential violations of
FINRA Rule 2210.
Among the observed discrepancies were the failure to
differentiate between affiliate-offered crypto assets and those directly from
the firm, false statements about crypto assets’ functions, and misleading
comparisons to traditional assets. These findings raise critical questions for
firms engaging in crypto communications.
Firms are urged to introspect on the accuracy of
their crypto asset retail communications. According to the regulator, clarity
is essential, especially when promoting products related to crypto assets, as
misleading implications can lead to misunderstandings.
Crypto Assets Risks and Disclosures
A fair and balanced presentation of risks associated
with crypto assets is crucial. Firms must address the speculative nature, lack
of legal protections, and regulatory uncertainties. It’s essential to clearly
distinguish between products offered by the broker-dealer and those by
affiliates or third parties.
The disclosure of commissions, fees, and the
ineligibility of certain funds for SIPC protection is paramount for informed
decision-making. Additionally, technical terms related to crypto assets should
be adequately explained for a comprehensive understanding.
Expect ongoing updates as this story evolves.
A recent targeted examination by FINRA uncovered a
staggering 70% potential violation rate in retail communications related to
crypto assets. This revelation underscores the need for stringent adherence to
regulatory guidelines as firms navigate the complex landscape of crypto asset
communication.
Under FINRA’s targeted exam, over
500 crypto asset-related retail communications were scrutinized. Shockingly,
approximately 70% of these communications exhibited potential violations of
FINRA Rule 2210.
Among the observed discrepancies were the failure to
differentiate between affiliate-offered crypto assets and those directly from
the firm, false statements about crypto assets’ functions, and misleading
comparisons to traditional assets….
