Date added: : 29.08.2019

The U.S. Securities and Exchange Commission (SEC) and the Financial Services Regulatory Authority (FINRA) have issued a statement on digital and crypto assets, which are considered securities under US law. The document should be familiar to everyone who wants to open a crypto company in the United States. The statement raises the historical problems of the securities market since 1934, and also contains useful recommendations that should be considered when registering a business of this kind.

Emphasis on the need for licensing

SEC and FINRA reiterated the need for business licensing in their statement. The departments noted that many obligations to clients are imposed on brokers, including:

  • Financial protection of investors;
  • Promotion of innovative ways of doing business;
  • Maximum assistance in complying with US securities laws.

The license confirms that the broker complies with the requirements and legislative norms of federal law. The statement also emphasizes that the same rules apply to digital assets as it does to ordinary securities.

Calls for investor protection

Since crypto assets do not physically exist, it is impossible to store them in the same way as ordinary securities. Experts are forced to look for other opportunities to protect them. The most popular method is the use of a private key. However, there are significant problems. The risks of stealing a key that is stored by a broker-dealer remain. Also, the risk of loss is not excluded, which will lead to the inability to withdraw the crypto assets.

Therefore, SEC and FINRA urge companies to seek innovative methods of protecting users. Dealers-brokers are required to pay maximum attention to this aspect and provide the maximum degree of customer protection.

If you want to register your own cryptocurrency company in the United States and work in the field of digital assets, Law&Trust offers its services. Our experts will advise on the requirements of SEC and FINRA for organizations working in this field and will help with registration and interaction with government bodies.