FINRA believes blockchain could impact regulatory rulemaking

Crazy Commentary : The U.S. Financial Industry Regulatory Authority believes that blockchain technology will affect its members' self-regulation in areas such as AML/KYC, asset verification, business continuity, monitoring and payment. Because these rules are reviewed or enforced by the U.S. Financial Industry Regulatory Authority, if blockchain technology is to be implemented, it should take some time to get used to it.

Translation: Nicole

The U.S. Financial Industry Regulatory Authority (FINRA) has revealed that widespread use of blockchain could affect the practice of its core business.

Yesterday, the US brokerage self-regulatory organization released a new report on blockchain technology, which provides a broad overview of the technology in its industry context and its potential impact on the intermediary industry. FINRA has always been open about the development of research on the technology (along with its members), but this report provides some of the most straightforward opinions to date.

Most notably, FINRA said its own rules may need to be revised or changed if the technology becomes widely used in the financial system.

As the report states:

“Many FINRA rules, as well as rules imposed by other regulators such as the SEC, are reviewed or enforced by FINRA and could be impacted by various DLT applications.”

Specifically, the technology could impact FINRA members’ self-regulation in areas such as AML/KYC, asset verification, business continuity, surveillance, and payments.

Perhaps unsurprisingly, record-keeping rules can also be used to their advantage.

The report authors noted:

“For example, a DLT application designed to change clearing arrangements or serve as a source of recordkeeping for broker-dealers could impact FINRA rules regarding signing agreements and books and records requirements.”

The report also provides a high-level overview of the impact of DLT in debt and derivatives markets and explains how various industry stakeholders will experiment with the technology.