Hello Fintech Friends,

Welcome to another week of fintech policy updates. This week, we provide a roundup of the major developments from the previous week related to crypto regulation, enforcement, artificial intelligence (AI), and payments. Additionally, we are excited to share the second and final segment of a two-part guest contribution by the Policy Edition’s friend Rina Wulfing, Policy & Campaigns Manager in North America for Wise. Rina's insightful contribution sheds light on the topic of junk fees in cross-border payments, highlighting its absence from the regulatory and policy agenda in the U.S. If you missed the first part of Rina's contribution, make sure to check out last week's edition. And stay tuned for more updates and analysis on fintech policy in the weeks to come!

As always, if you are not yet subscribed to the Policy Edition of This Week in Fintech, make sure to subscribe below! Additionally, if you are interested in contributing to the Policy Edition as a guest writer to cover ongoing events or dive deep into fintech policy issues, please feel free to reach out to me on Twitter or LinkedIn.

1. Crypto Regulation

Last week, Oklahoma's governor signed into law a new legislation aimed at granting full freedom for Bitcoin mining activities within the state. This landmark bill safeguards various rights associated with Bitcoin, including mining, buying and selling, self-custody, and operating nodes. This move aligns Oklahoma with a growing trend, as similar bills have been introduced or approved in 12 other states across the country. Advocating for this legislation is the Satoshi Action Fund, which has played a pivotal role in championing similar measures at the state level.

In the EU, key EU Parliament committees have approved three anti-money laundering (AML) regulations that will extend to cover cryptocurrencies. Following a political agreement reached in January, both the Committee on Civil Liberties, Justice and Home Affairs and the Committee on Economic and Monetary Affairs jointly voted in favor of these regulations during a meeting held on March 19. The new regulations introduce specific restrictions on cash transactions, including a prohibition on transactions exceeding €10,000 in cash and outlawing anonymous cash transactions above €3,000. However, the full implications of these regulations for the use of self-custody crypto in the purchase of goods and services, which could be considered akin to the use of anonymous cash, remain unclear at this time.

2. Enforcement

In our enforcement news for this week, a San Diego federal court approved a class action lawsuit filed by users of bankrupt crypto exchange FTX against the now-defunct Silvergate Bank. The users accused Silvergate of facilitating fraud that ultimately led to the collapse of FTX. The judge agreed with the class group's contention that Silvergate was complicit in FTX fraud and that it unfairly profited from aiding fraudulent activities at the expense of FTX users.

In other news, recent reports revealed that the Ethereum Foundation, a pivotal organization within the Ethereum ecosystem, is under scrutiny by an undisclosed "state authority." Following this, Fortune reported that the US Securities and Exchange Commission (SEC) has initiated efforts to classify ETH as a security.

Lastly, crypto trading platform Genesis has agreed to pay a $21M penalty to the SEC to settle charges that it engaged in the unregistered offer and sale of securities through cryptocurrency.

3. AI

On March 21, the UN General Assembly unanimously adopted a resolution aimed at promoting the safe, secure, and trustworthy development of AI globally. The resolution urges member states and stakeholders to ensure that the deployment of AI aligns with international human rights laws and calls for efforts to bridge the technological gap among countries in AI development. The United States played a leading role in the adoption of the resolution. However, being a non-binding resolution, its direct impact on national AI policies and regulations remains uncertain.

Meanwhile, the SEC took action against two investment advisors, Canadian company Delphia and U.S.-based Global Predictions, for what the SEC called "AI washing." The SEC claims that the two companies made misleading statements regarding the use of AI in their investment advice. Following a cease-and-desist order, both companies agreed to settle the charges by paying a combined total of $400,000 in civil penalties.

4. Payments

The Department of Justice and 16 state attorneys general filed a lawsuit against Apple, accusing the tech giant of monopolistic practices hindering the development of super apps. Apple's alleged actions limit consumers' ability to switch between smartphone platforms and deny access to other digital payment services. The lawsuit contends that Apple's control over the smartphone market makes it economically unviable for companies to develop apps, including digital wallets, for iPhone users. The complaint accuses Apple of imposing restrictive contractual terms on developers and undermining apps that could reduce users’ dependence on the iPhone. By discouraging cross-platform digital wallet development, Apple allegedly solidifies its ecosystem, making it challenging for users to switch to other smartphones. The lawsuit in the US comes amid similar antitrust scrutiny in Europe, where Apple was fined nearly $2B for allegedly abusing its dominance in the music streaming market.

5. Junk Fees in Cross-Border Payments (guest contribution by Rina Wulfing)

What, if anything, can be done about junk fees? 

Last week, I shared some context on why exchange rate markups in international payments and remittances should be considered a “junk fee”. This week, I want to share a bit more about what can actually be done about it. 

As a start, we need to include financial transactions, including international payments/remittances, as part of junk fees initiatives by regulators and policymakers. To bring more transparency to the market, Wise is advocating for the following: 

• The White House to incorporate transparency in exchange rate markup in junk fees initiatives 
• The CFPB to update the Remittance Rule to require exchange rate markups to be included as a fee 
• The CFPB to issue Best Practices Guidance providing instructions for simplified, transparent pricing of remittance disclosures 
• Congress to include banning hidden fees in exchange rate markups in junk fees legislation

Wise continues to advocate for these changes because it's part of our mission, and we actively encourage our customers to contribute their experiences of junk fees, too. Consumers can tell the CFPB about their experience by sharing their hidden fees story, and join Wise’s global grassroots campaign Nothing To Hide, which strives to bring transparent pricing to international payments.

If we can achieve all of these milestones, we will be significantly closer to eliminating hidden fees in exchange rate markups and offering Americans the transparent, low-cost financial services they deserve. 

Read Wise’s Junk Fees Report. 

Join me in conversation on Twitter or LinkedIn or leave a comment below.

See you next week!