How hot is the NFT craze? It’s so hot that even Finra is trying to wrap its head around it.
The Financial Industry Regulatory Authority — the non-government group that licenses broker dealers and accordingly polices it for infractions — is “taking a deep dive to understand NFTs and the implication for the regulation of broker dealers,” according to a source close to the group.
That includes “educating examiners what to look for from an examination standpoint,” according to the source, who notes that Finra is expediting things because so many retail investors have gotten into so-called non-fungible tokens in the span of a few months.
On Wednesday, Gamestop became the latest to jump on the bandwagon with a cryptic announcement that it’s “building a team” for an NFT project. After an NFT from artist “Beeple” scored $69 million in March, a slew of NFTs have sold for eye-popping prices, including Twitter co-founder Jack Dorsey’s first tweet, which went for $3 million later that month.
As it grapples with all of this, Finra may face an uphill climb. A source who has worked closely with Finra on cryptocurrency recalls meetings that turned into Q&A sessions where regulators asked rudimentary questions like “What is bitcoin mining?” and “What is a crypto exchange?”
If and when Finra does start policing NFTs, don’t expect anything too draconian. “They’re never going to be the toughest cop on the beat since they’re made up of industry people,” a former regulator adds.
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