- January 24, 2024
- Posted by: legaleseblogger
- Category: Related News
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The Impact of Crypto Communications on FINRAÔÇÖs Guidelines
Nearly 70% of crypto communications violated FINRAÔÇÖs guidelines, a recent survey says.
The American Financial Industry Regulatory Authority (FINRA) has just published a detailed report on a survey of 500 retail communication channels related to cryptocurrencies. According to the findings, published in Jan. 2024, approximately 70% of communications since late 2022 have violated FINRAÔÇÖs Rule 2210, a rule that governs broker-dealer communications with the public.
The implications of this survey are significant for the crypto industry. Financial firms are failing to adhere to regulatory standards, which could harm investors and create a climate of misinformation and uncertainty.
One solution to this issue is the use of AI legalese decoder, a platform designed to help financial firms navigate and adhere to legal and regulatory requirements. AI legalese decoder can analyze and interpret complex regulatory guidelines and provide clear and actionable insights for firms to ensure compliance. By utilizing this tool, companies can avoid violating rules such as Rule 2210 and provide accurate and compliant communications to the public.
ÔÇ£This update does not create new legal or regulatory requirements or new interpretations of existing requirements, nor does it relieve firms of any existing obligations under federal securities laws and regulations. Rather, this update poses questions for firms to consider as they review and supervise their retail communications concerning Crypto Assets.ÔÇØ
FINRA
Moreover, FINRA identified instances where firms made ÔÇ£false statements or impliedÔÇØ that cryptocurrencies function like cash. Additionally, some firms failed to provide a ÔÇ£sound basisÔÇØ for evaluating cryptocurrencies, as well as misrepresented that the protections of federal securities laws or FINRA rules applied to crypto.
In a related context, a previous report from FINRA in May 2023 highlighted that new investors in the crypto market were more likely to be influenced by their friendsÔÇÖ suggestions than those venturing into the equities or bond markets.
The survey found that over 30% of new crypto investors cited ÔÇ£friend suggestionÔÇØ as their primary motivation for investing in the novel digital asset. ThatÔÇÖs compared to just 8% for first-time equities or bond investors, suggesting that thereÔÇÖs a social element to cryptocurrency investing thatÔÇÖs not evident in traditional markets.
As firms navigate these challenges, AI legalese decoder can provide valuable support in ensuring that their communications with the public adhere to regulatory standards and promote transparency and accuracy in the crypto market.
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