Does FINRA Cover Bitcoin and Cryptocurrencies?
What is FINRA Rule 2010? FINRA Rule 2010 is a broad, sweeping rule that is utilized to address misconduct that is not directly addressed by another FINRA rule. The rule is centered around the use of ethical business practices by brokers and financial institutions....read more
Whether you purchased cryptocurrency like Bitcoin of Ethereum from a trade or as part of an initial coin offering (ICO), it is important to understand that these are investments. In many ways, they are very similar to stocks and other securities, since they can be purchased for a price, left to grow or decrease in value, and be sold. As an investment, cryptocurrencies are subject to dozens of rules and regulations, and the professionals claiming to trade cryptocurrencies on your behalf are required to register as brokers and get the proper FINRA certifications. If you are the victim of investment scams or financial negligence when working with a coin broker, talk to a FINRA arbitration attorney about your options. The FINRA claims attorneys at Epperson & Greenidge represent investors in claims against their brokers and help them to recover mishandled investments. Call our law offices today for a free consultation on your case.
Do Cryptocurrency Dealers Need FINRA Certification?
Nearly everyone who trades or deals securities in the United States is required to have the proper certifications to act as a broker-dealer. The Securities Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) each have rules for certifying and registering these broker-dealers, but FINRA is the organization that primarily writes the exams and licensing standards for these professionals.
This means that anyone claiming to be a cryptocurrency broker or dealer likely needs FINRA certification. FINRA recommends that you always research ICOs and crypto investment opportunities and that you never trust that someone contacting you about an investment is really a certified broker. FINRA has programs like BrokerCheck and the SEC has its EDGAR Database to help investors verify the identity, reputation, and history of prior rules violations for any certified broker across the country. Always check these resources before entrusting someone with your money.
How Does FINRA Regulate Bitcoin and Ethereum?
FINRA’s job primarily deals with regulating financial professionals like stockbrokers and financial advisors that work with stocks, securities, and other investments rather than regulating the securities themselves. In this respect, FINRA does not regulate cryptocurrency, but it does help oversee the professionals involved in the trades. Because of this, there are important things FINRA does to help investors invest safely in cryptocurrency.
First, FINRA works to educate investors and help them recognize scams and investment fraud surrounding cryptocurrency. FINRA warns on its website that you should always research any crypto investment before handing over any money. This means looking at the ICO and checking whether it has been properly registered with the SEC, determining whether the broker you will work with is properly certified and authorized to make transactions under FINRA’s rules, and reading and understanding the terms and disclosures that come with your investment.
In many cases of fraud or situations where a broker takes advantage of an investor’s urge to jump on the bandwagon of cryptocurrency investing, people make false claims to entice investors. If an ICO is not properly registered with the SEC, the initial offering and the investments purchased might be illegal. If the broker-dealer you are working with lacks certifications, it may be difficult to hold them accountable to FINRA rules or to file a claim against them for mishandling your investments. Lastly, the terms of your transaction and the disclosures your “broker” makes could be hiding important information. Under FINRA and SEC rules, there are important pieces of information you need to know about your transaction. If the ICO or the broker are not registered, these rules may not apply, and you could be making unsafe investments based on undisclosed information and omissions.
How Can FINRA Help with Fraud Claims After a Digital Currency Transaction?
As long as the investment professional you worked with was properly registered and licensed by FINRA, FINRA can help you hold the broker-dealer responsible for breach of contract, fraud, unsuitable investments, and other problems that harm your investments.
Since FINRA is responsible for licensing and regulating investment professionals, FINRA uses these rules to help investors who have been taken advantage of by bad brokers and financial advisors. One option investors have is to file a claim against the broker through FINRA’s arbitration process. Similar to how a lawsuit goes before a judge who decides what damages the defendant will pay, FINRA arbitration goes before an arbitrator (or panel of arbitrators) to decide damages that a broker will pay. FINRA uses SEC rules, other federal laws, state laws, and its own strict professional regulations to find problems with a broker’s practices. Many investors can use these rules to claim damages against their broker-dealer.
FINRA Claims Lawyers for Cryptocurrency Fraud and Unsuitable Investments
Talk to an attorney about your cryptocurrency investment to determine whether your broker committed any fraud, financial negligence, or other illegal acts that could entitle you to financial damages. The FINRA claims lawyers at Epperson & Greenidge, LLP, represent investors in claims against negligent brokers. If you were taken advantage of or were the victim of fraud in a cryptocurrency case, call our FINRA claims lawyers today for a free consultation and to begin exploring your options. Our number is (877) 445-9261.