Compliance innovation moves fast, but the news moves faster. To keep you and your team up to speed on the latest happenings and goings-on in the compliance world, we’ve aggregated the top five articles from the past few weeks to provide you with an in-depth look at the regulatory ecosystem.
Stay up-to-date and in the know on everything happening in the compliance world as of December 8, 2023.
COMPLY, ZenLedger Launch Digital Asset Trade Monitoring – Cindy Taylor
COMPLY has partnered with blockchain data and tax solution provider ZenLedger to launch a digital asset trade monitoring solution. Representing the first fully digital compliance solution for the cryptocurrency market, the solution offers real-time insights into employees’ cryptocurrency holdings and transactions, automating blockchain and exchange monitoring. This addresses compliance challenges amid increased regulatory focus on the cryptocurrency space by the SEC and the IRS. COMPLY’s Chief Product Officer, David Bliss, highlights the need for technology-backed solutions as cryptocurrency popularity grows and regulatory pressures intensify, aiming to provide a streamlined enterprise compliance solution.
SEC office calls for halt to mandatory arbitration for advisor disputes – Author Dan Shaw
The SEC’s Office of the Investor Advocate suggests a temporary halt to mandatory arbitration clauses used by advisers, citing potential violations of fiduciary duty. The report recommends further study on the benefits and drawbacks of these clauses. Arbitration contracts, common in the financial industry, sometimes limit claims, damages, and participation in class-action suits. While SEC estimates suggest that around 6 out of 10 advisers use mandatory arbitration clauses, critics argue they may favor industry interests. The report calls for a pause until a comprehensive study is conducted. The SEC has authority under the Investment Adviser Act of 1940 to place limits on arbitration proceedings.
US bitcoin ETF issuer talks with SEC have advanced to key details – Author Suzanne McGee and Hannah Lang
Discussions between the SEC and asset managers seeking to list Bitcoin exchange-traded funds (ETFs) have progressed to key technical details, suggesting potential approval. Thirteen firms, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, have pending ETF applications. The SEC, historically rejecting such products over investor protection concerns, is now engaging with issuers on critical aspects like custody arrangements, creation and redemption mechanisms, and risk disclosures. The shift follows a court ruling that the SEC was wrong to reject Grayscale’s ETF application, potentially paving the way for a regulated Bitcoin ETF and increased investor access.
Firms struggle to monitor staffers even after WhatsApp probes – Author William Shaw
A report from Global Relay indicates that Wall Street is struggling to monitor various communication channels among bankers despite over $2 billion in penalties related to unauthorized messaging services. The data shows that two-thirds of financial firms are not capturing LinkedIn communications, and only 3% can monitor employees’ use of Zoom. The report suggests that LinkedIn may become a focus for regulators due to its prevalence and trust. Compliance teams need to rethink their approach to communication monitoring, especially with the challenges posed by remote work during the pandemic. Last year, regulators settled with banks over failures in monitoring employee communications, resulting in over $2 billion in penalties.
FINRA warns its crypto custody list is mandatory – Author Dan Shaw
As the cryptocurrency market holds approximately $1.42 trillion in investments globally, FINRA emphasizes the need for US broker-dealers to inform regulators of their involvement in digital assets. FINRA’s Crypto Assets page outlines the need for firms to notify regulators before entering the digital asset business.
“A FINRA spokesperson confirmed earlier this week that 26 companies have so far obtained approval for everything from becoming a special purpose broker-dealer allowed to custody clients’ crypto holdings to being able to run an alternative trading system for digital assets.”
The industry anticipates increased regulatory clarity as digital assets continue to evolve.
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