FINRA and SEC explained the reasons for the delay in issuing broker-dealer licenses to cryptocurrency companies

The Financial Institutions Regulatory Agency (FINRA) and the US Securities and Exchange Commission (SEC) published a joint statement explaining the reasons for the delay in making decisions on obtaining broker-dealer licenses by cryptocurrency companies.

Thus, the document states that market participants should be aware that the application of federal securities laws, FIN RA rules and regulatory documents related to digital assets is associated with the emergence of new and complex regulatory issues.

“For example, the ability of a broker-dealer to comply with customer protection rules is largely determined by established laws and practices regarding the loss or theft of securities that may be ineffective against certain digital assets.”

As noted in the statement, regulators worked closely with participants in the cryptocurrency market to sort out a number of these controversial issues.

For example, in the SEC and FINRA expressed concern that the broker-dealer can not prove that the private key of the cryptocurrency wallet is not in a third party. In addition, the fact that a broker-dealer owns a private key may not be sufficient to allow him to cancel erroneous or unauthorized transactions.

"These risks can lead to loss of securities customers with corresponding obligations for the broker-dealer and put the company and other lenders at risk."

In addition, regulators are worried that such companies may encounter audit and reporting problems.

"The nature of the technology of the distributed registry, as well as the characteristics associated with securities based on digital assets, may make it difficult for a broker-dealer to prove the existence of these securities when drawing up broker-dealer financial documents at the request of government agencies."

Nevertheless, the SEC and FINRA are ready to cooperate with cryptocurrency companies, if they will strictly comply with all the requirements of the agencies.

“Regardless of whether the securities are paper or digital, the same fundamental elements of the rules of financial responsibility of the broker-dealer apply,” the regulators said in a statement.

The document also emphasizes that broker-dealers and departments will need to closely monitor the rapidly developing cryptocurrency market.

We will remind, earlier it was reported that about 40 cryptocurrency companies have long been waiting for approval of applications for broker-dealer licenses. According to media reports, the reason for delaying the process is the unofficial moratorium of regulators on the approval of applications from organizations involved in the cryptoindustry.

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