The Year in Digital Wealth (Part 2)
We wish everyone a Happy New Year! To review Part 1 of our 2024 year in digital wealth, click here. We move to Part 2 of our year in review.
- 2025 will come with several big surprises;
- This year’s events had utility in focus;
- The government will (expectedly) remain in the background;
- Adoption will likely increase;
- We covered all crypto events in our Decentralized Diaries column;
- Plus, what will happen in the new year? (read on to find out)
As always, it’s your week (and year) in digital wealth!
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Key Government Agency Moves
The Federal government allowed innovation to thrive, creating an environment for industry growth. Several moves are noteworthy. Here are some of them.
The Department of the Treasury
The Treasury was generally light touch, allowing players to focus on creating solutions. More so, the Treasury remained behind the scenes, and the industry could feel the effects of its actions rather than see them.
There was an increased focus on the budding emergence of artificial intelligence, with a focus on stability.
In March, the Treasury published a report on AI-related cybersecurity risks in the financial services sector. The report covered end-to-end related issues and made several recommendations. A December follow-up report expanded on AI risks and opportunities.
The Financial Stability Oversight Council (FSOC) also released a Nonbank mortgage servicing report in May. Besides other actions, the Financial Services Sector Coordinating Council (FSSCC) published a ‘cloud services standards’ recommendation report in July.
The Securities and Exchange Commission (SEC)
America’s top regulator continued to make waves with its focus on enforcement actions, although it also gave guidance to other segments. A significant move was a February requirement for dealers to register with self-regulatory organizations.
Besides the July update of its website, the SEC also pushed the T+1 conversation further, alongside unified filing ecosystem upgrades and an increasing focus on market stability and investor protections.
In May, the Treasury’s Financial Crimes Enforcement Network (FinCEN) and the SEC jointly proposed new customer identification program rules for exempt reporting advisers (ERAs) and registered investment advisers (RIAs).
The Commodity Futures Trading Commission (CFTC)
The CFTC continued its statutory market participation with an increased enforcement role. In a January announcement, the CFTC issued an AI fraud advisory, alerting customers about increasing bot trading scams.
The CFTC also simplified the submission process for registered entities.
Additionally, in August, the agency approved a joint rule that proposed creating joint technical data standards.
The Consumer Financial Protection Bureau (CFPB)
Consumers got enhanced protections and ease of use with improved rules and measures that created a safer environment on the retail end. In January, the CFPB moved to correct improper background checks and credit file-sharing practices.
Medical bills on credit reports were not left out. Insights from the CFPB highlighted the inclusion of medical bills on credit scores and its impact on lending.
In May, the CFPB categorized buy-now-pay-later (BNPL) companies as credit card firms. Consequently, the bureau unveiled a framework that includes nonbanks with 50 million annual transactions and over.
Customers also now have improved opt-out options and notifications.
Studies and Insights
Several insights provided a bird’s eye view of the goings-on and future industry trends. Here are some of them.
McKinsey and Company
According to McKinsey’s “State of consumer digital payments in 2024” (published in October), the adoption of digital payments continues upwards. According to the ninth annual McKinsey Digital Payments Survey results, nine out of ten respondents in Europe and America made some form of digital payment in the last year.
Additionally, online shopping remained the leading payment avenue, with utility leveling off at the 70 percentile range in America.
Protiviti/North Carolina State University
The year has presented unique operational risks for the financial services industry. That’s what the 2024 Top Risks in the Financial Services Industry (by Protiviti and North Carolina State University) suggests.
According to the survey, cybersecurity risks were up 0.54 points on the survey scale to 6.02 in 2024, from 5.48 last year.
Furthermore, the duo predicted that cybersecurity issues will likely increase in the coming years.
Unique Product Launches and Partnerships
Some industry players collaborated and launched products and solutions worthy of mention. We have covered a few that deserve the spotlight for want of publishing space.
Goldman Sachs/Quantum Motion
In October, Goldman Sachs and UK-based quantum computing firm Quantum Motion collaborated to develop an options pricing algorithm that could change the game. The experiment showed promise for future implementations, with improved parallel processing capabilities (alongside) maximized efficiencies.
On the compliance end, in September, Big Four behemoth Deloitte revealed deployments with AuditBoard and SAP. The partnerships enabled maximized risk and control guidance.
Furthermore, SAP’s Governance, Risk, and Compliance Process Control integrated with AuditBoard’s Internal Audit & Sarbanes-Oxley (SOX) offerings.
The 2025 Verdict
- The industry will grow beyond expectations in 2025.
- There will be further government interventions in the coming year.
- Innovation will find new ways of expression, the next stage of the industry’s evolution.
- Now, we move to the new year!
