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Wall Street's top regulator on Wednesday adopted new rules requiring publicly traded companies to disclose hacking incidents, a measure officials said was to help the investing public contend with the mounting cost and frequency of cyber attacks, Reuters reported. On a party-line vote, the five-member U.S. Securities and Exchange Commission also voted to propose requiring broker-dealers to address conflicts of interest in the use of artificial intelligence in trading, a reform partly influenced by the events of the 2021 "meme stock" rally when officials found robo-advisers and brokers used AI and game-like features to drive user behavior. The new cybersecurity rule will require companies to disclose a cyber breach within four days after determining it is serious enough to be material to investors. The rule would allow delays if the Justice Department deems them necessary to protect national security or police investigations, the SEC said.

When crypto company Binance launched its U.S. exchange in 2019, almost $70,000 of bitcoin changed hands in the first hour. But the demand didn’t come from external traders. “That was ourself, I think,” Binance Chief Executive Changpeng Zhao said in an internal message viewed by The Wall Street Journal. Just how much crypto trading volume is due to actual trades versus exchanges and coin promoters shuffling assets among themselves is an issue for regulators and investors trying to gauge the depth of these markets. The issue revolves around what is known as “wash trading.” This practice involves someone trading an asset with themselves or an affiliate. The result is that there isn’t economic substance to the trades, which can inflate both prices and trading volume. The U.S. outlawed wash trading for stocks and bonds nearly a century ago. Now, concerns about wash trading in crypto markets have mounted, especially since trading volumes have become a crucial marketing point for crypto exchanges to draw customers into an opaque market. The Securities and Exchange Commission sued Zhao and Binance.US last month, alleging that a firm he controlled inflated trading volumes on the U.S. exchange. The agency alleges Binance.US inflated trading volumes by using dozens of user accounts held by Sigma Chain, a Swiss trading company controlled by Zhao.

The U.S. Securities and Exchange Commission has hinted it may be set to appeal a recent ruling against the agency in its case against Ripple Labs and the XRP token, Forkast.com reported. The agency said that the Ripple decision was wrong in a filing for a different court case against Terraform Labs and its co-founder Kwon Do-hyeong. The filing was in response to a motion by Terraform lawyers arguing the case against the company should be dismissed based on the Ripple ruling. On July 6, U.S. District Court Judge Analisa Torres ruled that Ripple Labs’ programmatic sales of XRP cryptocurrency did not qualify as financial securities, or the offer and sale of investment contracts. The ruling was considered a partial win for Ripple, as the court still ruled that XRP sales to institutional investors constituted the unregistered offer and sale of investment contracts, violating securities law. However, lawyers for Terraform Labs said the Ripple ruling confirms the “legal insufficiency” of the agency’s argument that Terraform’s stablecoin and other cryptocurrencies were financial securities, according to documents filed July 18 asking the court to dismiss the SEC’s case against Terraform. The SEC charged Singapore-based Terraform and its South Korean founder Kwon in February for a “multi-billion dollar crypto asset securities fraud” involving the Terra stablecoin and Luna cryptocurrency, which both collapsed and erased billions of dollars in value.

Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges, a U.S. judge ruled on Thursday, a landmark legal victory for the cryptocurrency industry that sent the value of XRP soaring, Reuters reported. XRP was up 75% by late afternoon on Thursday, according to Refinitiv Eikon data. The ruling by U.S. District Judge Analisa Torres was the first win for a cryptocurrency company in a case brought by the U.S. Securities and Exchange Commission — though it did also give the SEC a partial victory. While the decision is specific to the facts of the case, it likely will provide ammunition for other crypto firms battling the SEC over whether their products fall under the regulator's jurisdiction. An SEC spokesperson said the agency was pleased with part of the ruling in which the judge held that Ripple violated federal securities law by selling XRP directly to sophisticated investors. It is possible for the ruling to be appealed once a final judgment is issued, or if the judge allows it before then.

Money-market funds are getting their biggest rules overhaul in years after Wall Street’s top regulator finalized a plan to stem rapid outflows during times of financial stress, Bloomberg News reported. The U.S. Securities and Exchange Commission decided Wednesday to require fees that could significantly affect a key corner of the $5.5 trillion industry. Although the regulations will make it more expensive to yank money during tumult, the regulator backed off a “swing pricing” proposal that the industry opposed. The new rules are meant to discourage runs like the one in March 2020 and shield remaining shareholders from costs tied to the high level of redemptions. After the pandemic’s onset roiled markets, the Federal Reserve was forced to step in to rescue money-market funds for the second time in 12 years, leading to calls for the SEC to impose tougher regulations. Under the regulations approved by three of the commission’s five members, some funds will face mandatory liquidity fees. Those will kick in after a one-year implementation period for institutional prime and institutional tax-exempt funds when daily redemptions surpass 5% of net assets.

Gary Gensler’s Securities and Exchange Commission is filling the crypto regulatory void, and the industry and its backers on Capitol Hill have so far been unable to check him, Bloomberg News reported. The tide was supposed to turn when Republicans gained control over the House last November. Finally, the thinking went, there would be restraints on the SEC chief. Yet after six months of hearings, initial plans and fiery statements about regulatory overreach, GOP lawmakers have yet to formally introduce their key proposals. The 2024 campaign season is about to kick into gear, and that means less time to debate complex policy issues and garner support from Democrats, who control the U.S. Senate. “Even if they do pull a rabbit out of the hat and get this out of the committee in a bipartisan way, get this to a floor vote, get it out of the House, there’s still going to be a significant hurdle to overcome with the Senate,” said Ron Hammond, director of government relations at the Blockchain Association, a crypto trade group. Although the SEC faces significant challenges in court, its power over the asset class appears to be growing. In the absence of new legislation, the watchdog keeps asserting jurisdiction and claiming the industry must abide by its strict investor-protection rules. Wall Street’s main regulator has signaled that it considers everything from crypto trading platforms to the vast majority of tokens as under its authority. The agency has recently sued two of the largest crypto exchanges, casting a cloud over the entire industry. The SEC also keeps thwarting plans for a Bitcoin exchange-traded fund and has sought sway over stablecoins.

The U.S. Supreme Court on Friday agreed to hear a bid by President Joe Biden's administration to defend certain Securities and Exchange Commission in-house enforcement proceedings in a case that could broadly undercut the power of federal agencies, Reuters reported. The justices took up the administration's appeal of a lower court's decision that struck down certain SEC enforcement proceedings as unconstitutional for violating the right to a jury trial and infringing on presidential and congressional powers. The case involves hedge fund manager George Jarkesy, who the SEC had fined and barred from the industry after determining he had committed securities fraud. The case represents the latest legal attack against the actions of the SEC, which enforces various federal laws that protect investors. The Supreme Court, which has a 6-3 conservative majority, has signaled skepticism toward expansive federal regulatory power.