FINRA Targets Crypto Communications After FTX Collapse

The U.S. self-regulatory body is gathering information on crypto marketing practices between July and September of this year to potentially inform a regulatory response.

AccessTimeIconNov 18, 2022 at 12:13 p.m. UTC
Updated Nov 23, 2022 at 10:08 p.m. UTC
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The Financial Industry Regulatory Authority (FINRA), a U.S. self-regulatory body for brokerage services, is targeting crypto marketing practices in the wake of the collapse of industry juggernaut FTX.

The assessment will require firms to provide all retail communication concerning crypto assets distributed between July 1 and Sept. 30 of this year, according to an announcement made by FINRA on Monday.

Retail communication includes “any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period,” the notice said. It added that and "video, social media, mobile applications, and websites generally fall into this communications category."

Regulators around the world are increasingly scrutinizing the crypto sector and calling for more transparency and regulation following the collapse of Sam Bankman-Fried's FTX exchange. FINRA itself had, in January, already announced that it was looking to change regulations for crypto when it comes to advertising and disclosure. Crypto ads and promotions in particular have peaked regulators' interests as companies like FTX invested millions of dollars in marketing strategies – including Super Bowl ads – targeting retail investors.

FINRA's "targeted exams" are designed for gathering information and carrying out investigations, with the goal of pinpointing appropriate regulatory responses, according to its website.

The targeted exam for crypto communications will be looking into all approved crypto communications in the specified period and if they included a FINRA reference number. It will also assess what compliance policies, manuals or training materials were provided in the same time period regarding communication.

CoinDesk has reached out to FINRA for comment.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

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