đđđ 70% of Crypto Asset-Related Communications Violate Rules: FINRA
The U.S. Financial Industry Regulatory Authority (FINRA) revealed that around 70% of crypto asset-related communications examined in a recent targeted exam did not comply with its rules.
In a recent FINRA report, it was disclosed that the examination, initiated in November 2022, involved a comprehensive review of over 500 retail communications distributed or made available by FINRA member firms concerning crypto assets.
The primary focus was on assessing these communications against FINRA Rule 2210, which mandates that broker-dealer communications with the public must offer a sound basis for evaluating the facts about any discussed product or service, while also prohibiting exaggerated, unwarranted, or misleading claims.
The report stated, "FINRA identified potential substantive violations of FINRA Rule 2210 in approximately 70 percent of the communications."
Inconsistent communication practices were a significant concern, particularly the failure to clearly differentiate between crypto assets offered through third-party affiliates and those directly offered by member firms. This lack of clarity raised the potential for investor confusion about the nature of the products and services being offered.
FINRA also observed instances where crypto assets were inaccurately portrayed, with some communications comparing them to cash or cash-equivalent instruments without a sound basis for such comparisons. Additionally, explanations about how crypto assets function, including their core features and risks, were found to be either unclear or misleading.
FINRA has issued guidance addressing concerns about misleading communication related to crypto assets by financial firms. The guidance urges firms to ensure a fair and balanced presentation in crypto-related communications, particularly regarding the #Safety and #liquidity of crypto assets. The aim is to promote transparency and compliance in the dynamic world of crypto.
Source - Cryptonews.com