US Exchange Regulator FINRA Cites Bitcoin in Annual Risk Assessment

An organization tasked with regulating brokerages and exchanges is seeking to obtain information about how its members are using bitcoin.

AccessTimeIconJul 8, 2016 at 3:43 p.m. UTC
Updated Sep 11, 2021 at 12:22 p.m. UTC
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A self-regulatory organization tasked with overseeing brokerage firms and exchange markets is attempting to obtain more information about how its members may be using bitcoin or other virtual currencies.

The inquiry comes as part of the Financial Industry Regulatory Authority’s (FINRA) 2016 Risk Control Assessment Survey, an optional poll that seeks to improve the organization’s understanding of member operations and the potential risks associated with those activities.

The survey was sent to members at the beginning of June, and comes amid a larger inquiry by many government and non-government regulators, both in the US and internationally, into uses of bitcoin and blockchain technology.

Among the roughly 200 questions, two were focused on virtual currencies. One required question sought to address whether member firms are engaged in business activities involving virtual currencies, while the other aimed to assess the nature of activities.

The questionnaire provides a number of possible answers for respondents including whether they issue virtual currencies or are affiliated with entities that trade or invest in the area, providing insight into how FINRA believes its members may be engaging with the emerging technology.

In statements to CoinDesk, FINRA sought to position the inquiry as just a small part of a larger examination process, one whose results would not be released more widely.

The organization said:

"The information collected through the RCA is used for regulatory and examination purposes only."

Elsewhere, Pillsbury Winthrop attorney Marco Santori said he believes FINRA may be seeking to learn more about its members virtual currency activities due to complexities relating to the how broker-dealers are regulated in the US.

More specifically, he posited that the reason for the questions may be that entities regulated by the Securities and Exchange Commission (SEC) are exempt from Financial Crimes Enforcement Network (FinCEN) and state licensing requirements, agencies which have been more assertive in attempting to understand and regulate the industry.


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