Weekly Roundup

Ripple (ruling) Effects: Following a federal judge’s ruling that Ripple Labs, Inc.’s did not violate securities regulations by selling its XRP token on various exchanges, numerous industry experts are claiming that it will hinder the SEC’s ability to police the crypto industry. Specifically, U.S. District Judge Analisa Torres ruled that sales on public cryptocurrency exchanges were not offers of securities due to purchasers not having “a reasonable expectation of profit.” It remains to be seen if the SEC plans to appeal the decision.

Merger Review Changes: The DOJ and the FTC announced on Wednesday updated draft guidelines for how they will evaluate corporate mergers moving forward. Specifically, the agencies stated that they intend to take a closer look at how the potential changes in competition posed by a proposed merger will affect workers and how a series of acquisitions, not just viewing vertical and horizontal mergers on a case-by-case basis, can potentially harm the marketplace. Legal and regulatory experts believe that this policy shift is an attempt to keep pace with radically evolving industries.

SEC Mum on Leveraged Loans: The SEC this week stated that they were not ready to declare its position regarding if leveraged loans can be considered securities. This statement was in response to a request for filing from a US Court of Appeals panel that was seeking the agency’s opinion on this question as they look to decide on a case that could transform the leveraged buyout marketplace. Industry observers have been closely monitoring the SEC’s filing on this question because it is expected that the court was expected to greatly rely on the agency’s opinion.

Retail Investors: Blackrock added a vote to retail investors in its biggest ETF. The firm will provide retail investors in its iShares Core S&P 500 ETF (IVV.P) the opportunity to use their voice regarding how the fund votes their shares at corporate annual meetings. Numerous industry experts believe that this policy shift is part of the asset manager’s strategy to shift public perception regarding their ESG initiatives. The change is expected to take effect for the 2024 proxy season.

Cboe’s Bitcoin Move: Cboe Global Markets Inc. took their biggest step toward introducing Bitcoin to the retail investor marketplace by submitting an application to the SEC for a Bitcoin exchange traded fund. Partnering on this endeavor with Fidelity National Financial and Coinbase, the stock exchange operator aims to form a crypto marketplace that prioritizes surveillance-sharing agreements to bolster transparency and trading integrity.

Crypto Clarity Across the Pond: British government regulators rejected calls to classify cryptocurrencies as gambling entities. This policy announcement comes after Parliament’s Treasury Select Committee issued a report in May urging Prime Minister Rishi Sunak’s government to regulate “unbacked” digital currencies as gambling properties due to certain risks that they present to investors. The government’s stance aligns with broader movements throughout the sector to make London a hub for crypto innovation.

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

  • Samantha Dezur was named BlackRock’s latest head of U.S. Policy. According to a company spokesperson, Dezur will oversee the company’s domestic legislative policy and regulatory engagement teams. Dezur’s division, “support[s] the creation of regulatory regimes that increase financial market transparency, protect investors, and facilitate responsible growth of capital markets, while preserving consumer choice and properly balancing benefits versus implementation costs,” according to the company website.

  • Gary Gensler, Chair of the SEC, touched upon the importance of AI technology to the agency’s future enforcement operations in a speech to the National Press Club. Gensler highlighted key areas where AI could be deployed to bolster these regulatory efforts, including market surveillance, disclosure review, and entry exams. “As machines take on pattern recognition, particularly when done at scale, this can create great efficiencies across the economy. I believe it’s the most transformative technology of our time, on par with the internet and mass production of automobiles,” Gensler said.

  • Robert Rubin, former U.S. Treasury Secretary, spoke at the Washington Economic Club about his latest book The Yellow Pad. Rubin outlined his decision-making process for attendees, which has been “developed over more than six decades.” His book “offers readers an astute and original guide for navigating uncertain times.”

  • John Schindler, Secretary General of the G20’s Financial Stability Board, spoke to reporters regarding his thoughts on how recently enacted regulations across the globe have forced crypto firms to implement operational safeguards. Schindler stated that the organization’s focus on protecting consumers has led to robust action on ensuring firms throughout the industry cannot sidestep conflicts of interest, neglect risk management procedures, and sidestep disclosure rules. “Crypto asset players need to stop operating outside the regulatory perimeter or in non-compliance with existing rules…These players can no longer argue there is a lack of regulator