On July 6, the Financial Industry Regulatory Authority published Regulatory Notice 18-20, which encourages member firms to promptly notify FINRA if the firm or any of its associated persons or affiliates engages or intends to engage in any activities involving digital assets, such as cryptocurrencies and other virtual coins and tokens. Digital assets activities include those relating to digital assets that are not securities and the activities under Rule 3270 (Outside Business Activities of Registered Persons) and Rule 3280 (Private Securities Transactions of an Associated Person).
Examples of activities that may be disclosed include, but are not limited to:
- Purchases, sales or executions of transactions in digital assets or in pooled funds that invest in digital assets;
- Creation of, management of or provision of advisory services for a pooled fund related to digital assets;
- Participation in an initial or secondary offering of digital assets;
- Creation or management of a platform for the secondary trading of digital assets; or
- Cryptocurrency mining.
FINRA has also requested that members voluntarily provide it information related to purchases, sales or executions in derivatives related to digital assets. Presumably this applies to bitcoin futures transactions on the Chicago Mercantile Exchange and the Cboe Futures Exchange.
Until July 31, 2019, FINRA members should keep their Regulatory Coordinators informed of the digital asset activities of the firm, as well as the firm’s associated persons or affiliates that were not previously disclosed—although this is also voluntary. Unless a change in such activities has occurred, FINRA is not requesting additional notice from those members who have already disclosed digital asset activities pursuant to a direct request, via the 2018 Risk Control Assessment Survey or through a continuing membership application.
Regulatory Notice 18-20 is available here.