FINRA Sets To Probe Communication Pattern Of Crypto Exchanges
According to multiple reports, the US Financial Industry Regulatory Authority (FINRA) plans to investigate the communication processes of crypto firms. Accordingly, the outcome of the investigation will shape future regulatory frameworks for the high-risk digital asset ecosystem.
FINRA oversees the activities of brokerage firms and the exchange markets in the United States. However, the crash of the FTX Group has forced the agency to seek information regarding retail communications in the crypto asset space.
An announcement by FINRA said it wants information from several sources, including social media, promotional videos, mobile apps, and websites. As a result, companies are expected to file compliance and training manuals alongside the reviews and approval processes they use for their business operations.
The body’s website noted that ‘FINRA, for example, performs “sweeps,” or targeted assessments like the current one, to obtain information that it can utilize to nail down a reaction to issues.” However, the FINRA’s inquests are restricted to some firms to “lessen the regulatory costs.”
On a broader scale, the latest move by FINRA was fueled by the collapse of some of the world’s largest crypto exchanges. The latest to take the fall is FTX.
Furthermore, FINRA wants to examine FTX alongside other crypto firms’ advertisements during the recent Super Bowl, targeted at retail consumers. By so doing, the regulatory body is looking at how to best grasp the communication processes of crypto service providers.
The FTX Debacle and Crypto Market Stability
Valued at $32 billion before it went into a painful meltdown, the FTX crypto exchange was one of the top industry players. Moreover, its CEO, Sam Bankman-Fried, is a highly regarded personality in the virtual asset ecosystem, as he is one of the industry’s top decision-makers.
The November 9 collapse of his exchange coincided with a sharp drop in the price of Bitcoin, which lost 3% of its value. In just a few days, the value of several digital assets has plummeted, wiping out more than $1 billion from the sector, and triggering another crypto winter.
Stablecoins are not immune from the FTX debacle, as the digital asset category witnessed some imbalance in its otherwise stable position. As a result, the crypto industry is currently in a state of shock and fear.
Bitcoin holders are reportedly attempting to move a significant ‘part of their funds from exchanges which signifies a selling sentiment to dispose of their assets.
Token holders on exchanges exposed to FTX ramp up efforts to withdraw their funds. Some businesses exposed to the troubled platform have already suspended withdrawals for fear of liquidity.
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