As one more eventful year in the world of financial regulatory policy unfolds, several key issues have emerged that merit attention. The year 2024 could potentially see more activity than the preceding ones, given the large backlog of proposed rules and the ramifications of the spring 2023 regional banking crisis. Moreover, with the crypto and tokenization sectors evolving rapidly, regulators are attempting to keep pace.
Election-Year Influence
Traditionally, the government tends to slow down during a presidential election year. However, recent times have demonstrated the exact opposite in the case of financial regulatory rulemaking. For instance, 2020 saw the adoption of 201 final rules by essential federal financial regulators—the highest in the post-Dodd-Frank era. It surpassed the preceding non-election years: 95 in 2017, 106 in 2018, and 144 in 2019. Agency heads will likely be motivated to expedite their policy work, especially in light of an uncertain election year. Proposed rules from top regulatory bodies such as the Federal Reserve, FDIC, and Comptroller of the Currency will be scrutinized for potential changes.
Challenges to Authority
Over the past years, numerous lawsuits have been filed against regulators, arguing that many reforms overstep legal authority and lack appropriate cost-benefit analyses. The outcomes of these lawsuits, some of which will be heard in 2024, may significantly reshape the regulatory process.
Banking Mergers
Several factors, such as the interest rate environment and stringent regulations, are pushing banks of all sizes towards mergers. However, the way regulators apply their standards to these mergers is a critical issue that requires careful evaluation.
Artificial Intelligence
This year may witness AI making its way into the statutory and regulatory rulebooks. Leaders of major regulatory bodies have already broached the possible implications of AI in public speeches. The Financial Stability Oversight Committee’s recent 2023 annual report also underscored AI’s significance.
Cryptocurrency and Blockchain
Despite the bubble burst of FTX in 2022, Bitcoin’s price saw a roughly 160% rise in 2023, which reinvigorated crypto proponents. This year, the regulatory community will have to address the expanding markets while balancing innovation promotion and protection from potential pitfalls.
Keeping these issues at the forefront will ensure a more regulated and transparent future for the financial world. To view the complete original write-up, visit Bloomberg Law.