FINRA Believes Blockchain Could Impact its Regulatory Rules

19 January 2017

FINRA believes the widespread use of blockchain could come to impact its core business practices.

The self-regulatory organization for US brokers published a new report on blockchain tech yesterday that offers both a broad overview of the tech from the context of its industry, as well as its take on its potential impact on the brokerage sector. FINRA has been open about its work on the technology (in conjunction with its members) in the past, though the release constitutes some of its most direct comments to date.

Most notably, FINRA said that, should the tech see broader use in the financial system, its own rules may need to be modified or changed.

As the report states:

“Many FINRA rules as well as some rules implemented by other regulators (such as the Securities and Exchange Commission (SEC)), that FINRA is responsible for examining or enforcing with respect to broker-dealers, are potentially implicated by various DLT applications.”

Specifically, the tech could affect how FINRA members self-regulate in the areas of AML/KYC, asset verification, business continuity, surveillance and payments, among others.

Perhaps unsurprisingly, recordkeeping rules may also be turned on their head.

“For example, a DLT application that seeks to alter clearing arrangements or serve as a source of recordkeeping by broker-dealers may implicate FINRA’s rules related to carrying agreements and books and records requirements,” the report’s authors note.

The report goes on to give a high-level overview of the impact of DLT in the debt and derivatives market, as well as explanations of how various industry stakeholders are experimenting with the technology.

Image Credit: Andriy Blokhin /