SEC and FINRA Provide Guidance Regarding Cybersecurity, Artificial Intelligence, and Digital Assets

The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) made several regulatory announcements this summer relating to cybersecurity, artificial intelligence (AI), and digital assets. These announcements are detailed below and include a FINRA summary report on the uses of AI in the securities industry, a FINRA regulatory notice regarding its members' activities relating to digital assets, and a risk alert from the SEC's Office of Compliance Inspections and Examinations (OCIE) on increased cybersecurity threats. On June 10, 2020, FINRA issued a summary report regarding existing and emerging uses of AI by securities industry participants. For a more detailed discussion of FINRA's summary report, please see our previous update. On July 9, 2020, FINRA reissued a request that member firms continue to proactively engage with their FINRA risk monitoring analyst regarding any type of digital asset activity, current or planned, similar to requests made in 2018 and again in 2019.