Regulations Roundup – July 2024

June was a busy month for global regulators as focus remained on elections in key countries like France, the UK, and the United States. These elections could lead to substantial changes in the regulatory environment. As an agency specialising in financial services marketing, our team has rounded up the biggest changes that happened last month and what’s coming up in July.

No Ethereum ETF Yet

The focus among most cryptocurrency investors was the potential approval of spot Ethereum ETFs by the Securities and Exchange Commission (SEC). Most analysts were expecting that the agency would approve these funds on July 4th. However, in a statement on June 28th, the agency returned S-1 filings by most issuers for amendments.

Still, the expectation is that the agency will approve these funds in the coming months. In a statement in June, Gary Gensler, the head of the SEC noted that these ETFs would be approved by September.

Ethereum ETFs will likely draw billions in inflows after being listed because of the coin’s popularity. It also has the most volume in the crypto industry after Bitcoin. However, ETF holders will miss out on the staking rewards that other holders generate. In another Ether-related story, Consensys, the parent company of MetaMask, said that the SEC had notified it that it was closing its investigation into whether Ether is a security.

FCA Listing Changes

In the UK, the Financial Conduct Authority (FCA) voted for the biggest listing changes in 40 years in a bid to make the country more attractive.

The voting results, which have not been made public, are meant to spur growth in the London Stock Exchange (LSE) which has been decimated in the past few years. There have been no major listing in a long time while UK companies like Arm Holdings have selected the US as their preferred venues. As part of the new listing rules, the FCA will combine premium and standard listing segments on the exchange. As a result, all main market companies will be put into one category.

However, some experts warn that easing listing rules would lower investor protection policies in the country.

Coinbase Files For Futures Listing

Meanwhile, in the United States, Coinbase announced that it had applied for futures for some of the biggest tokens with the Commodity Futures Trading Commission (CFTC). In a filing, the company filed for futures of tokens like Avalanche (AVAX), Shiba Inu, Stellar Lumens (XLM), and Polkadot. Already, crypto investors have access to other cryptocurrency futures products like Bitcoin and Ethereum.

Meanwhile, the CFTC launched an investigation into Jump Trading, one of the biggest market makers in the crypto industry.

The CFTC has also recently voted to propose a new regulation aimed at the event contracts such as trades tied to elections, sports, and award contests. Proponents for the ban argue that political-event contracts could pose challenges to election integrity. In a statement, Christy Goldsmith Romero, a member of the CFTC said:

The CFTC should not allow products in our markets with an unacceptable risk of unchecked abuse and manipulation that could threaten the sanctity of elections, thereby threatening democracy and national security.

ASIC Focuses On Provider Pathway Notifications

In Australia, the Australian Securities and Investments Commission (ASIC) announced that AFS licensees will be required to notify the agency when they receive a notification that an advisor is eligible for the experienced provider pathway. This is an important approach as it allows advisors to meet qualification stands without additional education. After the notification, the licensee will have 30 days to notify the agency after receiving the declarations. These declaration standards were introduced in September 2023.

Another ASIC-related move was that the agency tightened oversight on market intermediaries to strengthen their supervision of business communication. For example, the agency has introduced rules addressing concerns about the use of unmonitored and encrypted communication channels in business dealings.

The use of encrypted messaging platforms like Telegram and WhatsApp has been a source of concern among regulators in the past few years. In 2023, banks like Societe Generale, Wells Fargo, BNP Paribas, and Bank of Montreal were fined $549 million for these communications.

Meanwhile, ASIC announced that it would intensify its battle against greenwashing claims by companies. It will establish labels and disclosures for investment products marketed as “sustainable”, including in the giant superannuation industry.

Supreme Court Nukes Chevron Doctrine

One of the biggest regulatory stories in June came from the US Supreme Court, which nuked one of the most important rules in the industry. The court threw out the Chevron Doctrine that has existed for decades. In a statement, Chief Justice John Roberts said:

Chevron was a judicial invention that required judges to disregard their statutory duties and judges must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.

The new ruling will have major implications among regulators like the CFTC and the SEC, which have been criticized for regulatory overreach.

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