Hello Fintech Friends,

Welcome to another week of fintech policy updates. In this edition, we will highlight the latest developments in crypto regulation, enforcement, artificial intelligence (AI), and payments. We are also thrilled to present the first segment of a two-part guest contribution by the Policy Edition’s friend Rina Wulfing, Policy & Campaigns Manager in North America for Wise. Rina will delve into the topic of junk fees in cross-border payments. Be sure to check back next week for the continuation of her insightful analysis!

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

The US Securities and Exchange Commission (SEC) is facing some pushback over its potential approval of ether-ETFs. Democrat senators Jack Reed (D-RI) and Laphonza Butler (D-CA) expressed concerns in a March 11 letter to the SEC, warning against further approvals of crypto ETFs. They argued that such approvals could expose investors to "thinly traded" markets susceptible to fraud and manipulation. Meanwhile, the US Department of Treasury proposed a series of tax rules for digital assets, including prohibiting wash-trading and imposing an excise tax on miners' electricity costs. These proposals were part of the 2025 revenue proposals outlined in the Treasury's "Greenbook," released on Monday alongside President Biden's budget. Notably, these crypto-related proposals mirror those from 2023, which did not progress into law.

In our international news, the U.K. Financial Conduct Authority (FCA) said it will not object to requests from Recognized Investment Exchanges (RIEs) to establish a UK listed market segment for crypto-asset-backed Exchange Traded Notes (cETNs), exclusively available for professional investors. In Europe, the European Banking Authority (EBA) has released new guidelines outlining procedures for the orderly redemption of asset-referenced or e-money tokens should the issuer fail to meet its obligations under the Markets in Crypto assets Regulation (MiCAR). Turning to Asia, Russian President Vladimir Putin signed a law on March 11, permitting companies in the country to utilize digital financial assets, including the digital ruble, for international payments. The Hong Kong Monetary Authority (HKMA) has officially launched its stablecoin issuer sandbox, which we reported on two weeks ago. Thailand’s cabinet has granted tax exemption for crypto earnings as well as a $1B tax benefit to firms issuing investment tokens. Lastly, the Dubai International Financial Centre (DIFC) has passed new legislation treating digital assets as property.

2. Enforcement

Last week, Coinbase, the largest cryptocurrency exchange in the US, said it would appeal the SEC’s rulemaking petition denial. Coinbase contends that the SEC's rejection of the petition, filed in June 2022 to request rulemaking for the crypto sector, was arbitrary. Meanwhile, tensions escalated between Nigeria and Binance when Nigerian government officials invited Binance executives for discussions regarding an ongoing dispute, only to detain them afterward. The executives are slated to remain in custody in Nigeria until at least a March 20 hearing. In the Netherlands, the Dutch Central Bank imposed a €2.85M ($3.1M) fine on the crypto exchange Crypto.com. The fine stems from Crypto.com's failure to register for two years, thereby violating laws related to money laundering and terrorism financing.

3. AI

On March 11, the Spanish National High Court rejected Worldcoin's challenge of the Spanish Data Protection Agency (AEPD) order freezing its operations in Spain on March 6. The court underscored the significance of "safeguarding public interest" and voiced concerns about the quality of information provided by Worldcoin regarding the consent of data donors.

4. Payments

During the hearing at the House of Representatives Committee on Financial Services Subcommittee on Digital Assets, Financial Technology, and Innovation, the Consumer Financial Protection Bureau (CFPB) received some pushback against its proposed rule governing digital payment apps and wallets. Criticism centered around the perceived adoption of a one-size-fits-all approach and potential overstepping of authority. In parallel, in the UK, draft legislation has been released allowing payment service providers (PSPs) to delay outbound payments processing for up to four business days in cases of suspected fraud. Additionally, the European Parliament approved new rules on Tuesday aimed at harmonizing regulatory responses to sanctions violations across the EU, including those related to cryptocurrencies. Moreover, the Central Bank of Sweden has proposed regulations to guarantee the continued use of cash in transactions, acknowledging the intense competition posed by digital payment methods.

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

By now, most of us will have heard of “junk fees.” Last year, the Biden Administration announced a crackdown across industries to protect American consumers from punitive charges that cost Americans billions each year.  

While the initial policy focus was on concert, resort and airline fees, this has been expanding to the financial sector in the last few months. But there’s one major “junk” fee that is still being overlooked: exchange rate markups in international payments and remittances. 

International payments are riddled with hidden fees in the US, which is the largest source of remittances worldwide. Specifically, providers can advertise “$0” or “no fees”, but hide fees via a bloated exchange rate. In 2023 alone, hidden fees in exchange rate markups cost $5.8 billion, impacting everyone from immigrants sending remittances to their families, to students studying abroad, to service members sending money home, and small businesses going global.

A new Junk Fees report commissioned by Wise reveals that the vast majority (81%) of Americans agree that a hidden fee included in a currency exchange transfer is a junk fee, demonstrating that this isn’t just a niche issue. It’s one that affects Americans all over the country, and policymakers should take note. 

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See you next week!