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On 15 August, 2024, the International Monetary Fund (IMF) published a blog proposing significant increases in energy taxes aimed at crypto miners and artificial intelligence data centers, suggesting that such measures could play a crucial role in reducing global carbon emissions. According to a recent paper by IMF economists Shafik Hebous and Nate Vernon-Lin, raising electricity costs for these industries would not only encourage greater efficiency but also generate substantial government revenue. The IMF’s paper highlights that increasing electricity prices for crypto mining by 85% could potentially yield an additional $5.2 billion in annual global revenue while simultaneously reducing carbon emissions by 100 million tons—equivalent to the annual emissions of Belgium. The energy-intensive nature of both crypto mining and AI data processing is at the heart of this proposal, with a single Bitcoin transaction consuming as much electricity as an average person in Ghana or Pakistan uses...

On 15 August, 2024, Goldman Sachs made headlines by disclosing significant investments in Bitcoin exchange-traded funds (ETFs) in its quarterly 13F filing, signaling a notable shift in the bank's approach to cryptocurrency. Once a vocal skeptic of digital assets, Goldman Sachs has now become one of the largest institutional holders of Bitcoin ETFs, with positions in seven out of the 11 Bitcoin ETFs available in the U.S. market. This move, totaling $418 million in Bitcoin fund investments, marks the bank’s official debut in the spot Bitcoin ETF market. The largest portion of Goldman Sachs’ Bitcoin ETF holdings is in the iShares Bitcoin Trust, where the bank has invested $238.6 million. Other substantial positions include $79.5 million in Fidelity’s Bitcoin ETF, $56.1 million in Invesco Galaxy’s Bitcoin ETF, and $35.1 million in Grayscale’s GBTC. These investments are part of a broader trend among major financial institutions that have started to embrace cryptocurrencies, particularly...

On 14 August, 2024, the Securities and Exchange Commission (SEC) announced a landmark enforcement action against 26 broker-dealers, investment advisers, and dually-registered entities for widespread and systemic failures in maintaining and preserving electronic communications, resulting in combined civil penalties of $392.75 million. This sweeping action, which includes major financial firms such as Ameriprise Financial Services, Edward D. Jones & Co., and RBC Capital Markets, shows the SEC's unwavering commitment to upholding the integrity of the financial markets by ensuring strict compliance with federal recordkeeping requirements. They acknowledged that their conduct violated key recordkeeping provisions under federal securities laws. This settlement marks one of the most significant enforcement actions in recent years, reflecting the SEC's commitment to enforcing compliance with books and records requirements, which are foundational to the integrity of financial markets. The...

On 14 August, 2024, the Securities and Exchange Commission (SEC) Chairman Gary Gensler released a statement highlighting the growing influence of artificial intelligence (AI) in financial markets and the potential risks it poses to investors. With AI increasingly embedded in everyday digital experiences, from search algorithms to personalized marketing, the SEC's attention has turned to its application in the financial sector, particularly in investment platforms and brokerage services. The rise of AI has brought significant advancements in the ability to process vast amounts of data, recognize patterns, and make predictions. This technology allows companies to "narrowcast," tailoring messages, pricing, and products to individual consumers with unprecedented precision. In the financial sector, this manifests in the use of Robo-advisors and brokerage applications that rely on AI algorithms to provide personalized investment recommendations and alerts. However, as SEC Chairman Gary...

On 14 August, 2024, the Commodity Futures Trading Commission (CFTC) levied significant penalties on three prominent financial institutions—Truist Bank, The Toronto Dominion Bank (TD Bank), and Cowen and Company—for pervasive failures related to recordkeeping, supervision, and the improper use of unapproved communication methods. These enforcement actions are a stark reminder of the critical importance of compliance with federal securities laws and CFTC regulations, with cumulative penalties reaching into the millions of dollars. Truist Bank, a leading financial services provider based in North Carolina, has been ordered to pay a $3 million civil monetary penalty after the CFTC found that the bank failed to maintain, preserve, or produce records as required under CFTC recordkeeping regulations. The CFTC’s investigation revealed that from December 2019 through the present, Truist employees, including senior executives, engaged in business-related communications using unapproved methods...

On 13 August, 2024, in a significant step towards enhancing the security and resilience of the digital asset sphere, the United States and Latvia have embarked on a joint initiative to bolster supervision and regulation of operational risks associated with virtual asset service providers. From August 13 to 15, Latvijas Banka is hosting an intensive training program where U.S. experts will share their insights with Latvian financial supervisory and law enforcement authorities. This collaborative effort, spearheaded by the U.S. Securities and Exchange Commission, the New York State Department of Financial Services, the U.S. Department of the Treasury, and Latvijas Banka, is designed to foster a robust exchange of best practices in managing the complexities of virtual assets. The training program emphasizes the importance of a balanced approach to regulation—one that supports innovation while safeguarding market integrity and consumer protection. The approaches taken by both the U.S....

On 9 August 2024, the Australian Securities and Investments Commission (ASIC) released it’s financial advice update that discusses the importance of compliance across multiple critical areas. This update addresses the need for accurate record-keeping on the financial advisers register, ensuring that advisers meet required qualification standards, and maintaining stringent cybersecurity measures, especially concerning third-party exposures. Additionally, ASIC highlights ongoing concerns about unethical practices in the superannuation switching sector, specifically regarding cold calling and high-pressure sales tactics that can lead to poor consumer outcomes. The update also reminds AFS licensees of the imperative to register financial advisers properly before they provide personal advice, with strict compliance checks already identifying lapses in this area. Through this comprehensive update, ASIC reinforces its commitment to safeguarding investors and maintaining the integrity of the...

On July 25, 2024, the Financial Services Commission (FSC) officially announced the schedule for this year’s highly anticipated Korea Fintech Week, set to take place from August 27 to 29 at the iconic Dongdaemun Design Plaza in Seoul. This event, the largest of its kind in Korea’s history, is poised to be a landmark gathering for the fintech industry, focusing on the transformative impact of artificial intelligence (AI) within the financial sector. Under the theme “Beyond Boundaries: Fintech and AI Redefining Finance,” the expo will not only showcase cutting-edge technologies but also explore how these innovations are reshaping the global financial landscape. The expo will feature participation from leading fintech companies, financial institutions, academic bodies, and international organizations, making it a truly global event. Over the course of three days, attendees will have the opportunity to explore 85 meticulously curated exhibition booths spread across four specialized...

On August 13, 2024, in a compelling address at the International Association of Deposit Insurers (IADI) Asia Pacific Regional Committee (APRC) International Conference, Reserve Bank of India (RBI) Deputy Governor Michael Debabrata Patra highlighted the evolving challenges facing deposit insurers in an increasingly digital and climate-conscious world. Speaking at the conference hosted by the Deposit Insurance and Credit Guarantee Corporation (DICGC) in Jaipur, Patra emphasized the importance of fortifying crisis preparedness and the need for deposit insurers to stay ahead of emerging risks. Patra began by acknowledging the rapid digitalization of financial services and the opportunities it presents for deposit insurers to enhance their efficiency and effectiveness. He noted that while digitalization offers significant economies of scale and modernization in reimbursement, supervision, and resolution, it also brings new risks. The experience of banking sector stress in 2023, where...

On August 12, 2024, the Commodity Futures Trading Commission (CFTC) imposed a $100,000 fine on Cost Management Solutions, LLC (CMS), a Texas-based corporation, for operating as an unregistered Introducing Broker (IB). The order, which simultaneously files and settles charges, not only mandates the monetary penalty but also directs CMS to cease any further violations of the Commodity Exchange Act (CEA). The CFTC’s investigation, covering activities from May 2018 to the present, uncovered that CMS had been actively engaging in IB functions without the necessary registration. CMS's business primarily involved brokering swap and options transactions in energy commodities such as propane, heating oil, and crude oil. The firm’s activities included identifying potential counterparties, conducting price discovery, negotiating trade terms, and executing transactions on behalf of its clients—mainly propane retailers looking to hedge against market risks. Despite the extensive brokerage...