Category:Finance & Banking
The Collapse Of FTX and The Future Of Crypto
New investment vehicles and opportunities have flooded the financial services industry over the past few decades, but arguably none have grown in popularity at a rate comparable to cryptocurrency. A cryptocurrency is a digital or virtual currency typically based on a decentralized network that utilizes blockchain technology. In other words, this decentralized feature allows a network of users to verify and record transactions without relying on any central authority, which permits the cryptocurrency to exist without government interference.
Coinbase Global Inc. Settlement Raises More Questions for Financial Regulators
On January 4th, 2023, the New York State Department of Financial Services made public that a $100 million settlement with the cryptocurrency exchange Coinbase Global Inc. (Coinbase) has been agreed to. The settlement follows an enforcement action imposed this past August aiming to regulate cryptocurrencies. With a lot of discussion happening given the recent collapse of FTX and anti-money laundering violations by Robinhood Markets, this action begs the question: should the digital currency industry be regulated nationwide and, if so, what should these regulatory agendas look like?
What Does The “ENABLERS Act” Mean for Attorney Regulation?
The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Department of Treasury committed to safeguarding the financial system by detecting and preventing money laundering, the financing of terrorism, and other illicit activity since the 1970s. The Bank Secrecy Act (BSA) expanded the definition of “financial institution.” The ENABLERS Act (Act) is the latest proposed amendment that seeks to expand the provisions of the BSA to several different professions, such as lawyers, trust companies, investment advisors, accountants, public relations firms, and art dealers, amongst others. Should this amendment pass, it will be the most significant money laundering reform yet. It will expand its reach by requiring these financial service providers to adopt anti-money laundering safeguards to close the loophole in the U.S. anti-money laundering system. The safeguard will require these professionals to help prevent and report cases of money laundering by implementing due diligence rules in their practice to ensure that the money entering the system is not “dirty.” This is currently not required of lawyers or any of these other professions.
Financial Institutions and the Financing of Emissions: How Firms are Addressing the Climate Emergency Through Net Zero Emission Initiatives.
Megan Aldworth Associate Editor Loyola University Chicago School of Law, JD 2023 While our world economy is driven by commerce, over the last few decades, it has become apparent that along with driving the economy, commerce is driving our planet into a state of emergency. According to the UN Secretary-General, “the climate emergency is …
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Congress Trades on Trust
When Nancy Pelosi releases financial disclosures related to stock trades, those disclosures are filed with the Clerk of the House of Representatives. The Clerk publishes all financial disclosures on clerk.house.gov under the “disclosures” tab. Shortly thereafter, Pelosi’s stock trading disclosures are re-published on TikTok and Reddit where Zoomers and Millennials are copying all of her trades. According to a Pelosi spokesperson, she does not “personally own any stocks and that the transactions are made by her husband”. The Stock Act requires Pelosi to disclose these transactions within 45 days due to the fact that they are made by a member of her immediate family.
No Payday for the CFPB: A Recent 5th Circuit Decision Jeopardizes the CFPB and its Funding
A decision filed October 19, 2022 by the Fifth Circuit Court of Appeals has vacated a payday lending rule put in place by the Consumer Financial Protection Bureau (CFPB). The rule was put in place to prevent predatory lending practices and unfair practices in their collection. The court decision was not based on the rule being unconstitutional but rather based in how the bureau is funded. The decision has overreaching implications on the future enforcement of CFPB rules.
The Committee on Foreign Investment Publishes Its First Ever Guidelines
On October 20, 2022, the panel that reviews foreign investment in the United States for national security concerns published its first ever enforcement guidelines. The Committee on Foreign Investment (CFIUS) in the United States, has never had written guidelines on this topic. While this is the first guidance issued by CFIUS, the guidelines reflect the increased focus on monitoring and enforcement which has been evident since the passage of the Foreign Investment Risk Review Modernization Act of 2018. This continues the trend toward more enforcement relating to foreign investments and more concern surrounding compliance with terms of agreements meant to mitigate national security risks.
The OFAC Continues to Enforce Strict Sanctions on Cryptocurrency Mixers
Recently the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) added Tornado Cash to its Specially Designated National List. As part of enforcement efforts, the list contains individuals and companies that have been owned or transacted with targeted countries or organizations that may prove to be a threat to the United States. This action gives rise to questions regarding “secondary” sanctions/designated risk, and the effect this policy has on smart contracts and other protocols.
Single-Stock ETFs: The Debate Over Suitability
While Exchange-Traded Funds (ETFs) were introduced in the early 1990’s, the investment product skyrocketed in popularity throughout the 2000’s. In fact, only one ETF existed in 1993 before the market subsequently expanded to 102 funds in 2002, and then to 1,000 funds by 2009. There currently exists more than 7,602 ETFs globally, and their popularity among investors has prompted the creation of numerous other Exchange-Traded Products (ETPs). While ETFs are the most prominent form of ETPs, fund issuers have introduced a myriad of products that vary in terms of volatility, complexity, and investor suitability. Hence, regulators and financial professionals have continued to warn the investing public of the risks involved with purchasing complex ETPs, such as single-stock ETFs, without sufficiently understanding how the products operate.
The SEC’s Regulation Best Interest: Purposes, Components, and Criticisms
In 2019, the U.S. Securities and Exchange Commission (SEC) adopted Regulation Best Interest (“Reg BI”). Reg BI is a standard of conduct that applies to broker-dealers (a firm in the business of selling securities) and persons associated with broker-dealers when making a recommendation of a certain investment strategy or securities transaction to a retail customer. The SEC gave broker-dealers a time window to implement this new law into firm policies and procedures, and while no regulatory action happened in the first few years of its enactment, the SEC brought its first action in June of this year and FINRA brought its first in October of this year. This makes it especially important for broker-dealer firms to ensure they are presently in compliance with the standards set forth in Reg BI.