Regulations Round-Up – January 2023

The financial market ended 2022 in a sombre mood as stocks, bonds, and cryptocurrencies continued their sell-off. In total, stocks plunged by more than 20% in 2021 while cryptocurrencies plunged over 50%. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in December, and now we’re looking at what’s coming up in January 2023.


The Securities and Exchange Commission (SEC) concluded its review of how the stock market works. The commission has been considering how to make the stock market better for investors since the meme stock phenomena in 2022. In a statement, the agency voted to cut the middle-men known as market-makers from order execution.

They aim to replace a situation known as Payment for Order Flow (PFoF), where these marketmakers are given authority to execute these orders. As such, the proposed auction model will change the relationship between brokerages, high-speed traders that handle these orders, and the stock exchanges like NYSE and Nasdaq.

As expected, marketmakers, who make billions in these order executions opposed the new measures and warned that they will backfire. For one, they warned that the market faced no emergency that demanded revamping of these rules.

SEC called to boost crypto regulations

The collapse of FTX and Alameda Research had a significant impact on the crypto industry. In December, regulators filed a civil suit against Sam Bankman-Fried and his lieutenants. At the same time, Washington continued putting pressure on the SEC and other regulators to tighten the screws of the industry. They have accused the SEC of failing to sue a major exchange in the past few years.

The SEC has argued that rules for regulating cryptocurrencies already exist. For example, the agency has warned that most cryptocurrencies offered by exchanges like Coinbase and Binance were securities. In this regard, the SEC has sued Ripple Labs and its executives for selling unregistered securities.

Wall Street asks to ease capital requirements

Wall Street lawyers and lobbyists continued to pressure Washington policymakers to ease capital requirements that were put in place after the Global Financial Crisis. They believe that easing of liquidity rules could unlock over $24 trillion of liquidity in the financial market.

US government bonds are viewed as the safest in the world because of how easy it is for people to buy and sell them. This liquidity deteriorated in the past few years as banks moved from their market-making roles. As such, banks argue that reducing their capital requirements by exempting treasuries and cash reserves from supplementary leverage ratios will help them participate in the market.

FCA warns of crypto and money laundering

Most regulators have warned about the risks involved in the cryptocurrency market. In a statement, Ashley Alder, the incoming chair of the Financial Conduct Authority, warned that crypto platforms were deliberately evasive, facilitated money laundering, and created massive untoward risk.

Therefore, these comments mean that the UK will change its strategy on cryptocurrencies during his tenure. In the past few years, the government has attempted to be a friendly place for cryptocurrency companies in a bid to attract them. Still, the FCA faces a challenge of staffing and significant workload.

Bank of England warns on deregulation

Rishi Sunak, the UK prime minister, has hinted that he will be supportive of more deregulation of the financial sector. He argues that this deregulation will help the UK attract more companies to the city of London after Brexit.

In a statement, Andrew Bailey, the head of the Bank of England, warned that too much deregulation will expose the financial market to substantial risks. His statement came a few weeks after the Bank of England said that it will carry out the first non-bank financial stress tests.

FCA warns on CFD misseling

The Financial Conduct Authority warned that it will intensify its crackdown on companies offering forex and CFD products. In a letter, the regulator raised concerns that a significant minority of CFD brokers were undertaking pressure selling and charging inappropriate fees to their customers. Others were refusing to process withdrawals in a statement, the FCA director of markets said:

CFD providers authorised in our regime must sell products appropriately. When the new consumer duty comes into effect, [providers] will need to ensure that products deliver good outcomes for retail consumers.

The FCA maintains that over 80% of all CFD traders lose money. As a result, it has been increasing its pressure on the industry in the past few years. It limited the maximum leverage exchanges can offer to 30:1.

Turkish central bank liraization strategy

The Turkish central bank announced that it will implement new strict regulations as part of its liraization strategy that will take effect in January. In a statement, the bank said that the new strategy will include banks and other non-banking entities. The new strategy will be aimed at ensuring a balanced course in foreign currency funding items as the Turkish lira remains at a historic low against the US dollar.

Finance influencer marketing crackdown

Global financial regulators have been battling the rise of online marketing in the crypto industry. A key issue is on influencer marketing. A few months ago, Kim Kardashian was forced to pay a huge fine for promoting a cryptocurrency. And in December, the SEC fined a group of influencers $100 million for manipulating the market manipulation on Twitter and Discord. In a statement, the chief of enforcement said:

The defendants used social media to amass a large following of novice investors and then took advantage of their followers by repeatedly feeding them a steady diet of misinformation, which resulted in fraudulent profits of approximately $100 million.

If you enjoyed our Regulations Roundup January 2023, be sure to hit the share button. Love this type of content and want it for your FX broker or crypto exchange? We hear you. Contact the Contentworks team for financial services content.

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