UK cuts banker bonus rules as a US crypto deal triggers national security alarms

Last week, regulators pulled the levers on two of the most sensitive topics in finance, banker compensation and national security risk in digital assets. In the UK, a major reform was enacted to boost post-Brexit competitiveness by relaxing rules for senior staff bonuses. Meanwhile, a high-profile crypto deal in the U.S. sparked a heated debate about foreign influence and the security of critical infrastructure. For CISOs and Compliance Officers, the message is clear: The competitive and geopolitical risks are intensifying, demanding a sharp focus on both regulatory flexibility and supply chain defense.

1. UK Regulation: The Post-Brexit Payday Pivot

In a decisive move to enhance London’s global competitiveness, the UK’s financial regulators streamlined the rules governing senior banker compensation.

• Bonus Deferral Halved: The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) confirmed a major reform to banker bonus rules. The required deferral period for senior managers will be cut from eight years down to four years.
• Red Tape Cut: The changes are designed to simplify the UK’s remuneration regime, with the FCA reducing its Handbook rules by over 70% by largely cross-referencing the PRA’s rules. Regulators argued the move cuts “red tape without encouraging the reckless pay structures” that contributed to the 2008 financial crisis.
• FCA Cracks Down on Misconduct: Separately, the FCA issued a Final Notice against BlueCrest Capital Management, censuring the firm and imposing a $101 million redress scheme over significant failures in governance and conflict of interest management. This move underlines the FCA’s continued focus on governance and client transparency even as other rules are streamlined.

Bob’s Insight: Competitiveness vs. Caution

This remuneration reform brings the UK more in line with other major global financial centers. For UK compliance teams, this is a technical simplification that needs immediate implementation for 2025 pay awards. However, the BlueCrest censure is a critical reminder that while rules on how you pay may be simpler, the rules on why you pay (governance, risk management, and conflict avoidance) are being enforced with maximum scrutiny.

2. US Security: The Crypto Deal That Raised an Alarm

A transaction involving a U.S. crypto mining company and a Chinese technology firm has intensified the debate over national security, critical infrastructure, and digital asset regulation.

• Preferential Terms: SEC filings revealed that a private Chinese company (Bitmain) provided unusually beneficial access and payment terms to American Bitcoin, a crypto firm partially owned by Eric Trump. This included unique, long-term collateral arrangements for hundreds of millions of dollars worth of specialized mining equipment.
• National Security Scrutiny: Experts and lawmakers expressed concern that the favorable terms could be an attempt to influence U.S. policy regarding crypto regulation, energy, or China. This underscores the national security risks inherent in the supply chain for crypto mining and other digital infrastructure.
• Regulatory Status Quo: Meanwhile, the SEC was operating with a significantly reduced staff due to a lapse in government appropriations, potentially slowing down any new regulatory guidance or enforcement actions.

Bob’s Recommendation: Assess Geopolitical Supply Chain Risk

For US financial institutions engaging with the digital asset space, this incident is a flashing red light. You must conduct enhanced due diligence on all third-party and fourth-party hardware and software suppliers—especially those with foreign state ties—to ensure your critical infrastructure is free from potential compromise or undue influence.

3. Global Cyber Attack: The Unpatchable Threat to Enterprise IT

The security of widely-used, enterprise-grade software was brutally exposed last week, emphasizing the vulnerability of the global supply chain.

• Oracle EBS Zero-Day: Harvard University confirmed it was affected by a major global cyber campaign that exploited a flaw in Oracle’s E-Business Suite (EBS), a core business platform used by thousands of large organizations, including financial firms. The attack, linked to the Cl0p ransomware group, targeted a zero-day vulnerability to access sensitive corporate and institutional data.
• Liquidity Risk: The incident highlights how a single, unpatched flaw in a widely relied-upon system can trigger cascading consequences across sectors. This risk is quantified by a recent HKMA study, which empirically linked cyber incidents to significant investment fund outflows and stressed that stronger cybersecurity preparedness is crucial for mitigating associated liquidity risk.

Bob’s Action Point: Prioritize Enterprise Patching and LDRR

Enterprise software remains the soft underbelly.

1. Mandatory Patching: Immediately verify patching status for all critical Oracle and other enterprise applications. The sheer number of organizations affected by this single flaw is unacceptable.
2. Liquidity Defense: Use the HKMA’s findings to justify increased investment in your Liquidity Defense and Recovery Roadmap (LDRR). Ensure your operational resilience planning includes a severe, but plausible, scenario involving a major third-party enterprise software breach causing a sudden confidence and liquidity shock.