Broker-Dealer Crypto Asset Activities And Best Practices

The Financial Industry Regulatory Authority ("FINRA") recently released an update to its guidance regarding crypto asset activities, which included a non-exhaustive list of potential areas of concern to FINRA.¹ The publication is based on information collected by FINRA through its ongoing regulatory operations and member firms' responses to prior regulatory notices² and a crypto asset questionnaire.³ We summarize below key areas for consideration and provide recommendations for firms to consider in light of FINRA's evolving regulatory initiatives with respect to crypto asset-related activities of member firms and their associated persons.

Background

Over the past several years, FINRA has undertaken a focused effort to identify and act upon regulatory challenges presented by the crypto asset activities⁴ of FINRA member firms. FINRA defines crypto assets or digital assets as "assets that are issued or transferred using distributed ledger or