Securities Clarity Act Introduced: Representatives Tom Emmer (R-MN) and Darren Soto (D-FL) introduced a bill that would reduce uncertainty for both crypto investors and issuers. According to Bain Capital Crypto’s Tuongvy Le and Khurram Dara, the bill would help settle much debated legal questions in the crypto space and “make it more difficult for the SEC to argue that many existing tokens are unregistered securities.”

Institutions Embrace Crypto: Traditional financial institutions, such as Nomura and Charles Schwab, are creating new digital asset infrastructure, despite last year’s crypto collapses and increased scrutiny of the space. Some industry participants believe that institutional and retail crypto trading will become separate markets. “It is going to be a two-tier structure with Binance being the face of retail,” said Gautam Chhugani, a senior analyst of global digital assets at Bernstein.

Nvidia Hits a Record: Nvidia briefly hit a $1 trillion market value on Tuesday, the first chip stock to cross the $1 trillion threshold. Shares rose after the company announced new products in the artificial intelligence space. According to Insider, experts see Nvidia as best positioned to provide the graphics processing units (GPUs) that run chatbots like OpenAI’s ChatGPT and Google’s Bard. Earlier this year, 1,000+ technologists and researchers signed another open letter expressing concern over the “out-of-control race” to develop AI and called for a six-month pause on the development of the largest AI models.

AI Experts Issue a Warning: Nonprofit organization the Center for AI Safety released a one-sentence statementsigned by 350+ executives, researchers, and engineers in the artificial intelligence space, including executives from Open AI,  Google DeepMind, and Anthropic. The statement read, “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks, such as pandemics and nuclear war.”

Banks Embrace AI: Wall Street banks are increasingly embracing artificial intelligence, from scanning client portfolios to screening for potential defaulters to looking for talent to using customer service chatbots. From February to April, JPMorgan alone listed 3,651 AI-related job openings. Yet, embracing AI does not come without risk. Warren Buffett expressed his concerns over the rapidly evolving technology at Berkshire Hathaway’s annual meeting, stating, “I know we won’t be able to uninvent it.”

Meta Publicizes AI Code: Tech giant Meta publicly released its latest AI technology, LLaMA, so that people can build their own chatbots. Conversely, Google and OpenAI have taken steps to safeguard their technology. There are critics on both sides, as AI can be used to spread disinformation, hate speech, and other problematic material. Meta’s chief AI scientist Yann LeCun responded to the criticism, asking, “Do you want every AI system to be under the control of a couple of powerful American companies?”

Crypto Clarity:  It was reported that a bipartisan group of Members of Congress are working on draft legislation to bring jurisdictional clarity to the crypto market structure.

Short Selling: Short sellers significantly profited from the US banking crisis, gaining $1.2 billion in just the first two days of May. Critics have expressed concern over this type of short selling. Despite recent chatter about a potential short selling ban, SEC Chair Gensler stated these types of bans have not worked in the past and the SEC is not considering implementing restrictions on short selling.

Stock Buybacks: The US Chamber of Commerce, the Texas Association of Business, and the Longview Chamber of Commerce sued the SEC to attempt to block new proposed rules requiring public companies to disclose more information about their stock buybacks. The US Chamber stated that the lawsuit “seeks to protect returns for investors as well as the ability of companies to make decisions free from government micromanagement.”

Stablecoin Market Manipulation: Court filings of the SEC allege that Jump Trading made a deal with Terraform Labsregarding the price of stablecoin TerraUSD, with several agreements revolving around Terra’s LUNA tokens.

EU Crypto Regulation: On Tuesday, the European Union approved the world’s first comprehensive set of rules to regulate crypto. The rules will require all firms that want to issue, trade, and safeguard crypto assets, tokenized assets, and stablecoins within the EU to obtain a license. The rules are expected to come into play in 2024.

24/7 Trading: Robinhood will be the first US brokerage to provide overnight weekday trading for individual stocks. The brokerage will allow round-the-clock trading in 43 securities for some users starting next week, with the official rollout in June.

Trading Data: Institutional brokerage firm Themis Trading released a report claiming that Depository Trust & Clearing Corp. (DTCC) is selling sensitive trading data that sophisticated traders can use to profit at the expense of more traditional investors. While DTCC disputed the report, investors continue to voice concerns.

Generative AI: Artificial Intelligence is taking the world by storm. Generative AI program ChatGPT gained 100 million users in just two months, a record pace. Big technology companies are investing billions in AI, and startups are racing to develop business models around the technology. While investors try to gauge the impact of AI across industries, stocks are “swinging wildly in both directions.”

AI Legislation: Senate Majority Leader Chuck Schumer (D-NY) proposed a new framework to guide future artificial intelligence legislation and regulation. He is currently seeking feedback from AI stakeholders on his proposal. Other members of Congress are also considering legislation to address AI concerns.

Network of Networks: Microsoft, Goldman Sachs, Deloitte, and others have teamed up to launch a new blockchain network. Canton Network is aimed at linking disparate institutional applications, potentially encouraging broader adoption of distributed ledger technology in financial markets.

Market Manipulation: US officials are investigating whether market manipulation caused the recent volatility in banking shares. White House press secretary Karine Jean-Pierre said the Biden administration is closely monitoring the situation, but any possible action would be taken by the SEC.

Crypto Interest: According to The Wall Street Journal, Miami is losing interest in crypto. Attendance at this year’s Miami NFT conference was down 1,500 from last year, and major hotels that once accepted crypto no longer do. Mayor Francis X. Suarez, who once referred to Miami as the world’s crypto capital, has switched his focus to tech startups, their financial backers, and AI.

Bittrex Bankruptcy: On Monday, crypto exchange Bittrex filed for bankruptcy. The exchange said the filing will not impact Bittrex Global, its operations outside of the US. Last month, the SEC sued Bittrex for operating unregistered securities. Separately, Bittrex agreed to pay $29 million in fines to the US Treasury Department last month.

Crypto Goes Public: Even with the current regulatory scrutiny around crypto, small crypto firms, like Bitdeer Technologies, are going public. Market factors, including rising interest rates, have helped bring a market rebound of riskier assets, like crypto and technology stocks. IPOs can help these smaller firms access additional capital through large pools of individual and institutional investors who wouldn’t invest otherwise.

Spot Bitcoin ETF: Cboe Global Markets filed a proposal with the SEC to list and trade shares of a spot bitcoin ETFby Cathie Wood’s Ark Invest and crypto investment product firm 21. The SEC rejected Cboe’s previous two proposals as well as over a dozen other proposals from firms for spot bitcoins ETFs, including Grayscale, Fidelity, and NYDIG.

Retail Rage Selling: After analysis of Nasdaq single stocks, Goldman Sachs concluded that since February 2022, retail investors have sold more than twice what they acquired during the pandemic. A Goldman Sachs analyst said these investors have “rage sold out of the stock market.”

Crypto Across Generations: In a survey by crypto exchange Bitget, 46% of millennial respondents owned cryptocurrencies, compared with 25% of Gen X, 21% of Gen Z, and 8% of baby boomers. The survey included about 255,000 adults across 26 countries.

Crypto Partnerships: According to Mastercard’s Head of Crypto Raj Dhamodharan, the company is looking for additional crypto partnerships. Mastercard has existing relationships with Binance, Nexo, and Gemini, and Dhamodharan is “really quite enthusiastic” about the blockchain technology that powers crypto.

First Republic Delisted: The NYSE has suspended trading of First Republic Bank’s shares and started the process of delisting the eight securities tied to the bank.

Coinbase International Exchange: Coinbase Global Inc. is launching an international derivatives exchange for institutional crypto traders. Coinbase International Exchange will list Bitcoin and Ether perpetual futures starting this week amidst the ongoing regulatory battle with the SEC. Coinbase said it is still committed to the US, but disappointed by the country’s regulation by enforcement approach.

Government Stock Trading: Following an investigation by The Wall Street Journal showing that 2,600+ government officials across 50 federal agencies had reported investments in companies that stood to rise or fall with the decisions made by their agencies, Congress is pressing federal officials to better police their agencies’ stock trading. Rep. Nick Langworthy (R., N.Y.) has also said that he plans to propose legislation that would require agencies to place limits on stock holdings and share disclosures in a searchable online database.

New Disclosure Rules: The SEC has adopted new disclosure rules for hedge fund and private equity advisors aimed to increase transparency, competition, and efficiency. The SEC also adopted a rule to enhance disclosures surrounding stock buybacks.

VIX1D INDEX: Cboe Global Markets launched the Cboe 1-Day Volatility Index (VIX1D), which measures the expected volatility of the S&P 500 Index over a single trading day. The launch coincides with the 30^th anniversary of the Cboe Volatility Index (VIX).

Capital Formation & CFPB:  The House Financial Services Committee held a markup on capital formation and Consumer Financial Protection Bureau (CFPB) reform legislation, passing along largely partisan lines.

Nonbank SIFI: The Financial Stability Oversight Council (FSOC) proposed rules regarding nonbank systemically significant financial institution (SIFI) status, rolling back interpretative guidance made in 2019.

Retail Losses: Bed Bath & Beyond’s bankruptcy and 99% fall in shares in 2023 has led to $142 million in profits for short sellers and about $140 million in losses for retail investors this year. Bloomberg notes that retail investors, who pushed $730 million into the company in the last couple of years, are “opting to hang along for the ride despite sitting on massive paper losses” and experts expect losses to be even greater.

Government Debt: Retail investors are showing increased interest in Treasuries and in municipal and corporate bonds. They are purchasing new US Treasury bills at a record pace and are increasingly purchasing Treasury bills in the secondary market. Accelerated by banking collapses, “retail demand for T-bills has been strong since the beginning of the year due to the attractive yields versus bank deposits.”

Coinbase Sues:  Crypto exchange Coinbase filed a suit against the SEC, asking that the regulator be forced to publicly share its answer to Coinbase’s July 2022 petition on whether existing securities rule-making processes could be extended to the crypto industry.

DEX Launch: Decentralized exchange Vertex Protocol has launched on Arbitrum, a scaling solution built on Ethereum blockchain, to offer high-speed spot and derivatives trading. The exchange will focus equally on retail and institutional traders and has prominent backers in the market-making and proprietary trading space, including Jane Street and Hudson River Trading.

ESG Transparency: NYSE and IBM are collaborating to help support NYSE-listed companies with ESG efforts. Following increased demand for transparency around ESG, IBM will offer qualified NYSE-listed companies promotional pricing of IBM Envizi, which can automate the collection and consolidation of ESG data and the calculation of GHG emissions, streamline ESG reporting, and leverage data insights and integrations with operational systems.

Gensler on Market Structure: In more than four hours of testimony before the House Financial Services Committee, SEC Chair Gary Gensler addressed questions on a variety of issues including crypto, artificial intelligence, climate policy, minimum accredited investor standards, and equity market structure. On market structure, members expressed bipartisan concern regarding the fast pace of rulemaking over the past year, interplay of four proposals on equity market structure and unknown potential negative outcomes for everyday investors, and focus on pilot programs and incremental approach.

Equity Market Structure Roundtable: SIFMA hosted an equity market structure roundtable with industry participants with key topics discussed tick sizes, disclosure of order execution information regulation best execution, and the SEC’s auction proposal.

Gensler on AI: SEC Chair Gensler noted that the rise of artificial intelligence and predictive data analytics is transforming finance. He noted that artificial intelligence is being used in finance for call centers, account openings, compliance programs, trading algorithms, and sentiment analysis, and has fueled changes in in robo-advisors and brokerage apps, among other uses of AI.

Regtech Market Growth: It was reported that the global RegTech market is expected to grow at 17.55% CAGR in the next six years, and anticipated to rise from $6.5 billion  market in the USi in 2023 to above $28.83 billion by 2029.

Hedge Fund Scrutiny: Hedge funds and other parts of the shadow banking system could face greater scrutiny after last month’s upheaval in U.S. government bonds. SEC Chair Gary Gensler said he wants a better understanding of how bets by such asset managers can spill out across asset classes and into the real economy.

Misleading Accounting: The SEC is scrutinizing public companies that tout overly rosy earnings numbers that don’t comply with US accounting rules. In December, the SEC released guidance about which unofficial accounting adjustments are acceptable and which are out of bounds. So far, Academy Sports & Outdoors Inc., Dave & Buster’s Entertainment Inc., and Petco Health & Wellness Company Inc. have been questioned by the SEC.

Cybersecurity Concerns: The SEC has recognized that cyber-related threats are a widespread and serious danger to capital markets. Building off of the momentum of their 2022 initiatives, the SEC is now proposing Rule 10, which would require market entities to report cyber risks and incidents to the SEC on a partially public SCIR form.

Crypto Charges: The SEC charged crypto exchange Bittrex Inc. and its co-founder William Shihara for operating an unregistered securities exchange, broker, and clearing agency. SEC Chair Gary Gensler commented on the matter, stating that “crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity.”

Crypto Dealmaking: According to M&A advisory firm Architect Partners, there were 54 mergers and acquisitions among digital-asset firms in the first quarter of 2023 – almost 10% more than the first quarter of 2022. According to the report, about 65% of activity last quarter involved one crypto company buying another.

Artificial Intelligence: ChatGPT and other forms of AI are gaining traction in corporate America, but AI has yet to be equally embraced in the world of trading. While quants have used machines and algorithms to inform their decisions for years, many are saying they are sticking to a theory-first approach due to nuances of the data they work with.

Trading on Twitter: Twitter has partnered with online brokerage eToro. Users can now see market charts and buy and sell stocks and other assets directly from the Twitter app. This is a step toward Musk’s goal to make Twitter a “super app.”

Congress Bank Trades: As calls for restrictions on congressional stock trading continue to intensify, at least three lawmakers traded bank stocks last month. The lawmakers were working on government efforts to address fallout from the collapse of Silicon Valley Bank and Signature Bank, raising questions of whether they received inside information that may have guided their stock trades.

Reporting Errors: Credit Suisse and the SEC have been debating over the severity of reporting deficiencies that led the Swiss bank to delay its annual report last month. At the heart of the issue were changes Credit Suisse made to reports and whether they had to be disclosed to the auditor committee. On Tuesday, the SEC published correspondence on the matter dating back to July.

Crypto Compliance: Following SEC Chair Gensler’s request for $200 million from Congress to beef up the SEC’s crypto compliance team, the SEC has listed a job post seeking attorneys to help conduct and litigate “complex, fast-moving investigations being undertaken by the SEC involving crypto asset securities and cyber issues.”

Crypto Recovery: Bankrupt crypto exchange FTX has recovered over $7.3 billion in cash and liquid crypto assets so far. FTX attorney Andy Dietderich stated, “The situation has stabilized, and the dumpster fire is out” and that the exchange is thinking about its future. FTX plans to file a preliminary Chapter 11 in July but acknowledges that many details are still to be worked out.

Instinet Expansion: Instinet announced the launch of BlockMatch Asia, an Alternative Liquidity Pool for non-display trading of equity securities. Ian Lauder, head of liquidity strategy, Asia Pacific, noted “an increase in client interest and awareness of conditional order types in APAC over the past two years in particular” and expects that trajectory to continue.

 Crumbling Quote Indicator: IEX has introduced a new version of The Signal, or the “Crumbling Quote Indicator”, to better protect its investors from adverse price selection. Some enhancements include looking at both size and number of venues (rather than just venues), adding new venues (MEMX, MIAX, Nasdaq PSX), and shifting from a logistic regression to a rules-based model.

Comment Letter: The Antitrust Division of the US Department of Justice submitted a letter to the SEC commenting on its four market structure proposals. The Division commended the SEC for proposing the rules, while also “encourag[ing] the Commission to carefully consider potential interactions among the Proposed Rules when preparing their final versions, planning for the rules’ implementation timelines, and evaluating the actual effects of the rules once they go into effect.”

Retail Diversification: According to a new global poll by social investment platform eToro, commodities and alternative investments have become more popular among retail investors in the past year. The survey also showed a 12% drop in domestic stocks for retail investors– this was even more significant for US respondents, where the share fell from 60% to 42% in a year.

SBNY Accounts: The US Federal Deposit Insurance Corp (FDIC) has given Signature Bank’s crypto clients until April 5 to close their accounts and move their money. According to an FDIC spokesperson, Flagstar’s bid for Signature Bank did not include the roughly $4 billion in deposits related to its digital-asset business.

Binance Lawsuit: The Commodity Futures Trading Commission (CFTC) charged Binance and two of its executives for “instruct[ing] its employees and customers to circumvent compliance controls in order to maximize corporate profits.” Experts expect Binance to pay hundreds of millions of dollars in fines.

Cybersecurity Proposal: Critics have voiced concerns about the SEC’s proposed cyber security risk management rule. Criticism includes a lack of an accurate and meaningful cyber risk measurement, duplication with other regulatory entities, lack of sufficient SEC resources to regulate, and increased compliance costs that smaller firms may be unable to keep up with.

Emoji Use: The SEC is increasingly evaluating emojis as context when pursuing enforcement action. While the use of emojis by themselves has not been litigated, certain emojis may be scrutinized for their perceived intention.

TikTok Trial: Last Thursday, TikTok CEO Shou Zi Chew appeared before the House Committee on Energy and Commerce. The hearing stirred adverse reactions from Wall Street – an analyst with Wedbush called Chew’s testimony “a ‘disaster’ moment that will likely catalyze more calls by lawmakers and the White House to look to ban TikTok.” However, Chew is receiving strong support from Tik Tok users.

CEO Compensation: In the spring, proxy statements will report a new SEC-mandated measure of CEO pay. CEO compensation has been notoriously clouded and hard to estimate, and the new mandate is supposed to edge reported CEO compensation closer to the truth. But critics aren’t optimistic, citing many confounding variables that muddle CEO compensation packages, such as the fluctuating value of stock grants.

Climate Disclosure Support: Various US environmental organizations, like As You Sow and Earthjustice, shared a letter expressing public support for the SEC’s proposed climate disclosure rule. However, they cited a need for further clarification to assuage fears of its impacts on small businesses. “We are concerned that certain members of Congress and groups representing a handful of SEC registrants may be spreading misinformation about the rule’s contents and applicability,” the letter read.

Signet Losses: Following Signature Bank’s collapse, Coinbase Global announced that it is no longer using Signet, the bank’s real time payment network. Coinbase clients who already use Signet can now only send funds during banking hours. “While not ideal, this shows a need for an updated financial system,” a Coinbase spokeswoman said.

Crypto on Wall Street: Wall Street may be departing from its crypto-phobic ways. JPMorgan Chase, and other major banks, are opening new accounts for crypto firms following Silvergate Bank’s recent failures.

Crypto’s Future: After more than two years, it’s time for the judge in the Ripple vs. SEC lawsuit to issue a verdict. At the core of the lawsuit is a debate over whether Ripple’s crypto token, XRP, should be categorized as a security. The judge’s decision will set a precedent for the treatment of other US crypto tokens and help define the SEC’s role in crypto regulation.

Crypto Charges: The SEC charged cryptocurrency entrepreneur Justin Sun and three of his companies with securities law violations. Eight celebrities, including Lindsay Lohan and Jake Paul, were charged with illegally promoting Sun’s cryptocurrencies. Six of the eight celebrities agreed to pay a total of $400,000 to settle the charges.

SVB Nightmare: Following the collapse of Silicon Valley Bank (SVB) this past week, the bank’s executives are under fire for potential insider stock sales. SVB CEO Greg Becker sold $3.6 million in shares just days before its collapse, and around $30 million in shares over the last two years. Other SVB executives also shed millions of dollars in shares over the past two years, totaling approximately $84 million worth of stock. The SEC and Justice Department are investigating these sales as well as the bank’s collapse.

Retirement Worries: Retirement and investment industry leaders are concerned about a new SEC proposal to implement “swing pricing.” Critics worry that the proposed rule would hinder investors trying to put money away for retirement by allocating the cost of open-end fund transactions to the redeeming shareholders.

Investor Anxiety:  Market volatility is surging following the downfall of three banks in just the past week. According to Cboe Global Markets data, put options volume across all stocks and exchange-traded funds hit the highest level on record last week.

Retail Survey: According to a Brunswick Group survey, around 60% of retail investors have made investments based on information they sourced from Reddit. The survey also found that almost 81% of respondents admitted to using information from digital or social media to inform their investment decisions.

Crypto Moves: Catalyzed by the collapse of three crypto preferred banks last week, US crypto firms are allegedly even more motivated to make the move across the pond. According to Sygnum in Switzerland and Bank Frick in Lichtenstein, there has been particular interest in crypto firms opening accounts offshore in the past week. Some banks, like Swiss bank SEBA, have already started onboarding crypto clients.

Crypto Tax: Crypto companies may be subject to a 30% excise tax according to a provision unveiled last week as part of the Biden administration’s 2023 budget proposal. The proposal would create a phased-in excise tax based on the electricity used to mine cryptocurrency. Crypto companies may also be required to report the amount and source of their power usage.