Weekly Roundup

Kirsten Wegner’s 2024 FinTech Policy Outlook: In an editorial published this morning in Real Clear Markets, MMI’s own Kirsten Wegner highlighted five key FinTech trends that should be top-of-mind for policymakers going into 2024. Specifically, Wegner underscored the importance of legislators and regulators factoring increasing retail investor activity, AI’s expanding role in investment strategies, evolving regulatory technology, the proliferation of spot bitcoin ETFs, and the rising demand for low-cost trading options into their decision-making.

Stock Ownership Increases: According to a recent consumer finance-oriented survey conducted by the Federal Reserve, the percentage of American households that are stock market participants has reached a historic high of 58%. This figure is up five percentage points from a similar study the agency conducted in 2019, and numerous sector experts have attributed this surge to a record number of first-time participants entering the marketplace during the Covid-era.

SEC’s Stock Buybacks Setback: The SEC’s plan to impose additional disclosure requirements related to public companies’ stock buybacks was rejected by the U.S. Court of Appeals for the Fifth Circuit. Citing a lack of a proper cost-benefit analysis, the decision will force the agency to formulate an updated strategy to address next stock-buyback disclosure regulations.

Crypto Lobbying Efforts: Signaling that the crypto industry intends to leave its mark on next year’s election, three super PACs linked to various digital currency platforms have announced that they have raised a total of $78 millionfor the 2024 cycle. Specifically, key sector players, such as Andreessen Horowitz and Coinbase, are supporting these PACs initiatives to endorse candidates who advocate for policies that will advance important crypto-related priorities. While the legislative progress to establish a new regulatory framework for the industry faces challenges in the Senate and with the Biden Administration, numerous crypto sector experts are optimistic that the increasing volume of lobbying efforts could soon sway policy.

Coinbase vs. SEC: The SEC has rejected Coinbase Global’s latest petition for the agency to draft new rules for the digital asset sector. In their dissenting statements, SEC Commissioners Hester Peirce and Mark Uyeda expressed disagreement with the agency’s decision, emphasizing the importance of addressing issues arising from new technologies and innovations in a responsible regulatory manner. This response from the SEC has led the U.S.-based crypto exchange to challenge the decision in court, claiming that current regulations are “unworkable” for the crypto space.

Retail Trader Education: With Fortune Business Insights recently projecting that the global online trading platform market will reach $15.34 billion by 2030, numerous industry experts have raised concerns about the success rate of new retail traders. Specifically, these sector observers note that various online trading platforms will have to meet the increasing demand for transparency and education. These assertions are based off a survey by the World Economic Forum, which found that 74% of retail traders want more learning opportunities and 67% are seeking an increased level of trust in their online trading platform.

Crypto Training: A recent TRM Labs survey of 300 U.S. and international law enforcement professionals reported that although approximately 90% of respondents confirmed that their organizations provide crypto-related instruction, an overwhelming 99% believe that the intensity and scope of this training needs to be expanded. Specifically, these professionals identified shortages of qualified investigators, a general lack of expertise, and insufficient agency funding as the primary obstacles hindering law enforcement’s ability to effectively address crypto-linked crimes. Several sector observers have noted that the results of the survey underscore the urgency for regulators to prioritize digital asset education and sensible rules that promote technological advancements focusing on transparency and consumer safety.

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

  • Julie Sweet, CEO of Accenture, told the Financial Times in an interview this week that she does not believe most companies have the digital infrastructure to safely utilize AI technology. “There is a gap between saying you’re committed to responsible AI and having the programs that allow it to be real on the ground. The good news is that people are not trying to leap over the gap. They are being careful in the rollout and so it does limit, in the short term, some of the scaling opportunities,” said Sweet.
  • Michael Sonnenshein, CEO of Grayscale, spoke with Bloomberg TV recently about his company’s struggle with the SEC to convert into a spot ETF. “I think that the SEC should and does, in fact, want to create an even playing field,” said Sonnenshein. “We’ve publicly been advocates of the fact that when the commission is ready to give the requisite approvals for spot products to come to market, that it should be done all at once — the issuers who are operationally ready to launch their products should come out the gate all at once.”