FINRA conducts 2016 risk control assessment survey to strengthen risk supervision of Bitcoin activities

The U.S. Financial Industry Regulatory Authority (FINRA), which oversees brokerage firms and exchange markets, is trying to get more information about how its members use bitcoin and other virtual currencies.

The Bitcoin survey was conducted as part of FINRA’s 2016 Risk Control Assessment Survey, a multiple-choice questionnaire designed to increase FINRA’s understanding of potential risks in its members’ operations and related activities.

The surveys, sent to its members in early June, come as a number of government and non-government regulators, both in the United States and internationally, are investigating the use of bitcoin and blockchain technology.

FINRA’s survey included about 200 questions, two of which focused on virtual currencies. One question sought to address whether member firms were engaged in corporate activities involving virtual currencies, while the other sought to assess the nature of those activities.

The survey questionnaire provides respondents with a number of answer options, including whether the respondent has issued a virtual currency or is affiliated with an entity that trades and invests in the virtual currency space, providing insight into how FINRA believes its members may be involved in this emerging technology.

FINRA said: "The information collected during this review will be used only for regulatory and investigative purposes."

Separately, Pillsbury Winthrop attorney Marco Santori said he believes FINRA may be trying to learn more about its members’ virtual currency activities because of the complexity of how broker-dealers are regulated in the United States.

Specifically, he believes the problem stems from the fact that entities regulated by the Securities and Exchange Commission (SEC) are not governed by the Financial Crimes Enforcement Network (FinCEN) and state licensing requirements, and that agencies are more assertive in trying to understand and regulate the industry.