The US Financial Industry Regulatory Authority has asked all American firms that sells securities to disclose any activities “related to digital assets, such as crypto-currencies and other virtual coins and tokens.”
The authority is tasked by Congress to ensure the US broker-dealer industry operates “fairly and honestly” and also registers and licenses every firm and broker that sells securities to the public in the US. It says it is now “monitoring developments in the digital asset marketplace and is undertaking efforts to ascertain the extent of [its members’] involvement related to digital assets.”
It is now also asking its membership to notify the authority if they “or associated persons or affiliates,” currently engages, or intends to engage, in any activities related to digital assets, such as crypto-currencies and other virtual coins and tokens.
In addition, until July 31, 2019, the authority “encourages each firm to keep its Regulatory Coordinator abreast of changes in the event the firm, or its associated persons or affiliates, determines to engage in activities relating to digital assets not previously disclosed.”
The announcement from the authority comes after sustained activity against crypto fraud by multiple US agencies. In May, the US Department of Justice announced it was opening a criminal probe into traders manipulating the price of digital currencies. Federal prosecutors are now working with the Commodity Futures Trading Commission, the financial regulator with responsibility for overseeing Bitcoin derivatives, to examine allegations of ‘spoofing’ and ‘wash trading.’
The US Securities and Exchange Commission has also been publicly vocal and active in anti-crypto fraud actions as has the North American Securities Administrators Association, which announced its members have been carrying out 70 state- and provincial-level investigations into crypto-currency scams and fraudulent ICOs since April, and that the actions, dubbed Operation Crypto-sweep, are “just the tip of the iceberg.”
The Financial Industry Regulatory Authority issued an earlier warning in December 2017 to its members about pump-and-dump schemes and advised them to “be cautious when considering the purchase of shares of companies that tout the potential of high returns associated with crypto-currency-related activities without the business fundamentals and transparent financial reporting to back up such claims.”