70% of Crypto Asset Communications Flout Regulations

70% of Crypto Asset Communications Flout Regulations

Time Stamp: January 23, 2024 1:10 PM
70% of Crypto Asset Communications Flout Regulations PlatoBlockchain Data Intelligence. Vertical Search. Ai.

A recent examination by FINRA uncovered a
staggering 70% potential rate of violation of its retail communication regulations for crypto assets. This revelation highlights the need for stringent adherence to
regulatory guidelines as firms navigate the complex landscape of crypto assets.

Under FINRA’s targeted examination, over
500 crypto asset-related retail communications were scrutinized. Approximately 70% of these communications exhibited potential violations of
FINRA Rule 2210.

Among the discrepancies were the failure to
differentiate between crypto assets offered by affiliate companies and those offered by crypto companies, false statements about crypto assets’ functions, and misleading
comparisons to traditional assets. These findings raise critical questions for
firms engaging in crypto communications.

Following the examination, firms have been urged to examine the accuracy of
their retail communications involving crypto assets. According to FINRA, clarity
is essential, especially when promoting products and services, as
misleading implications can lead to misunderstanding.

Amy Sochard, the Vice President of the Advertising
Regulation Department, FINRA, mentioned: “The crypto asset market has
rapidly grown over the last decade, and product offerings and retail investor
participation have expanded. Our update on the targeted exam poses questions
for firms to consider as they review and supervise their retail communications
concerning crypto assets.”

“Any findings of substantive potential
violations are evaluated for further review and follow-up, including
considering whether to refer to FINRA’s Enforcement Department, as
appropriate.”

Crypto Assets Risks and Disclosures

Recently, FINRA released its annual regulatory oversight report for 2024, highlighting key priorities, including
cybersecurity , cryptocurrency, and communication standards, Finance Magnates reported.

The report introduced emerging regulatory scope,
encompassing areas like cryptocurrency, the impact of AI on regulatory
obligations, and supervision of off-channel communications.

FINRA emphasized the important roles of compliance
in cybersecurity, referencing the SEC’s regulations for safeguarding customer
information, business continuity, and incident reporting. The SEC’s rules
mandate public companies to disclose cybersecurity incidents.

The report offers a comprehensive cybersecurity
checklist, underscoring technology management, vendor oversight, change
management, system availability, data protection, and event handling.

A recent examination by FINRA uncovered a
staggering 70% potential rate of violation of its retail communication regulations for crypto assets. This revelation highlights the need for stringent adherence to
regulatory guidelines as firms navigate the complex landscape of crypto assets.

Under FINRA’s targeted examination, over
500 crypto asset-related retail communications were scrutinized. Approximately 70% of these communications exhibited potential violations of
FINRA Rule 2210.

Among the discrepancies were the failure to
differentiate between crypto assets offered by affiliate companies and those offered by crypto companies, false statements about crypto assets’ functions, and misleading
comparisons to traditional assets. These findings raise critical questions for
firms engaging in crypto communications.

Following the examination, firms have been urged to examine the accuracy of
their retail communications involving crypto assets. According to FINRA, clarity
is essential, especially when promoting products and services, as
misleading implications can lead to misunderstanding.

Amy Sochard, the Vice President of the Advertising
Regulation Department, FINRA, mentioned: “The crypto asset market has
rapidly grown over the last decade, and product offerings and retail investor
participation have expanded. Our update on the targeted exam poses questions
for firms to consider as they review and supervise their retail communications
concerning crypto assets.”

“Any findings of substantive potential
violations are evaluated for further review and follow-up, including
considering whether to refer to FINRA’s Enforcement Department, as
appropriate.”

Crypto Assets Risks and Disclosures

Recently, FINRA released its annual regulatory oversight report for 2024, highlighting key priorities, including
cybersecurity , cryptocurrency, and communication standards, Finance Magnates reported.

The report introduced emerging regulatory scope,
encompassing areas like cryptocurrency, the impact of AI on regulatory
obligations, and supervision of off-channel communications.

FINRA emphasized the important roles of compliance
in cybersecurity, referencing the SEC’s regulations for safeguarding customer
information, business continuity, and incident reporting. The SEC’s rules
mandate public companies to disclose cybersecurity incidents.

The report offers a comprehensive cybersecurity
checklist, underscoring technology management, vendor oversight, change
management, system availability, data protection, and event handling.

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