Cryptocurrency/Blockchain Regulatory Task Force Adds New Standards

A Seton Hall University law student, Braeden Anderson has extensive knowledge of securities law and is presently a legal extern with FINRA. One area in which Braeden Anderson has a strong interest is cryptocurrencies and the regulations surrounding them. 

A recent BanklessTimes article by Braeden Anderson, the president of the Cryptocurrency & Blockchain Regulatory Task Force (CBRTF), brought focus to a new US-based nonprofit that is designed to augment the regulatory structures of the Commodity Futures Trading Commission and the Securities and Exchange Commission (SEC). 

Operating independently from financial interests and markets, the CBRTF requests the voluntary participation of crypto-market sell-side entities. These include blockchain startups, initial coin offerings (ICOs), and the developers of smart tokens/contracts. 

The aim is to set in place and enforce a set of standards and rules that have been designed as reflecting worldwide industry best practices. A focus is on regulatory issues that are at present inadequately addressed and reflect the technological complexity of “multifaceted amalgamations of code.” 

Areas of major CBRTF emphasis addressed include financial management standards, diligence and surveillance protocol, and conflict of interest rules. Compliance is seen as critical in bringing to a close the current “wild west” approach and ensuring consistent, transparent, and enforceable standards.

FINRA Proposes Proactive Move against Churning

A law student at Seton Hall University, Braeden Anderson possesses long-standing interest in securities regulation, with a particular focus on algorithmic trading. Braeden Anderson is currently undertaking a legal externship with the Financial Industry Regulatory Authority, Inc. (FINRA). 

The industry-funded regulator has oversight of 3,700 brokerage firms, as well as 630,000 registered representatives, and recently proposed steps to increase actions against churning. This practice involves brokers trading excessively using client accounts, with an aim of boosting their revenues.

The proposed new regulation would not require the broker to have control and discretion over the client’s account in order to be liable for churning it. At issue are situations where the customer relies on guidance from the broker, although the client authorizes investment buying and selling within the account. For clients used to brokers making decisions for them, the potential for churning may not be evident and such activities go unnoticed. 

Even with the change in rules, FINRA would require that, in specific cases, it must be demonstrated that the transactions at issue were “excessive and unsuitable.”