January was a difficult month for key assets like stocks and cryptocurrencies. In the United States, the S&P 500 and Nasdaq moved into bear territory as worries of a hawkish Fed remained. At the same time, cryptocurrencies erased more than a trillion in value as bitcoin crashed below $40,000. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in January, and now we’re looking at what’s coming up in February 2022.
Bank of Russia on cryptocurrencies
One of the biggest regulatory stories in January came from the Bank of Russia. After months of assessment, the central bank published a report in which it asked the government to ban all cryptocurrencies and mining operations. It argued that Bitcoin mining will help to curtail Russia’s ambitions on climate change. It also argued that cryptocurrencies were making it easy for people to engage with cybercrime. Most importantly, it warned that the coins were making it difficult to handle monetary policy.
These concerns mirrored those expressed by the Federal Security Service (FSB), which has also called for a total ban of cryptocurrencies. However, it is still unclear whether the Russian government will implement these recommendations as the country has benefited from the industry.
Federal Reserve on CBDCs
Another major regulatory event that happened in January was that the Federal Reserve published a highly-waited report on Central Bank Digital Currencies (CBDCs). The bank highlighted the benefits and cons of CBDCs to the American economy.
For example, it argued that a digital dollar will lower the cost of transactions for both individuals and companies. Also, the currency will lead to faster remittances. Still, it expressed concerns about privacy. The Fed then announced that it was seeking public opinion about these currencies. Other central banks like the Riksbank and the People’s Bank of China (PBOC) are already testing their CBDC product.
Turkish forex regulations
The Turkish lira has been relatively volatile in the past few months because of the central bank’s policy to cut interest rates at a time of rising inflation. As a result, the lira has dropped by more than 50% in the past few months. In January, the Turkish government introduced new regulations aimed at stabilizing the currency. For example, the government pledged to compensate individual holders of the lira depending on its performance.
The government also introduced measures to incentivize foreigners to convert their holdings into lira. For example, banks will need to convert at least 10% of all customer dollar and euro deposits to lira by April.
SEC focuses on hedge funds and private equity
The SEC announced that it will tighten rules in the hedge fund and private equity industry. The regulator voted 3 to 1 to require more disclosure from these companies. The goal, according to Gary Gensler, is to help regulators to better spot risks building the private markets. For example, these firms will need to report within one day of incidences such as extraordinary investment losses. At the same time, the regulator voted to expand oversight of some trading platforms that match buyers and sellers of US Treasury securities.
Another key regulatory change from the US dealt with money market funds. The SEC issued a 325-page document that sought to tighten laws that govern prime funds offered by companies like Federated Hermes and Fidelity. The rules are designed to prevent panic sales and protect customer deposits in a highly volatile environment.
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