TFU | Jan. 15-22

Leading Off

The SEC questioned SIFMA about how cryptocurrency ETFs would satisfy regulatory requirements; Zelle is facing consumer complaints due to onerous anti-fraud checks; TechCrunch provided a primer on the EU’s forthcoming GDPR; Goldman Sachs made moves to grow its consumer lending portfolio; Standard Chartered and BB&T set up new fintech investment units; and the New York Times examines the current cryptocurrency mania through the lens of history.   

In the News…

SEC questions SIFMA about cryptocurrency ETFs.  The U.S. Securities and Exchange Commission (SEC) sent a letter [full text] to the Securities Industry and Financial Markets Association (SIFMA) regarding the development of cryptocurrency exchange traded funds (ETFs). The SEC said it has “significant outstanding questions” about how such funds would satisfy regulatory requirements.

Mulvaney halted CFPB data collection over breach concerns.  Acting Director of the Consumer Financial Protection Bureau (CFPB) Mick Mulvaney cited “hundreds of confirmed and suspected data breaches” as justification for suspending CFPB data collection activities. Senator Elizabeth Warren (D-MA) said it was merely “pretext to halt and weaken critical agency functions.”

Users frustrated by Zelle anti-fraud efforts.  The bank-backed P2P payments service has received growing numbers of consumer complaints over account setup and transaction execution. Zelle “acknowledged the problems,” but said they are the cost of “one of the industry’s strictest fraud-prevention programs.” Meanwhile, Bank of America reported that it processed nearly $68 million through Zelle in 2017, an 84% increase over 2016.

North Korea may be behind recent crypto hacks.  Cybersecurity firm Recorded Future reported that hackers with ties to North Korea may have targeted users of a South Korean cryptocurrency exchange using malware similar to the WannaCry ransomware. The report aligns with recent indications that North Korea is mining bitcoin and hacking crypto wallets as a source of revenue.  

TechCrunch’s “tl;dr” summary of the GDPR.  Effective on May 25, the EU’s forthcoming General Data Protection Regulation (GDPR) is the most significant change to European privacy law in decades and will impact hundreds of global businesses. This week, TechCrunch published a primer for anyone looking for a high-level overview of the regulation’s key elements.

Gene Ludwig discusses blockchain and regtech.  Promontory Financial Group CEO and former Comptroller of the Currency Gene Ludwig was interviewed by Bloomberg Law on a variety of topics including regtech, AI, and blockchain. The combination of new technologies and methods will drive an “asymptotic change in the way we do business,” he said.

Goldman takes steps to grow consumer lending.  Goldman Sachs has started marketing its personal loans “as a way to pay for home improvements,” and raised its maximum loan to $40,000, to compete for borrowers primarily served by firms like LendingClub and Prosper. Since launching its Marcus platform in Oct. 2016, Goldman has made over $2 billion in personal loans.

SC and BB&T set up fintech investment funds.  Both Standard Chartered and BB&T announced the creation of internal funds dedicated to investing in fintech. Standard Chartered’s SC Ventures will “focus on managing the bank’s [fintech investments] and [seek] new ones;” and BB&T’s new fund, valued at $50 million, will “invest in and acquire emerging digital technology companies.”

Beyond the bitcoin bubble. The New York Times takes a deep dive into the current cryptocurrency mania, placing it into the context of other technological advances throughout history. The article says the current climate around crypto may be “a case study in irrational exuberance,” and ultimately “a distraction from the true significance of the blockchain.”

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