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SEC and FINRA commented on the delay in issuing brokerage licenses to cryptocompanies. by innavertigel

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· @innavertigel ·
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SEC and FINRA commented on the delay in issuing brokerage licenses to cryptocompanies.
The U.S. Securities and Exchange Commission (SEC) and the Financial Services Regulatory Authority (FINRA) issued a joint statement on Monday highlighting a number of factors that need to be considered when considering requests for digital asset-related brokerage licenses from companies.

"The ability of a broker-dealer to comply with customer protection rules is largely dictated by established laws and practices regarding the loss or theft of securities, which may not apply to certain digital assets," the publication says.

As regulators explain, the broker can confirm the possession of a private key to the cryptocurrency wallet, but it is unlikely that he will be able to prove that he does not have anybody else's private key.

"He may not be able to demonstrate that a copy of the private key is not at the disposal of a third party who will be able to move the security in the digital asset format without his consent," the offices write.

Previously, some cryptocurrency companies reported that they had to wait more than a year for the regulators' decision. Some suggested that the SEC imposed a moratorium on the approval of such applications, while others suggested that digital assets brought with them new challenges that needed to be addressed at the legal level.

In addition, the SEC and FINRA note that common practice such as the transfer of securities to third party custodial services when dealing with digital assets entails additional risks of loss or theft. The broker will not be able to cancel a transaction in blockchain if it is sent to an unauthorized address.

Regulators also have certain reporting issues, as "the nature of distributed registry technology and the characteristics associated with digital assets can make it difficult for a broker-dealer to confirm the existence of a security.
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