A recent survey says that nearly 70% of cryptocurrency communications violated FINRA guidelines.
The US Financial Industry Regulatory Authority (FINRA) has just published a detailed report on a survey of 500 retail communication channels related to cryptocurrencies. According to the findings, published in January 2024, nearly 70% of communications since late 2022 violated FINRA Rule 2210, the rule governing brokers' and agents' communications with the public.
While FINRA did not reveal exactly who violated the rule, the regulator noted that some companies “failed to clearly distinguish in communications, including mobile applications, between crypto assets offered through affiliates or third parties and those provided directly by Before the members.
“This update does not create new legal or regulatory requirements or new interpretations of existing requirements, nor does it relieve companies of any existing obligations under the federal securities laws and regulations. Instead, this update raises questions that companies should consider as they review their communications Its hashing and supervision in relation to crypto-assets.
FINRA
Furthermore, FINRA identified instances where companies made “false or implied statements” that cryptocurrencies function like cash. Additionally, some companies failed to provide a “sound basis” for valuing cryptocurrencies, as well as misrepresented that the protections of the federal securities laws or FINRA rules applied to cryptocurrencies.
In a related context, a previous report issued by FINRA in May 2023 highlighted that new investors in the cryptocurrency market were more likely to be influenced by their friends’ suggestions than those who ventured into the stock or bond markets.
The survey found that more than 30% of new cryptocurrency investors cited “friend suggestion” as their primary motivation for investing in new digital assets. This compares to just 8% for first-time stock or bond investors, suggesting there is a social element to investing in cryptocurrencies that is not evident in traditional markets.
