American self-regulatory body, the Financial Industry Regulatory Authority (FINRA), has added crypto considerations for companies to its annual oversight report, released Tuesday.
We’ve published the 2024 FINRA Annual Regulatory Oversight Report to share key insights and observations with member firms to use in strengthening their compliance programs.
— FINRA (@FINRA) January 9, 2024
The regulator has directed firms to pay more attention on the growing crypto-related compliance risks. Additionally, it urged firms to heighten their due diligence on activities involving digital assets.
“Member firms seeking to engage in crypto asset-related activity should identify and address the relevant regulatory and compliance challenges and risks.”
FINRA acts under the regulation of the US SEC and mandates membership to all firms dealing in securities broker-dealers. The self-regulatory organization (SRO) has asked its member firms to have their crypto securities business line assessed by FINRA to ensure it meets all rules stipulated by the SEC.
“FINRA has also asked member firms to complete a questionnaire related to their and their affiliates’ activities in the crypto asset space,” the report added.
FINRA addressed various cybersecurity trends during its examination of member firms including imposter websites, insider threats, and ransomware, among others.
The SRO report noted that bad actors are “taking advantage of investor interest in crypto assets and blockchain technology by engaging in market manipulation schemes” such as pump and dump.
Furthermore, the 90-page report noted that FINRA has identified associated people engaged in a range of crypto-related activities. These include proprietary trading, operating crypto investment funds, and involving in crypto mining operations.
FINRA’s highlights align with the recent actions taken by the SEC to bring in more supervision over the asset class and the whole crypto industry. This might result in stringent legislation in the future to guard against new and existing threats.
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