Six US Market Regulation Predictions for 2018


(4). SEC to seek fiduciary standard for broker-dealers

The conventional wisdom is that Trump appointees will remove, rather than add, new regulatory requirements, but there are a few critical areas that belie this expectation. For example, Jay Clayton, chairman of the Securities and Exchange Commission, has expressed a strong commitment to tackle the fiduciary standard for brokers in 2018. The Department of Labor recently delayed until mid-2019 the implementation of key provisions of its fiduciary rule that applies to transactions with retirement account clients. The delay provides breathing room for coordination on a consistent approach by the two agencies. Look for possible complications, however, due to the arrival of two new commissioners at the SEC this year, each of whom may have very different views of the necessity and impact of moving from a suitability to a fiduciary standard for brokers.

(5). More enforcement actions related to virtual currencies

We expect the explosion of public interest in the trading of virtual currencies and virtual-currency-related products to continue. US regulators spent much of the second half of 2017 actively focused on these products and the regulatory issues they raised. The SEC, CFTC and state regulators all warned the public of the potential risks of trading in these products. While agencies brought enforcement actions in instances of clear fraud or manipulation, for the most part their efforts have been focused on clarifying the scope of their authority and the application of their regulations to these activities. We believe this approach is likely to shift very quickly and sharply as the regulators pivot to an enforcement mode. Market participants, particularly those involved in offering or selling unregistered securities or who deal in these products without the necessary licences, will be much more likely to face enforcement action than in the past.

The Economist, Bitcoin is no longer the only game in crypto-currency town (Jan. 13, 2018)

First on the list, after bitcoin, was Ethereum, whose coin, called ether, reached a market capitalisation of $137bn. Ethereum’s claim to fame is that it is also a platform for “smart contracts”-business rules encapsulated in software. Most ICO tokens, for instance, are issued by such contracts. Its success has attracted crypto-copycats: Cardano ($20bn) and NEO ($8bn), a Chinese version.

Ripple, too, is defying gravity. It is all the rage in crypto-crazy South Korea, which this week roiled crypto-markets with plans to ban trading on exchanges. Ripple sells software to move money between countries; more than 100 banks have signed up to its technology, based on a coin called XRP. Its market capitalisation jumped by more than 40,000% in 2017, reaching nearly $149bn on January 4th, before falling back to $78bn. That still makes Chris Larsen, a Ripple co-founder, one of the world’s richest people, at least on digital paper.