SEC and FINRA Give Thumbs Up To Non-Custodial Exchanges

Exchange
#1

Good news, make me wonder how Nash’s applications are proceeding, guess this won’t hurt!

https://www.finra.org/newsroom/2019/joint-statement-broker-dealer-custody-digital-asset-securities

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#2

Maybe this is what they have been waiting on…either way, good news all around. :beers:

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#4

[Excerpt from the above article]

Noncustodial Broker-Dealer Models for Digital Asset Securities

As noted, some entities contemplate engaging in broker-dealer activities involving digital asset securities that would not involve the broker-dealer engaging in custody functions. Generally speaking, noncustodial activities involving digital asset securities do not raise the same level of concern among the Staffs, provided that the relevant securities laws, SRO rules, and other legal and regulatory requirements are followed.8The following are examples of some of the business activities of this type that have been presented or described to the Staffs.

  • One example is where the broker-dealer sends the trade-matching details ( e.g ., identity of the parties, price, and quantity) to the buyer and issuer of a digital asset security—similar to a traditional private placement—and the issuer settles the transaction bilaterally between the buyer and issuer, away from the broker-dealer. In this case, the broker-dealer instructs the customer to pay the issuer directly and instructs the issuer to issue the digital asset security to the customer directly ( e.g. , the customer’s “digital wallet”).
  • A second example is where a broker-dealer facilitates “over-the counter” secondary market transactions in digital asset securities without taking custody of or exercising control over the digital asset securities. In this example, the buyer and seller complete the transaction directly and, therefore, the securities do not pass through the broker-dealer facilitating the transaction.
  • Another example is where a secondary market transaction involves a broker-dealer introducing a buyer to a seller of digital asset securities through a trading platform where the trade is settled directly between the buyer and seller. For instance, a broker-dealer that operates an alternative trading system (“ATS”) could match buyers and sellers of digital asset securities and the trades would either be settled directly between the buyer and seller, or the buyer and seller would give instructions to their respective custodians to settle the transactions.9 In either case, the ATS would not guarantee or otherwise have responsibility for settling the trades and would not at any time exercise any level of control over the digital asset securities being sold or the cash being used to make the purchase ( e.g ., the ATS would not place a temporary hold on the seller’s wallet or on the buyer’s cash to ensure the transaction is completed).

Great guidance, it looks as though Nash may be one of the Non Custodian Entities it was referring to, all 3 examples apply perfectly to the coming features of the Exchange and its functions. Well done Nash team :+1:t5:

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#5

Why does Nash have broker dealer but no Finra registration ?
No luck on SIPC either

thanks

#7

Nash is in the process of acquiring the ATS broker-dealer license. Don’t think they are there yet but their legal team has already broken new ground. Only a matter of time.

#8

steps go
step1
1A)Broker dealer … 1B)register with finra or other self reg body

  1. apply ATS

correct me if wrong

#9

You could be right. But I am not sure about the steps. Last I read was that Nash is still in the process of acquiring the broker-dealer license. Shouldn’t Finra registration be the first step in acquiring a Broker-Dealer license though?

#10

maybe ur right… i swear i saw a broker dealer registration somewhere , bloody certain

Edit: damn … i dont think we do … my bad

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