Regulations Round-Up – May 2021

The financial market continued firing in all cylinders in April, helped by low-interest rates and other easing policies. Cryptocurrencies too, soared to record highs as Coinbase Global became the first exchange to go public. The currencies then crashed by double digits as investors continued to worry about regulations. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in April, and now we’re looking at what’s coming up in May.

Turkey regulators craft rules

In April, the Central Bank of the Republic of Turkey (CBRT) released a memo saying that cryptocurrencies would be banned in the country. It argued that the use of these currencies would cause “irreparable damage and transaction risks.” This was part of the reason why most cryptocurrencies declined from their all-time highs. It was also partly blamed for the collapse of two major cryptocurrency exchanges in the country.

However, in another report, Governor Sahap Kavaciouglu said that the bank would not ban cryptocurrencies. Instead, he said that the bank and other regulators would tighten regulations to ensure that all exchanges comply with the law. He also said that the bank would clarify the legal definition of cryptocurrencies and how they are stored by financial institutions.

The announcement came as India continues planning for its cryptocurrency ban. According to the Indian Express, the regulations will provide an exit window to the existing cryptocurrency holders of private entities. The government is expected to ban the mining, trading and issuing of digital currencies.

In April, the deputy of the People’s Bank of China said that cryptocurrencies were alternative investments. This was viewed as being positive for cryptocurrencies since the country has put limits on the industry.

Bank of England explores CBDC

In the UK, the Financial Conduct Authority (FCA) had a relatively calm month. However, at the Bank of England (BOE)  the Treasury Department announced that they were considering launching a digital currency. The two formed a taskforce to coordinate the possibility of such a currency.

Many Central Banks are either actively exploring issuing the so-called Central Bank Digital Currency (CBDC). Some of the most active in the sector are the People’s Bank of China (PBOC), Riksbank, European Central Bank (ECB), and the Norges Bank. In the United States, the Federal Reserve is conducting research about these currencies.

ASIC focuses on trading forums

In Australia, ASIC intensified its battle against pump and dump schemes, especially using online forums following the recent Wall Street Bets frenzy. According to Reuters, the regulator has increased surveillance of popular retail trading internet chat rooms that have come up recently. It has also contacted several platforms. The senior officer on market supervision said:

“If we see concerning conduct that looks as though it was a clear ‘pump and dump’ that would result in a market manipulation case, there is appetite within ASIC to take those matters forward.”

Further, in April, ASIC said that it was banning binary options from being offered to Australians. This is after the regulator found that 80% of retail traders lost money trading binary options. The ban will take place from May 3 this year. It came after ASIC started to implement regulations similar to MIFID in Australia. Still, some brokers have found a way around the rules set by ASIC. They can continue accessing high-leverage products by becoming wholesale investors.

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