The Financial Industry Regulatory Authority (FINRA), a non-governmental and self-regulatory organization (SRO) in charge of regulating member brokerage firms, has been reluctant to approve the application of nearly 40 firms looking to offer crypto-related services in the region. Some insider sources have revealed that FINRA’s inaction stems from the fact that the United States Securities and Exchange Commission (SEC) is yet to provide regulatory clarity on bitcoin (BTC) and other blockchain-based digital assets offerings, according to reports on June 17, 2018.
U.S Regulators Uncomfortable with Cryptos
Per sources close to the matter, up to 40 fintech startups that have filed to become cryptocurrency broker-dealers and offer tokenized securities in the United States are yet to receive a word from FINRA for over 14 months now and they are now growing quite impatient.
Several industry observers have reportedly hinted that the nation’s financial watchdogs may have set an indefinite moratorium on the approval, while some others believe that FINRA’s lack of positive action is because it’s yet to get the “greenlight” from its “big brother,” the SEC.
Commenting on the matter, Ray Pellecchia, FINRA’s director of media relations reportedly stated categorically that accepting new membership applications from crypto-linked businesses is quite a complicated task, given the nascent nature of the digital asset class.
SEC Still Not Interested in Cryptos
While firms such as Coinbase, Gemini, BitGo, and others have gotten the necessary stamps of approval needed to function as regulated cryptocurrency custodians, from other regulators in the region such as the New York Department of Financial Services (DFS) and the South Dakota Division of Banking, the SEC has not made life easy for market participants looking to offer crypto-based securities.
Though companies like OpenFinance, Overstock’s tZERO, SharePost and Templum markets have all gotten the nod from FINRA to offer securities trading, many people still label the SEC’s approach towards regulating the cryptoassets securities space as slow.
As reported by BTCManager earlier in May 2019, SEC Commissioner Hester Peirce made it clear that the agency’s securities guidelines (the Howey Test) are quite ambiguous and complicated, creating a huge barrier for even firms genuinely interested in treading the legit path.
In recent times, the SEC has rejected or delayed the approval of so many bitcoin exchange-traded fund (ETF) filings even from large companies like VanEck and Bitwise that have maintained a solid track record over the years.
While the agency may be taking its time to regulate the U.S cryptocurrency industry, the fact still remains that market participants waiting to do business in the country are growing increasingly disillusioned and frustrated with each passing day and they may decide to migrate to more crypto-friendly regions such as Switzerland and Malta if things continue this way.