The Financial Industry Regulatory Authority, a self-regulatory body of the American financial industry that is subordinate to the Securities and Exchange Commission, has published a notice encouraging its member firms to notify it if they engage in or intend to engage in any activities related to cryptocurrency.
FINRA regulates trading in financial derivatives such as securities, futures, options, and so on. Finance companies in the US are required to be regulated; FINRA is one of the options.
It is actually a private corporation that was created in 2007 by the joining of the National Association of Securities Dealers (est. 1939) and certain departments of the New York Stock Exchange.
In 2017 it had 630,132 registered representatives processing 36 billion ‘market events’ every day, according to its website. In that year it received 3,002 complaints and handed out fines totalling $64.9 million. It barred 492 individuals and 20 companies from working in the industry and suspended 733 and 29, and it referred 855 cases of fraud for prosecution. In that year it had 3,726 member firms – interestingly, the number of member firms has fallen on a yearly basis since 2007.
The notice says that member firms are encouraged to keep their ‘regulatory coordinator’ updated about cryptocurrency-related activities until the 31st of July 2019. Activities include mining, acceptance of cryptocurrency from customers and custody of cryptocurrency.
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It is not explained what action will be taken as a result of this information.
Cryptocurrency in the land of freedom
The SEC, one of the country’s two major federal financial watchdogs, seems to have come to a tentative conclusion that cryptographic tokens are sometimes securities and sometimes not. Commissioner Hester M. Pierce said in May: “There is a way of figuring this out…The best path forward is for regulators to approach ICOs and tokens with intense curiosity.”
Meanwhile, a resident of LA has been sentenced to one year in prison for facilitating millions of dollars’ worth of Bitcoin trades between 2014 and 2017, making an annual profit of roughly $300,000.
Court documents claimed that Theresa “Bitcoin Maven” Tetley, 50 years old, “fueled a black-market financial system in the Central District of California that purposely and deliberately existed outside of the regulated bank industry.”
The US Department of Justice announced on Monday: “‘Bitcoin Maven,’ who admitted to operating an unlicensed bitcoin-for-cash exchange business and laundering bitcoin that was represented to be proceeds of narcotics activity, was sentenced today to 12 months and one day in federal prison, three years of supervised release, and a fine of $20,000.”