In the letter
- Nine members of the House of Representatives signed a letter to SEC Chairman Jay Clayton.
- According to the letter, a lack of guidance from the SEC has left potential crypto broker traders in a state of limbo.
- It asked for clarity regarding the broker-dealer applications at FINRA.
Has a group of nine congressmen signed a letter Addressed SEC Chairman Jay Clayton for more clarity on broker-dealer applications for companies in the crypto space.
The signatories include Tom Emmer (R-MN-6), Bill Foster (D-IL-11), David Schweikert (R-AZ-6) and Darren Soto (D-FL-9) who jointly lead the Blockchain Congress Caucus, along with Warren Davidson (R-OH-8), Ted Budd (R-NC-13), Ralph Norman (R-SC-5) and Ro Khanna (D-CA-17) who are members. Dan Crenshaw (R-TX-2) was the only non-member to sign the letter.
According to a press release from Tom Emmer’s office, Congressmen are asking for three things:
“First, make a formal clarification that banks can act as good control bodies for the custody of digital securities. Second, advise FINRA on the specific criteria that must be met for broker-dealers to hold digital securities for their customers and for their own account Third, you can instruct FINRA to approve broker-dealer requests that meet these requirements. “
In order for a company to issue securities to U.S. investors, either conventional (like stocks) or digital (like blockchain-based tokens offered through an ICO), it must register with the Financial Industry Regulatory Authority (FINRA). Government-authorized regulatory body to grant official broker-dealer status.
Once a company becomes a broker-dealer in FINRA’s eyes, it can begin buying and selling securities for clients and / or itself, as well as holding digital securities.
However, FINRA may not be sure what to do with cryptocurrency companies.
The letter to Clayton states, “In the absence of guidance from the SEC, FINRA has not directly denied any broker-dealer filings involving the custody of digital securities that would call into question the filings for appeal.” Instead, they claim Representative, these requests were in a state of limbo.
As evidence, they point out that the SEC and FINRA made a joint statement In July 2019, it was recognized that more and more companies wanted to hold digital stocks, but that neither organization has done much to provide guidance.
Congressmen are calling on the SEC to help FINRA turn qualified companies into licensed broker-dealers and the SEC to explicitly confirm that banks can hold digital securities – something currently held by the Office of Currency Validators, an office of the US – Treasury Department, is headed by former Coinbase manager Brian Brooks, has already proposed.