Weekly Roundup

Private Fund Rules: The SEC is reportedly gearing up to introduce a rule package aimed at bringing greater transparency and competition to the private-funds industry,  specifically targeting  private-equity and hedge fund firms. According to SEC Chairman Gary Gensler, the proposed rules would help protect consumers by increasing transparency of quarterly statements and annual audits, as well as prohibit preferential terms for certain investors and increase liability exposure for the firms for any potential mismanagement or negligence. Private-funds industry observers have noted that the sector has been pushing back against these proposed rules, fearing that they will lead to higher costs and a slew of potential lawsuits.

Coinbase vs. SEC: Coinbase is denying reports that company CEO Brian Armstrong was told by SEC officials to remove every digital currency on the platform except Bitcoin. Armstrong was quoted earlier this week as saying the SEC believes “every asset other than Bitcoin is a security” and recounted an exchange with SEC team members where they allegedly stated that Coinbase needed “to delist every asset other than Bitcoin.” A Coinbase spokesperson stated that these comments were taken out of context and do not represent the views of the Commission.

Cboe’s New Options Contracts: Cboe announced this week their intention to introduce new options based on both their iBoxx iShares High Yield Corporate Bond Index futures offerings and iShares Investment Grade Corporate Bond Index futures. These options will bolster users’ risk management capabilities and promote more effective credit portfolio organization.

Hex Charges: The SEC charged Hex crypto founder Richard Heart with numerous counts stemming from efforts to raise more than $1 billion in unregistered cryptocurrency offerings. The agency claims that Heart’s fundraising to promote his Hex token, the PulseX asset trading platform, and PulseChain’s asset network entailed false claims about their returns to defraud investors out of a collective $12.1 million. Heart is also accused of using investor funds to buy a number of extravagant gifts, including the world’s largest black diamond and four premium Rolex watches.

Ripple Slams SEC: Ripple CEO Brad Garlinghouse criticized the SEC for using the company’s quarterly XRP Markets Report as evidence in an ongoing lawsuit against the firm. Garlinghouse stated that while the reports were initially meant to offer updates on Ripple’s XRP holdings voluntarily, they were later used against the company by the agency. According to their most recent report, Ripple’s XRP holdings increased by approximately $45 million, while the total XRP on ledger escrow decreased by nearly $1 billion due to rising demand.

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

  • U.S. Senator Elizabeth Warren (D-MA) introduced a bipartisan bill this week on crypto industry regulation that sector experts are already labeling as extremely stringent. Unlike bipartisan measures currently advancing through the U.S. House of Representatives, Senator Warren’s bill, which has been cosponsored by Senators Graham (R-SC), Manchin (D-WV), and Marshall (R-MS), is believed to be “tougher” on the sector by granting expansive powers to the Treasury Department’s Financial Crimes Enforcement Network to police the marketplace. “Crypto has become the payment method of choice for rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions of dollars in stolen funds, evade sanctions, fund illegal weapons programs, and profit off of devastating cyberattacks. This bipartisan bill is the toughest proposal on the table to crack down on crypto crime and give regulators the tools they need to stop the flow of crypto to bad actors,” Warren said.

  • Navneet Govil, Executive Managing Partner and Chief Financial Officer of SoftBank Investment Advisers, stated that artificial intelligence is already changing the way companies throughout the financial services sector are compiling their predictive analysis reports. In an interview with Fortune Magazine regarding the publication’s recent survey of CFOs regarding potential AI usage in the financial sector, Govil said that while the technology has great capabilities, there are several factors to consider before organizations can fully incorporate it into their daily operations. “I don’t want to jump on something because the switching costs can be quite considerable. I think today, what we’re seeing is, with generative A.I., and A.I. in general, is: how can we leverage those tools?”, Govil said