Regulations Round-Up – June 2021

The financial market was relatively volatile in May. In the United States, the rotation from growth stocks to value, accelerated after strong inflation and other key numbers. In currencies, the US dollar sell-off against developed and emerging market currencies accelerated. Commodity prices like iron ore, lumber, and copper jumped to all-time highs while cryptocurrencies crashed by double-digits from their highs. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in May, and now we’re looking at what’s coming up in June.

Chinese regulators warn on cryptocurrencies

The price of all cryptocurrencies dropped in May after Chinese regulators warned about the volatility of the coins. In a statement, the National Internet Finance Association, China Banking Association, and Payment and Clearing Association warned their members against dealing with digital assets.

The statement was posted by the People’s Bank of China (PBOC), the country’s Central Bank. The regulator also barred financial companies from offering cryptocurrency savings, trusts, and issuing crypto-related services. This was a major event considering that China has emerged as a leading player in the cryptocurrency industry. However, crypto enthusiasts were not surprised by the decision given the country’s harsh stance on internet freedoms.

Other countries could also move to add regulations in the sector. In the United States, Janet Yellen has asked regulators to curtail the sector and in Japan, BOJ’s Haruhiko Kuroda criticized the currencies for their volatility. In the European Union, Christine Lagarde has also warned about the currencies. Following the recent Colonial Pipeline hack, governments could be forced to take more measures to regulate the currencies.

ASIC civil proceeding against Westpac

In May, the Australian Securities and Investments Commission (ASIC) made headlines when it initiated an insider trading proceedings against Westpac, the second-biggest bank in the country. The allegations are about a A$12 billion interest rate swap transaction with a number of entities.

The transaction took place in 2016 and was associated with the privatization of Ausgrid by the New South Wales government. Westpac denies the allegations. The regulator alleges that the bank traded on these shares on the day the deal was announced. The lawsuit could lead to a multimillion-dollar fine.

Meanwhile, the regulator revealed that all companies providing debt management services will be required to hold a credit license that covers debt management services from July 1.

In May, the Australian Tax Office also asked cryptocurrency investors and traders to submit the correct tax details. In a statement, Tim Loh, of the agency said:

“[We] follow the money trail back to the taxpayer, and we do that through the ATO which has data matching profiles with cryptocurrency exchanges, and they provide that information to us, and we use that information to cross-match with people’s tax returns.”

Other countries are also doing more to collect taxes from traders. In May, Joe Biden’s administration said that it will require businesses to report to the IRS when they receive $10,000 in cryptocurrency.

ESMA consults on digital finance

In May, the European Securities and Markets Authority (ESMA) published a call for evidence on digital finance. The goal for the new submissions is to collect relevant information on issues like value chains, platforms, and groups that provide financial and non-financial services. Precisely, the agency sought information on fragmented value chains, digital platforms and bundling of financial services, and mixed economic groups providing financial and non-financial services.

SEC on crypto regulation

The Securities and Exchange Commission (SEC) is looking forward to work with Congress on a set of policies to regulate the cryptocurrency industry. In a statement, Gary Gensler, the new SEC head said that there were many gaps in the industry that needed to be filled. For example, he said that the Decentralized Finance (DeFi) industry was operating with few regulations. He also noted that many exchanges that provide trading platforms were yet to register as exchanges. This means that the industry could see a lot of regulations in the near future.

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