Regulations Roundup – June 2019

When it comes to finance, strict regulations are all part of the fun. Huge LOL. While they’re designed to govern complex industries like crypto and blockchain, the various rule changes can be difficult to keep up with. The thing is, if you don’t stay on the ball, huge fines and penalties can come into play. As a content marketing agency for the finance world, we make it our job to keep you informed of the latest advances. Here’s your Regulations Roundup for June 2019.

CySEC Proposes Three Tiers of Leverage for Retail Clients

We love a bit of CySEC in our monthly reports and this update is significant as we head into June. In contrast to regulators that have copied ESMA’s product intervention measures, CySEC is finding it’s own path. The Cyprus based regulator is proposing a risk-based approach on leverage. This means that different clients with various experience levels will be tiered and able to use different leverage. To access upper levels, traders need to have a gross annual income surpassing €40,000 or net liquid assets of at least €200,000. Different clients could use between 20:1 and 50:1 on major forex pairs and between 10:1 and 30:1 on major indices.

Top Takeaway: It’s too early to say how this will affect brokers but let’s keep an eye on this one. Brokers are still smarting from ESMA’s compulsory risk warning disclosure which highlights losses. Let’s hope this update doesn’t hurt as much.

FATF To Finalise International Regulation Standards

The crypto sector has long been difficult to regulate. But the Financial Action Task Force (FATF) is upping its game by finalising international standards for regulating crypto firms. It has been in the pipeline for some time but the new standards are expected to subject crypto exchanges, wallet providers and others with crypto involvement to the US ‘travel rule’ long followed by correspondent banks.

So, what does this mean exactly? Well, when the legislation is confirmed, exchanges will be required to collect and share information about where and to whom they are sending money. This goes beyond the Know Your Customer (KYC) rules as keeping and verifying user records alone is no longer enough. Instead, customer information must be passed between service providers when transferring funds.

Yes, there’s been backlash. This is because many crypto and blockchain enthusiasts believe the new international rules are destroying Satoshi Nakamoto’s decentralised dream. While the regulations aren’t legally binding, whole countries can be blacklisted if they do not comply.

Top Takeaway: June is a significant month for international crypto regulation. Those in the industry need to pay close attention to regulation guidelines. And it doesn’t appear there will be any delay. At Consensus 2019 in New York, Sigal Mandelker, the U.S. Treasury’s Under Secretary for Terrorism and Financial Intelligence said:

“During its presidency of the FATF, the United States has worked with other countries to clarify how all countries should regulate and supervise activities and providers in the digital currency space.” She added: “We anticipate that in June the FATF will adopt a final version of its Interpretative Note, along with updated guidance to further assist countries and industry with their obligations.”

Japanese Parliament Moves Crypto Regulations to Upper House

Crypto regulations are sweeping the globe, with the Japanese Parliament pushing ahead with new legislation. The lower house has moved crypto-related amendments to the House of Councillors. Initial laws were first approved in March 2019 but amendments will now be made to the Financial Instruments and Exchange Act and Payment Services Act which will be extended to include legislation of crypto margin trading. The idea is to strengthen governance over the crypto trading process.

Top Takeaway: When working in the crypto sector, staying abreast of the latest developments is a must, particularly if you work in or with exchanges and providers in heavily regulated countries. be sure to run content marketing past your compliance officer to avoid possible repercussions.

South Korean Regulators Discuss Crypto Future

The recent Bitcoin price surge which has climbed 140% this year has prompted South Korean regulators to discuss possible crypto regulations and control mechanisms. One of their main areas of focus is to prevent users from being caught up with scammers and fraudulent schemes. A total ban on cryptocurrencies had been discussed earlier in the year causing some investors located in South Korea to move their funds to other platforms.

The meeting of decision makers was led by the Minister of the Office for Government Policy Coordination, Noh Hyeong-ouk. Other attendees included the Ministry of Economy and Finance, the Justice Ministry and the Financial Services Commission (FSC).

Recent regulation news is not the first time South Korea has tightened their crypto reigns. The country imposed stricter regulations during the 2017 Bitcoin price hike. This included the total ban of Initial Coin Offerings (ICOs). They also tightened Know Your Customer (KYC) and Anti Money Laundering (AML) policies. This time, regulators want to reduce the impact of a market crash on investors.

Top Takeaway: South Koreans are very active in the crypto market. Regulation changes could cause a shift in investor attitude so again staying on top of the news is the best way to understand potential future trends.

If you enjoyed this Regulations Roundup – June 2019 update, share it with your friends and colleagues. Contact the Contentworks team for financial services content that works.

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