Prosek’s Financial Regulation Roundup: December 29, 2017

Eamon Levesque  Follow

Here are the top stories on the financial regulatory landscape in the U.S., EU and around the world over the past two weeks.

U.S. News:

Bitcoin’s explosive month prompts regulation concerns

  • As Bitcoin looks to close out the year with 1,376% gains, despite massive volatility in the last month, the question of how to regulate it and other cryptocurrencies seems even more timely. One U.S. regulatory body, the Commodity Futures Trading Commission (CFTC), has proposed regulation requiring proof of physical control of cryptocurrency assets traded on a commodities exchange within 28 days of a transaction. (Fortune: read more)

New York proposes limited state-level fiduciary rule

  • As the fiduciary rule’s rollout at the federal level seems to be delayed, perhaps permanently, the top New York state financial regulator has proposed a scaled-back version of the rule throughout the state. New York’s version would require issuers of annuities and life insurance policies to act only in the best interest of their clients. The proposed rules are subject to a 60-day comment period before being enacted. (Financial Advisor: read more) The Wall Street Journal this morning ran a round-up of what developments to expect in 2018 on the nation-wide fiduciary rule rollout. (The Wall Street Journal: read more)

E.U. News:

FCA rejects call for help from cryptocurrency issuers

  • The Financial Conduct Authority (FCA) has turned down several applications from initial coin offering (ICO) issuers trying to work with its Project Innovate team. In recent months, the FCA has issued several warnings about cryptocurrencies and ICOs because they are high-risk, speculative investments. It is understood the regulator has received applications from companies offering these investments that want help in launching their services, but they have been turned down because they do not meet the FCA's consumer benefit condition. (FT Adviser: read more)

EU regulators grant more last-minute relief on Mifid II

  • European regulators have delayed more of their flagship MIFID II legislation, less than two weeks before its arrival heralds sweeping reform of the region’s markets. The European Securities and Markets Authority (ESMA) on Wednesday granted an extra six months to allow compliance with new rules that force all institutions, as well as companies issuing securities, to have individual reference numbers for trading. The code, known as a Legal Entity Identifier (LEI), is a crucial part of policymakers’ efforts to track market abuse and monitor trading as part of MiFID II, which comes into effect on January 3. Policymakers have called it the biggest shake-up of European markets in a decade. (Financial Times: read more)

International:

China moves to retain profits, but ease market access

  • Seemingly in response to the recent overhaul of the US tax code, the Chinese government has created a temporary exemption for taxes on the earnings of foreign companies. Aiming to prevent profits made by foreign companies from returning home (namely, to the U.S.), the exception is however limited to a number of specific sectors promoted by the Chinese government, such as railways, tech and mining. (New York Times: read more) Additionally, China has decreased regulation on foreign financial institutions, pledging greater market access for foreign commercial banks wishing to operate in mainland China. (Financial Times: read more)

Crypto boom prompts worries in South Korea

  • While cryptocurrencies in the United States have found a decently captive audience, the new form of investing has spread much more rapidly among youth in South Korea. University students especially have taken to day-trading a number of digital currencies in record numbers, prompting some to believe that a bubble bursting could disproportionately impact a demographic less able to afford a loss of assets. (Reuters: read more)

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