FINRA was “encouraging” broker-dealers to record factual statements about digital stocks. It’s excellent to possess proper rules, but a few broker-dealers are averting crypto to prevent the soft conditions.
In simple terms, FINRA (a non-governmental company that modulates member brokerage firms and foreign exchange stores ) will be “encouraging” (essentially demanding, as though you don’t comply… they gonna ask why) broker-dealers and other such entities who facilitate the exchange of digital stocks or products related to digital stocks to provide an array of information about every aspect of transactions related to digital stocks.
That is, FINRA is collecting info on each broker-dealer, fund, and/or person who touches these stocks via a broker, and generally is also collecting information on every other aspect of a trade (i.e. this is about broker-dealers in equities stores, not crypto exchanges specifically, they have their own rules).
This means that there is a long paper trail on anyone trading digital stocks via a broker essentially required by FINRA.
That means if your broker-dealer is letting you trade say GBTC, they are probably also submitting detailed records to FINRA.
That also by proxy means that some broker-dealers (and other such entities) are skipping out on allowing the trade of stocks like GBTC, to avoid the paperwork and reporting.
This is like a mix medially death by paperwork and a positive sign of crypto being taken seriously.
With that noted, a similar thing is happening with weed assets.
If your broker stopped letting you trade Tilray or GBTC, for example, this helps explain why.
For more reading, see:FINRA Encourages Firms to Notify FINRA if They Engage in Activities Related to Digital Assets (notice 18-20).
Are bans permeant? No, everything is constantly up to review. Remember the bans come from the broker, not from the state. That said, once one of these brokers dig their teeth in, they generally tend not to let go. We may love our crypto and weed, but for these guys they need to be taking a serious hit before they are going to bend to our whims and turn trading back on. Once again, we are likely at the whim of the SEC (like with a Bitcoin ETF). This is to say, don’t even HODL your own breath.
NOTEI’m confident there’s a little more likely in the back ground together with the SEC and National Futures Association, the sense I’m emphasizing FINRA is really because it had been usually the sole powerful established release I really detect that connected using a few brokers prohibiting crypto services and products for their clientele. Essentially out of what I could glean the private and public watchdog groups are tag teaming crypto (and I presume bud assets ) a little. Checkout this article from Bloomberg:Brokers’ Cryptocurrency Deals Are Focus of SEC Review.
What do weed assets and crypto have in common? The answer is nothing good unfortunately. They are both a bit of a grey area with some unclear guidelines. They are both also new share classes that include some low liquidity, scammy, and often pumped up stocks. I am a big fan of both these share classes, but the reality is that these new and volatile stocks are getting wrenches thrown at them, as you might and should expect. Hopefully this round of oversight leads to clear SEC guidelines down the road which open the flood gates back up. For now though, we should just be crossing our fingers that the CFTC gives the thumbs up to Bakkt.
“FINRA Reporting on Digital Assets Has Some Broker-Dealers Avoiding Crypto” contains information about the following Cryptocurrencies:
Crypto ETFs / ETNs / Trusts / Funds / etc.