As the SEC continues its onslaught against the crypto industry, including the filing of high-profile actions against Binance, which operates the largest crypto asset trading platform in the world, and Coinbase, a multi-billion-dollar crypto trading platform, FINRA has quietly approved OTC Markets to provide trading services for digital asset securities.
OTC Markets announced the approval in early May but don’t expect any activity in the near future. Concurrent with announcing the approval, OTC Markets CEO, R. Cromwell Coulson, stated:
“We also recently received FINRA approval to permit digital asset securities to be traded by broker-dealers on OTC Link ATS. This approval furthers our mission of operating regulated markets for broker-dealers and issuers of securities. While it will be some time until the regulatory framework and infrastructure develop, we believe our markets are well-positioned to be part of new trading, data, and disclosure solutions for these securities.”
OTC Markets is clearly putting itself in a position to
In the year and a half since Gary Gensler made it clear to the world that he intends to focus on the crypto “wild west” (see HERE) things have gone from bad to worse for the industry. Of course, it is not all the SEC’s extreme crypto scrutiny that is causing problems, but the very real crypto winter including the collapse of the FTX exchange and its FTX Future Fund, and the realization that the metaverse of tomorrow, will actually not be here until… tomorrow have all added to industry problems. Not to mention a slew of bankruptcy filings (FTX, Blockfi, Celsius and Voyager) and several other precarious financial positions (Blockchain.com, Coinbase, Crypto.com and Genesis, to name a few).
However, putting aside the crypto industry financial crisis, the U.S. regulators, including the SEC, FINRA and national exchanges, are scrutinizing any business with even a modicum of crypto focus to the point where it is almost impossible to move
On May 17, 2022, SEC Chair Gary Gensler gave testimony before the Subcommittee on Financial Services and General Government U.S. House Appropriations Committee asking for an 8% budget increase for the SEC and outlining his priorities. Although Chair Gensler expressed a desire to update rules for modern markets and technologies, his main focus is to “ensure that the SEC is adequately resourced so we can remain the cop on the beat.” As the cyclical nature of the SEC continues, it seems we are moving back towards the era of “broken windows” shepherded in by former Chair Mary Jo White in 2013 and ended in 2017 by former Chair Jay Clayton.
Reminding us of the reach of our capital markets, Gensler points out that the SEC oversees 24 national securities exchanges, 99 alternative trading systems, nine credit rating agencies, seven active registered clearing agencies, five self-regulatory organizations and other external entities. They look after the accounting and auditing functions of