The cryptocurrency industry rebounded in August as demand for digital coins rose. The price of Bitcoin jumped by more than $20,000 to above $50,000 while the total market capitalization of all cryptocurrencies jumped back to more than $2 trillion. Similarly, US stocks rallied, with the Dow Jones, Nasdaq 100, and S&P 500 indices soaring to an all-time high. As an agency specialising in financial marketing, our team has rounded up the top regulation changes in August, and now we’re looking at what’s coming up in September 2021.
Want to read more about September? Read our September Checklist for Brokers at Finance Magnates.
China technology regulations
Chinese regulators were busy in August as they continued targeting the technology and education sectors. In August, the Xi Jinping administration said that it will continue enforcing strict regulations as it deals with the recent growth of tech companies like Alibaba, DiDi, and Tencent.
Some of the regulations target companies like Meituan, which is a food delivery company in China. In a statement, the regulators asked these firms to start recognising their riders as employees. Another regulator targeted gaming companies like Tencent. In particular, the regulator asked the company to limit their games from people of a certain age.
Other technology companies like Alibaba, Ant Financial, Bytedance and JD.com were also asked to share data with each other and avoid activities that hurt competition. In total, the outcome of these regulatory scrutinies was that these firms’ share prices collapsed by more than 20% in August.
CySEC’s latest updates
On June 16, 2021, CySEC published a draft law, the Proposed IFA Law, which introduces regulation of investment fund administrators and providers of similar services. The aim of this new proposed law is investor protection and maintaining market integrity. Cyprus-based fund administrators are also regulated under the Administrative Service Providers Law of 2012.
However, a need was felt for bespoke regulation regarding the operations of such administrators. CySec has also issued a directive regarding the registration and operating conditions of cryptocurrency-related services providers. Included in these guidelines is a series of procedures that will need to be followed to comply with the recently enforced AMLD5 by the EU to combat money laundering and terror financing. The fee for registration of such service providers has been set at €10,000, with a renewal fee of €5,000.
Following widespread lockdowns and a move to remote work in 2020, the UK FCA was quick to set out regulations pertaining to anti-fraud, market abuse, conduct and data privacy. The regulatory body highlighted the need for financial services providers to ensure information security and “operational resilience.” The FCA suggested that financial services providers should use “enhanced monitoring,” especially for the prevention of market abuse. With remote work still a reality in 2021, the UK’s regulatory watchdog published further guidelines, stressing on ensuring that “the right controls… are in place” to curb insider trading and other misconduct.
More recently, in July 2021, the FCA has proposed changes to the transparency and disclosure rules related to diversity in the boards and executive management teams of listed companies. The definition of diversity has been broadened and might include considerations such as sexual orientation, socio-economic background and disability, apart from ethnicity.
SEC and Bitcoin ETFs
In the past few years, many investors have been craving a cheap way to trade Bitcoin and other cryptocurrencies. Exchange-Traded Funds (ETFs) are known for being some of the cheapest investment options around. As a result, many investment companies have been working to have their Bitcoin ETFs accepted by the Securities and Exchange Commission (SEC).
In August, SEC’s Gary Gensler signalled that the SEC would accept Bitcoin ETFs only if they complied with strict rules for mutual funds. In a speech, he signalled that the ETF will need to be tied to Bitcoin futures, which are offered by CME. This statement was in contrast to the policies of the previous SEC Chair, Jay Clayton.
An ETF will be a cheaper and safer way to invest in Bitcoin. One of the only major options available today is the use of Grayscale Bitcoin Trust, which is usually relatively expensive.
FCA and Monzo
Monzo is one of the biggest neobanks in the world. The London-headquartered company has raised more than $648 million from investors at a valuation of more than 2 billion pounds. The bank allows customers to deposit their funds and spend it both online and in stores.
In August, the Financial Conduct Authority (FCA) said that it was investigating the bank over potential anti-money laundering lapses. In a previous statement, the regulator said that it had found some “several common weaknesses in key areas of firm’s financial crime systems.” The investigation came a few months after the FCA brought charges against NatWest, the bank formerly known as the Royal Bank of Scotland.
Japan FSA crypto rules
In Japan, the Financial Services Agency (FSA) said that it would take additional steps to strengthens regulations about cryptocurrencies. The regulator has already started negotiations and deliberations about the new cryptocurrency laws that are set to be launched in 2022. The goal will be to bring stability to the industry and protect customers. In the past few years, Japan has emerged as a progressive country when it comes to cryptocurrencies. In August, Coinbase even opened a new cryptocurrency exchange in Japan.
Binance is the biggest cryptocurrency exchange in the world. In terms of daily volume, the exchange is significantly bigger than Coinbase, Huobi, and FTX combined. Still, in the past few months, more regulators like in the US, Japan Malaysia, and the UK have warned against the company. In a statement in August, the Netherlands’ central bank warned about the company. It said that it was not in compliance with the country’s anti-money laundering and anti-terror financing act.
Basel III Regulations Shake Up the Gold Market
New banking rules known as Basel III came into effect over the summer. They mark a big change for European banks and the way they deal with gold. This will potentially alter the landscape for precious metal demand and prices. Allocated gold, in tangible form, will be classified as a zero-risk asset under the new rules, but unallocated or ‘paper’ gold, won’t. Under the new regime, physical, or allocated, gold, like bars and coins, will be reclassified from a tier 3 asset, the riskiest asset class, to a tier 1 zero-risk weight.
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