Development of Laws
FDIC Deposit Insurance Coverage and Crypto
On July 29, the FDIC issued a Of course and Instructions (collectively, the Publications) relating to FDIC deposit insurance and crypto assets. The published articles emphasize that the FDIC’s deposit insurance policy does not cover crypto assets, nor does it apply to many financial products such as stocks, bonds or mutual funds. The advisory warns that crypto companies representing that crypto products are eligible for FDIC deposit insurance may mislead non-bank customers about the extent of FDIC insurance protection in general. In addition, the Advisory also sets out various risk management concepts for insurance banks to know when dealing with crypto companies.
“The misrepresentation of deposit insurance by non-banks, including crypto companies, can confuse non-bank customers and lead those customers to falsely believe that they are protected against any kind of loss.”
The CFTC’s Notice of Rulemaking and Notice of Proposed Order and Request for Comment
On July 29, the CFTC issued a information for legislative purposes amending Regulation 39.24 to improve the CFTC derivatives clearing organization (DCO) governance standards, requires the DCO to establish one or more risk management committees (RMCs) and one or more risk advisory working groups (RWGs), and specify policies regarding composition, operations, and procedures and procedures for RMCs and RWGs. In addition, the CFTC issued a notice of proposed order and request for comments on a comparative determination that would allow for consistent compliance with Japan’s capital and financial reporting requirements for non-bank exchange dealers compared to the capital and financial reporting requirements adopted by the CFTC under Dodd-Frank. Comments for both purposes can be sent via CFTC Comments Portal for 60 days after publication in Federal Register.
OCC Updates Rulebook on Smaller Subsidiaries
On July 27, the OCC announced a plastic process (Statement) revising the previous policy of 2013 regarding MDIs. This document updates and updates the description of its policies, procedures, and programs, and describes the programs the OCC currently has in place to maintain and support MDIs. The OCC was prompted to review its original 2013 policy after seeing increased interest from banks and other stakeholders in working with MDIs and the proposed MDI process.
The 2020 creation of Project REACh (Roundtable for Economic Access and Change) and the establishment of the Emergency Capital Investment Program by Congress for COVID-19 relief also supported the OCC’s decision to review and update programs related to MDIs. Project REACh brings together leaders from banking, business, technology, and civil rights organizations to reduce barriers to full, equal, and fair participation in the nation’s economy. The OCC created Project REACh to promote MDIs to major banks that are committed to promoting MDIs through financial assistance, technical assistance, business opportunities, higher education, and other resources. Signatory banks have committed $500 million to MDIs.
SEC Proposes Exempt Changes to Membership of National Securities Association
On July 29, SEC revised rules which would limit the current exemption from Section 15(b)(8) of the Securities Exchange Act. Section 15(b)(8) requires every broker or dealer registered with the Commission to be a member of a national securities association unless the broker or dealer interferes with securities transactions in exchange for membership.
Rule 15b9-1 currently provides exemptions to Section 15(b)(8) for dealers engaged in qualified securities trading. The proposed changes will replace the commercial exemption with a partial exemption. Under the proposed changes, a broker-dealer that does not have client accounts and engages in securities transactions other than on a member national securities exchange is exempt from Section 15(b)(8). only if the transaction is based on a security system to be protected by a national security agreement where the broker is a member or to make a stock-option order. These changes will help strengthen FINRA’s oversight of firms that sell securities in all markets.
The public comment period will remain open for 60 days after publication of the proposed release on the SEC’s website.
News US Department of Labor Proposes Changes to QPAM Exemption
On July 26, the US Department of Labor issued a proposal to amend section 84-14’s prohibited class transaction (QPAM Exemption) under ERISA. The QPAM exemption currently allows a plan fund to deal with “parties having an interest” in the plan if, among other things, the assets are managed by a “qualified asset manager,” or “QPAM,” who is not a party. interested parties that meet certain requirements.
Read our customer alert for more information about this rule.
Are the SEC and FINRA Moving to the Metaverse?
Will the SEC and the Financial Industry Regulatory Authority (FINRA) establish a forum? Not really, but we emphasize on! As business enterprises, financial services managers in the US are taking a closer look at what the metaverse, augmented reality (AR), and virtual reality (VR) mean for their subscription businesses and management strategies and processes.
Read our customer alert for Goodwin to capture the future of governance, regulation and expectations as the financial industry expands its presence.
Delaware Adopts Control Share Acquisition Statute for Registered Closed-End Companies and Business Development Companies Organized in Delaware
The state of Delaware recently amended the Delaware Statutory Trust Act to establish a share forfeiture as a defense against expropriation.
Read our customer alert to learn more about this law and its effects.