Supervision

The collapse in the value of two cryptocurrencies linked to South Korea’s Terra blockchain has sent the crypto world aflutter. The resultant crash wiped out over USD 15 billion in cryptocurrency value, raising questions about the level of stability offered by “stablecoins” and attracting the attention of politicians and regulators worldwide. Jake Lee, chief strategy officer of Gopax, a South Korean cryptocurrency exchange, who knows the players involved,  shared his insights at the recent Finverse Forum conference in Luxembourg. 

Revenue from corporate banking activities in Luxembourg has risen nearly 60 percent since 2016 to approximately 3 billion euro, according to a new study conducted by consultancy firm PWC. The consultants also found a need for the government and regulators to join the banking sector on its innovation journey in order to address regulation challenges. 

Active management of investment funds is no guarantee for outperformance during volatile times in financial markets, according to a new study presented on Monday by Europe’s top financial markets authority. “There is low ability to generate sustained positive alpha, especially for larger funds,” it said.

Financial supervisors in Luxembourg and elsewhere in Europe on Monday stepped up their efforts to maintain financial stability, protect investors and ensure the orderly functioning of markets as part of the European Union’s overall response to the “tragic consequences” of Russia’s military aggression.

Dutch financial group ING is bracing for a criminal indictment in Luxembourg over its failure to properly manage anti-money laundering (AML) processes at its unit in the Grand Duchy.

The bank said it was informed in January by a Luxembourg investigating judge that he intends to instruct the relevant prosecutor to prepare a criminal indictment regarding shortcomings in the anti-money laundering at ING Luxembourg.

Rather than having to file the same publicly available financial and non-financial information multiple times with national and European regulators, why not have a single, centralised repository for this data? That’s the idea behind the European Single Access Point (ESAP) which has just been given the go-ahead. ESMA is now working on the devilish detail, with a view to launch at the start of 2025.

Top-level European securities markets regulator ESMA (European Securities and Markets Authority) has announced it will be examining the valuation of UCITS and open-ended alternative investment funds (AIFs) across the EU.

Integrating distributed ledger technology (DLT) can be “a real challenge” for financial institutions and regulators, Luxembourg’s financial regulator the CSSF (Commission de Surveillance du Secteur Financier) said last Friday in a white paper on distributed ledger technology (DLT), also known as blockchain (a type of DLT, the CSSF noted). 

Luxembourg has decided to raise charges for supervising financial institutions by approximately 10 to 15 percent this year, according to an analysis of the Grand Duchy’s recent government decision. The increase was roughly 15 percent for banks, while investment firms were informed of increases of around 10 percent for 2022.

In the medium term, the green transition may further fuel inflationary risks, according to ECB board member Isabel Schnabel in an interview with the Financial Times last weekend. Rising energy prices, she said, may require the ECB to do more to hold back increases. She urged portfolios to increase their investments into real assets.