August 13, 2024, brought two contrasting snapshots of the evolving cryptocurrency regulatory landscape. In the United States, the Financial Industry Regulatory Authority (FINRA) released a comprehensive update revealing that nearly 400 brokerage firms are now involved in the crypto sector, raising new questions about oversight and compliance. Meanwhile, in Europe, the regulatory noose tightened further as Bybit, one of the world’s largest cryptocurrency exchanges, completed its exit from the French market amid growing pressure from the EU’s Markets in Crypto-Assets (MiCA) regulation framework.
TL;DR
- FINRA reports 390 U.S. brokerage firms are involved in crypto activities
- Many firms’ crypto activities are conducted through affiliates, outside FINRA’s direct jurisdiction
- FINRA identified violations in supervision, marketing, AML, and record-keeping
- Bybit completed its France exit on August 13, auto-liquidating all remaining French user positions
- The AMF (French financial regulator) had issued warnings against Bybit prior to the shutdown
- U.S. PPI inflation fell to 2.2%, strengthening expectations of a September rate cut
FINRA’s Sweeping Crypto Survey: 390 Firms and Counting
The Financial Industry Regulatory Authority, the self-regulatory organization that oversees U.S. brokerage firms, published a guidance note on August 13 based on extensive reviews of member firms’ crypto activities. The findings reveal a sector that has penetrated the traditional financial system far more deeply than many observers realized. According to FINRA, there are now 390 firms involved with crypto in some form — whether through active crypto businesses, planned launches, partnerships with crypto companies, or associated persons with outside business activities involving digital assets.
The scope of these activities is remarkably broad. FINRA firms are handling private placements in crypto assets, operating trading platforms, and providing custody services for digital assets. However, the SRO also highlighted a significant jurisdictional gray area: much of this involvement is indirect, with crypto activity being carried out by affiliates or parent companies rather than the FINRA-member brokerage firms themselves. This distinction matters enormously because FINRA’s jurisdiction extends only to its member firms and their associated persons — not to affiliates, parent companies, or unaffiliated third parties.
Compliance Gaps and Market Abuse Red Flags
FINRA’s review did not just quantify the industry’s involvement — it also uncovered troubling compliance gaps. The regulator identified member firms that have “encountered challenges” with various FINRA rules, including potential violations of supervisory rules, such as due diligence failures, and marketing rules, where firms misrepresented the availability of investor protections for crypto assets.
More seriously, FINRA disclosed that it has identified situations where individuals are seeking to exploit investor interest in crypto assets and blockchain technology to perpetrate pump-and-dump schemes and other forms of market abuse in equity markets. The SRO has already taken disciplinary action for violations of anti-money laundering rules, outside business activity requirements, trading rules, and record-keeping regulations.
The survey that informed these findings covered 600 firms, making it one of the most comprehensive assessments of the traditional financial industry’s exposure to crypto. Greg Ruppert, executive vice president and head of member supervision at FINRA, emphasized that the organization is focused on understanding “where and how our firms may be engaging in crypto-related activities” as it adapts its regulatory approach.
Bybit’s Forced Exit from France
While FINRA was documenting the growing entanglement between traditional finance and crypto, across the Atlantic, the regulatory environment was tightening in a very different way. On August 13, 2024, Bybit completed its withdrawal from the French market, auto-liquidating all remaining open positions held by French users across all products, including derivatives and spot trading. From that date forward, French users were restricted to withdrawing their funds only — no new trades, no new positions, no card services.
The exit was not voluntary. The Autorité des Marchés Financiers (AMF), France’s financial regulator, had issued a warning against Bybit, placing the exchange on a list of unauthorized crypto platforms. The move is part of a broader European regulatory crackdown under the MiCA framework, which came into effect in June 2024 and is progressively tightening requirements for crypto service providers operating within the European Union.
For Bybit, one of the world’s largest crypto exchanges by trading volume, the French exit represents a significant strategic setback in one of Europe’s most important markets. The exchange had already restricted French users to close-only mode on August 2, giving them less than two weeks to wind down their positions before the August 13 deadline.
Cooling Inflation Adds Macro Context
The regulatory developments coincided with significant macroeconomic data that could influence the broader crypto market. The U.S. Producer Price Index (PPI) for July 2024 came in at 2.2%, below the expected 2.3% and marking the lowest level since March 2024. Core PPI also fell to 2.4%, well below the 2.7% expectation. The cooling inflation data strengthened market expectations of a Federal Reserve rate cut in September, a development that traditionally benefits risk assets including cryptocurrencies.
However, market participants remained cautious, noting that the Consumer Price Index data scheduled for release on August 14 would provide a clearer picture. Wall Street consensus expected a 2.9% rise, but there was a significant 37% probability of a higher reading. Bitcoin was trading near the $60,600 mark on August 13, reflecting the uncertainty.
Why This Matters
The events of August 13 illustrate the dual trajectory of crypto regulation in 2024. In the United States, the challenge is bringing existing oversight frameworks to bear on a rapidly growing and increasingly complex ecosystem of traditional finance firms engaging with digital assets. FINRA’s revelation that 390 firms are involved — with many operating in jurisdictional gray zones — suggests that the current regulatory infrastructure may be struggling to keep pace with market evolution. In Europe, MiCA is producing more concrete and immediate consequences, forcing major exchanges like Bybit to exit entire markets. For investors and market participants, the message is clear: regulatory compliance is no longer optional, and the costs of non-compliance are escalating rapidly on both sides of the Atlantic.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Cryptocurrency investments carry significant risk, and readers should conduct their own research before making any investment decisions. The mention of specific regulatory actions does not imply endorsement or criticism of any entity.