Regulations Round-Up – December 2022

The need for strict cryptocurrency regulations took center stage following the collapse of Alameda Research and FTX. Politicians and regulators in the United States and other countries insisted on guardrails to keep the industry safe. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in November, and now we’re looking at what’s coming up in December 2022.

UK banking rules

The new UK administration announced a set of banking changes as it seeks to improve the sector after Brexit. In a statement, Andrew Griffith, the City minister said that the government will remove the ringfencing rules in a bid to make the UK a more attractive place for bankers.

These rules were proposed after the 2008/9 Global Financial Crisis (GFC). They were then implemented in 2019. Like in the United States, they mandated banks to separate their retail and investment bank segments. Since then, bankers warned that the moves were inefficient as they meant that banks were supposed to have separate pots of cash to absorb risks.

British banks with vast retail and investment banking operations will maintain these rules. However, smaller banks like Virgin Money, Santander, and TSB will be exempt.

CySEC financial quiz

The Cyprus Securities and Exchange Commission (CySEC) announced plans to improve financial literacy in the country. The agency issued a quiz in which industry participants answered questions on investments and economic activities.

It prepared the quiz after participating in World Invest Week, an event that emphasised the need for financial literacy. According to CySEC, most people in Cyprus lacked information on the industry, which led to substantial losses in the market. At the same time, the agency warned about influencers, who are promoting investments on social media.

FCA proposed changes on investment advice

In the UK, the Financial Conduct Authority (FCA) proposed new changes to democratise investment in financial products. The goal of these rules is to make access to financial advice more affordable to most people as inflation soared.

In a statement, the agency said that its plans will enable individuals with straightforward needs to get advice from less-qualified experts. These individuals can often be cheaper than traditional investment advisors.

Another change is that the FCA wants the duration of fee payments to be spread over a long period. As a result, customers don’t need to pay the current 3% of funds per investment advice upfront. In a statement, the director of markets at FCA said:

“Now, more than ever, people across the UK should have access to useful and affordable financial products and services which can improve their quality of life and support the economy.”

HKSFC’s risk management for futures brokers

Hong Kong’s Securities and Futures Commission (SCF) focused on the growing industry of futures markets. In a statement, the regulator unveiled new proposals for risk management guidelines for licensed futures brokers.

The rules require that futures brokers add qualitative requirements for controlling and mitigating risks in futures dealing activities. They will need to set risk limits and conduct due diligence reviews of executing and clearing agents. The rules also proposed guidelines on margin calls in the futures market.

FCA warns on rogue promotions

In the UK, the FCA warned the public about fake financial promotions in the country. The agency said that it had intervened over 4,100 times to withdraw unscrupulous financial promotions. Most of them related with forex and contracts for difference (CFD) trading.

It warned the public to ensure that they did their due diligence before signing up to financial services company. In a statement, the agency’s Director of Enforcement and Market Oversight said:

“We’re doing even more to tackle false claims in adverts, issue prompt warnings to consumers, and we continue to engage with the largest tech and social media platforms as they also play an important part in protecting consumers from online harm.”

SEC crypto regulations

Following the collapse of FTX and Alameda Research, the SEC issued a statement warning about the risks in the industry. The agency, together with the Justice Department are investigating the company. Their concern is on whether FTX illegally took customer deposits and moved them to Alameda Research.

The SEC has made crypto enforcement a major priority. For example, it has increased the enforcement team to 50 members. It has also suggested exchanges like Coinbase and Kraken should obtain licenses since most coins and tokens are securities in its view. A SEC license comes with strict rules.

Meanwhile, the Commodities and Futures Commission (CFTC) argued that regulating cryptocurrencies should not be a one-agency solution. In a statement, Summer Mersinger, a commission of the agency said that they should collaborate with the SEC to ensure the safety of the industry. In a recent statement, a former CFTC commissioner suggested that the two agencies should set up a self-regulatory organization to oversee the industry.

Ireland bankers pay regulations

In Ireland, the government announced measures to loosen caps on bankers pay and bonuses. Like other governments, the Irish government unveiled strict banking rules after the 2008/9 financial crisis. Under these proposals, banks will be allowed to pay bonuses of up to 20,000 euros and other benefits like health insurance. These proposals are meant to make Ireland a great place for bankers.

Treasury Department warns on mixers

In the United States, the Treasury Department warned on money laundering risks paused by crypto mixers. Mixers are financial products that create anonymity in cryptocurrencies by making it harder for law enforcement agencies to have visibility of transfers. In a statement, Treasury’s assistant secretary for terrorism financing said:

“While these services often operate as money transmitters and thus have regulatory reporting obligations, they may deliberately operate in a non-compliant manner to make it more difficult for regulators and law enforcement to trace illicit funds.”

The statement came a few months after the department sanctioned Tornado Cash, a company in the mixer industry.

If you enjoyed our Regulations Roundup December 2022, be sure to hit the share button. Love this type of content and want it for your FX broker or crypto exchange? Contact the Contentworks team for financial services content.

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