In November, the Financial Industry Regulatory Authority (FINRA) launched a targeted examination into firm practices regarding retail communications concerning crypto asset products and services. FINRA's broad sweep focuses on retail communications made by brokers or their affiliates in the third quarter of 2022 that involved a crypto asset or a service involving the transaction or holding of a crypto asset, as well as the firm's supervisory processes and procedures over this area. For purposes of this sweep, "Crypto Asset" means an asset that is issued or transferred using distributed ledger or blockchain technology, including, but not limited to, so-called "virtual currencies," "coins," and "tokens." A Crypto Asset may or may not meet the definition of a "security" under the federal securities laws, will not include a security registered under the Securities Act and transferred through a registered clearing agency.
This is the first sweep letter issued by FINRA this year. The regulator states that it conduct targeted exams to gather information and carry out investigations. Sweep information is used to focus examinations and pinpoint regulatory response to emerging issues. Read FINRA's targeted exam letter.
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