FINRA Believes Blockchain Could Impact its Regulatory Rules

FINRA, the self-regulatory organization for US brokers, could see some of its rules impacted by blockchain.

AccessTimeIconJan 19, 2017 at 4:00 p.m. UTC
Updated Sep 11, 2021 at 1:00 p.m. UTC

FINRA believes the widespread use of blockchain could come to impact its core business practices.

The self-regulatory organization for US brokers published a new report on blockchain tech yesterday that offers both a broad overview of the tech from the context of its industry, as well as its take on its potential impact on the brokerage sector. FINRA has been open about its work on the technology (in conjunction with its members) in the past, though the release constitutes some of its most direct comments to date.

Most notably, FINRA said that, should the tech see broader use in the financial system, its own rules may need to be modified or changed.

As the report states:

"Many FINRA rules as well as some rules implemented by other regulators (such as the Securities and Exchange Commission (SEC)), that FINRA is responsible for examining or enforcing with respect to broker-dealers, are potentially implicated by various DLT applications."

Specifically, the tech could affect how FINRA members self-regulate in the areas of AML/KYC, asset verification, business continuity, surveillance and payments, among others.

Perhaps unsurprisingly, recordkeeping rules may also be turned on their head.

"For example, a DLT application that seeks to alter clearing arrangements or serve as a source of recordkeeping by broker-dealers may implicate FINRA's rules related to carrying agreements and books and records requirements," the report’s authors note.

The report goes on to give a high-level overview of the impact of DLT in the debt and derivatives market, as well as explanations of how various industry stakeholders are experimenting with the technology.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.