MoFo's Financial Markets & Innovation

Please see below for this week’s Financial Markets & Innovation Weekly Update from Morrison Foerster, tracking how emerging technologies are reshaping financial markets and how U.S. and global regulators are responding. Covering developments across digital assets, prediction markets, artificial intelligence, and next-generation trading infrastructure, this update highlights key regulatory actions, enforcement activity, policy signals, and related market structure implications.

CFTC Innovation Task Force Sets Lineup for First Super Intelligence Forum

On October 20, the CFTC Innovation Task Force released the agenda for the inaugural Frontier Forum on Super Intelligence, also known as artificial intelligence. Attendees will discuss how AI is being implemented, the impact AI will have on U.S. markets, and the CFTC’s role in fostering responsible adoption and innovation while protecting market participants from new risks. CFTC Chairman Michael Selig stated that AI “is poised to transform our financial markets” and the CFTC will remain active in the next stages of market innovation.

CFTC’s Selig Details CFTC’s Internal AI Buildout for Market Surveillance

On October 20, CFTC Chairman Michael Selig addressed his agency’s use of artificial intelligence, whether post-2008 financial crisis regulations had gone “too far,” and how he is pressing forward with crypto rules despite the CLARITY Act’s failure. The remarks come as the CFTC continues to position artificial intelligence as both a supervisory tool and a subject of its broader innovation agenda, alongside its parallel work exploring AI through the Innovation Task Force’s Frontier Forum series.

OCC Finalizes Stablecoin Rules Required Under the GENIUS Act

On October 21, the Office of the Comptroller of the Currency (OCC) issued a final rule implementing the GENIUS Act regarding the issuance of payment stablecoins and certain related activities by entities subject to the OCC’s jurisdiction. The majority of the GENIUS Act rules are codified in a new 12 CFR Part 15 and cover activities, reserve assets, redemption, risk management, audits and supervision, the transition of state-qualified issuers to the federal framework, custody, applications and registrations, examination of foreign issuers, revocation of approval, and capital and operational backstops. The rule also revises rules on capital adequacy standards, prompt corrective action rules, fee assessments, and rules of practice and procedure. The final rule will be effective along with the GENIUS Act on January 18, 2027.

SEC’s Investment Management Chief Urges Advisers to Act on AI Without Waiting on the Agency

On October 19, the Director of the SEC’s Investment Management Division, Brian Daly, instructed advisors not to “wait for regulators to hold your hands” as they adopt artificial intelligence, warning that regulatory guidance may be “too limited and too late.” If entities identify regulations or interpretations that prevent investment advisors from using AI tools, they should contact the SEC for guidance. The remarks add to a string of recent statements from federal financial regulators, including the CFTC’s public comments on building internal AI capabilities, emphasizing private industry innovation instead of waiting for regulator insight.

SEC Staff Issue FAQs on Tokenized Stock Trading Venue Exemption

On October 20, the SEC Division of Trading and Markets published a set of frequently asked questions addressing the recently published Innovation Exemption, which we discussed in our client alert. Among the topics addressed, a tokenized security venue (“TSV”) operating under the TSV Exemption must publish a public notice at least 30 calendar days before beginning operations, after its operations and access standards are established and ready for production and must keep that notice current as required by the order. The FAQs also address how a TSV should identify, in its public notice, tokenized NMS stocks still subject to an issuer notice objection period, and how the TSV must amend that notice once the period lapses or if the issuer timely objects. The SEC separately published and will continue to update a list of persons that have provided written notice of their intent to operate under the TSV Exemption. 

If you have any questions about these developments or would like to discuss how they may affect your business, please contact any of the partners listed.