Regulations Round-Up – November 2021

October was a good month for the financial markets. American stocks and cryptocurrencies surged to record highs. Energy prices like crude oil and natural gas also recorded strong gains. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in October, and now we’re looking at what’s coming up in November 2021.

SEC approves Bitcoin ETF

The biggest regulatory event in October was that the Securities and Exchange Commission (SEC) decided to allow the first Bitcoin ETF in the United States. The ProShares Bitcoin ETF, commonly known as BITO, was built using Bitcoin Futures. This means that the fund does not hold Bitcoin itself. Instead, it holds CME Bitcoin futures. The fund attracted inflows worth more than $1 billion.

At the same time, some companies like Grayscale announced that they would seek authorization for their Bitcoin ETF. If approved, these ETFs will track the spot prices of Bitcoin since they will hold real Bitcoins. The SEC also ruled that it will not approve a leveraged Bitcoin ETF

SEC battle with Terraform Labs

Another key development was at Terraform Labs, the parent company of Terra. The Singapore-based company announced that it had received a subpoena by the Securities and Exchange Commission. Its founder was also given the subpoena as he was heading to a conference. Terraform countersued the SEC.

The main issue is that Terra also operates the Mirror Protocol, a platform that gives investors access to synthetic assets like stocks and commodities. The SEC argues that the company is offering regulated products without any authorisation. Terraform becomes the next major blockchain platform to be targeted by the SEC after Ripple Labs.

The SEC weighs in on ESG

The SEC is closely looking into how advisors and brokers advertise and market ESG investing. The regulatory watchdog plans to set up regular exams and policies that will maintain the standards and safety of investors who invest in Environment, Social, and Governance related investments. This comes at a time when 82% of professional investors worldwide plan to increase their allocation of socially responsible investments. Tighter regulations would mean that these investors would be protected and brokers will have to run a tight ship.

Nigeria central bank digital currency

The world of Central Bank Digital Currencies (CBDCs) gained steam in October after Nigeria’s central bank launched its digital naira. The goal of the currency is to boost the government’s tax collections, reduce transaction costs, and boost participation in the financial system. The announcement came a few months after the central bank announced that it would outlaw banks and other financial companies from dealing with cryptocurrencies. Read more about crypto trading in Africa here.

Coinbase recommends a blockchain regulator

Coinbase has been at loggerheads with regulators in the past. In September, the company was forced to do away with a yield product that it was planning to launch. As part of its remedy for the situation, the company asked Congress to block the SEC from overseeing the crypto industry. In its place, the company recommended that a separate regulator should be appointed to come up with holistic rules to govern the different sectors of the industry like stablecoins and DeFi. The report said:

“To avoid fragmented and inconsistent regulatory oversight of these unique and concurrent innovations, responsibility over digital asset markets should be assigned to a single federal regulator.”

If you enjoyed our Regulations Roundup October 2021, 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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