Weekly Roundup

Margin Trades on Crypto Futures: Following CFTC approval, Cboe will be the first derivatives clearing house to allow trading of bitcoin and ether futures on margin. Cboe agreed to increase security protocols prior to the launch, which will be under its subsidiary Cboe Clear Digital LLC, later this year.

Enforcement Cases Dismissed: The SEC dismissed 42 pending enforcement cases after its enforcement staff gained improper access to legal materials pertaining to these cases. An internal review found that there was no effect on enforcement staff or officials reviewing cases, however, all impacted pending cases were dismissed.

SEC Charges Binance: The SEC filed 13 charges against Binance entities and founder Changpeng Zhao. Charges include operating unregistered exchanges, broker-dealers, and clearing agencies, misrepresenting trading controls, oversight on the Binance.US platform, and the unregistered offer and sale of securities. Binance issued a statement on its blog expressing disappointment with the SEC’s complaints, stating that Binance “actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.”

 SEC Charges Coinbase: Following its charges against Binance, the SEC charged Coinbase, also alleging that the company is providing unregistered securities. Chair Gary Gensler stated, “We allege that Coinbase, despite being subject to the securities laws, commingled and unlawfully offered exchange, broker-dealer, and clearinghouse functions.”

Crypto Bill: Reps. Patrick McHenry, R-N.C., and Glenn Thompson, R-Pa., co-drafted legislation that provides a regulatory pathway that would allow digital assets to be traded on more conventional trading platforms. While the draft bill will likely be reshaped and modified in coming months, the SEC would regulate digital-asset securities and would be required to “modify its rules to allow broker-dealers to custody digital assets.”

Google’s New Plan: With the rise of AI and ChatGPT, Google announced a new plan to help organizations apply basic security controls to their artificial intelligence systems and offer protection from cyberthreats.

Global AI Summit: England will host the first global summit on artificial intelligence safety later this year. The summit will cover the potential risks of AI and what internationally coordinated actions can be taken to lessen these risks. AI regulation is a growing focus, and several countries, including the US and China, are working to place regulations on the use of generative AI.

Cybersecurity Proposal: The Securities Industry and Financial Markets Association, the Bank Policy Institute, the Institute of International Bankers, and the American Bankers Association submitted joint comment letters on the SEC’s cybersecurity proposals, calling for a number of changes. One letter stated that the commission should “focus on harmonization between the various SEC-proposed rules — and with rules of other federal agencies — simplify requirements within the proposals, and design proposals that protect against cyberthreats without creating enforcement and litigation traps.”

CAT Concerns Continue: Scrutiny continued over the consolidated audit trail (“CAT”), with SIFMA submitting a comment letter to the SEC raising concerns over potential conflicts of interest in governance structure and funding, lack of accountability on ballooning costs, questions of value add over existing surveillance systems of OATS, raising questions of accountability to Congressional oversight.

In the Mix: This Week’s Top FinTech Thought Leader

  • Phil Gardner, CEO of IANS Research, spoke with Traders about the SEC’s recent cybersecurity rule proposals and the now increased importance of bringing on board members with expansive cybersecurity expertise. According to a joint study by IANS Research, Artico Search, and The CAP Group, only 14% of Chief Information Security Officers stand out as good matches as board director candidates.

    Bakul Patel, former FDA official and Head of Digital Health Regulatory Strategy at Google, spoke with Politico about how officials should approach AI regulation. Patel believes regulators can leverage this developing technology “as a partner in regulation.” 

    Bill Harts was appointed as CEO of the Long-Term Stock Exchange (LTSE).