Clifford Chance

Welcome to this week's global fintech round-up, summarising fintech regulatory developments that have happened around the world along with our Clifford Chance fintech publications and upcoming events.

Details of these and previous developments can also be found on our Fintech Topic Guide on the Clifford Chance Financial Markets Toolkit.

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CLIFFORD CHANCE PUBLICATIONS AND MATERIALS

• Clifford Chance webinar recording –  Post GameStop – a fresh look at market behaviour in the digital age
• Clifford Chance video – What are the top three tips for a successful data centre construction project?

SPOTLIGHT: 

The shifting global regulatory outlook for stablecoins

In case you missed it this week, catch up with the recording of our expert panel discussion on the evolving international regulation of stablecoins. Our global experts share some of the opportunities around this emerging asset class, as well as the challenges for classification and regulation. They also give their views on what's next for Facebook's global stablecoin Diem (formerly Libra). Grab a hot drink and watch in full.

GLOBAL LEGAL AND REGULATORY UPDATES

International 

• (19 Mar 2021) International Monetary Fund (IMF) working paper​ which sets out a new index designed to demonstrate the impact that the adoption of technology in financial services has had on financial inclusion.
• (19 Mar 2021) Financial Action Task Force (FATF) consultation​ on proposed updates to its guidance on a risk-based approach to virtual assets and virtual asset service providers (VASPs). The proposals include revisions to the guidance on the licensing and registration process for VASPs, the application of FATF standards to stablecoins​ and the implementation of the 'travel rule'. Responses are due by 20 April 2021. | Press release​
• (18 Mar 2021) Speech​ by Financial Stability Board​ (FSB) Secretary General, Dietrich Domanski, on the impact of COVID-19 on the FSB's work agenda. Among other things, Domanski discusses the work the FSB is doing to harness the benefits of financial innovation, including work under its cross-border payments roadmap and on the harmonisation of the regulatory reporting of cyber incidents.
• (12 Mar 2021) IMF working paper on quantum computing and the financial system.

APAC

Australia:

• (18 Mar 2021) The Senate has voted to expand the scope and length of the Senate Select Committee on Financial Technology. The Committee is to be renamed the 'Select Committee on Australia as a Technology and Financial Centre' and will focus on digital assets and neobanking, among other things. Its deadline has been extended from April 2021 to October 2021. | Press release

Hong Kong:

• (25 Mar 2021) The Hong Kong Monetary Authority (HKMA) has launched a global regtech challenge, in which firms are invited to demonstrate solutions designed to help solve common risk management and regulatory compliance pain points experienced by banks. | Press release
• (23 Mar 2021) Speech​ by HKMA Deputy Chief Executive, Howard Lee, in which he discusses the HKMA's work on central bank digital currencies (CBDCs), the use of commercial data to improve financial intermediation and the adoption of innovative technology to support supervision.

India:

• (24 Mar 2021) Amendments to Schedule III of the Companies Act 2013​, which introduce requirements around the disclosure of cryptoassets, including the profits or losses made from the investment or trading in cryptoassets, the amount of cryptoassets held at the time of reporting, and the amount of advance deposits made by customers for the purposes of trading or investing in cryptoassets.

Japan:             

• (26 Mar 2021) Speech by the Executive Director of the Bank of Japan, Shinichi Uchida, at the launch of the Liaison and Coordination Committee on CBDC, which includes private sector participants. The Bank of Japan announced that it will conduct a CBDC proof of concept from April 2021, which may be followed by a broader pilot program involving payment service providers and end users if required.

Singapore:   

• (17 Mar 2021) Personal Data Protection Commission guidance on the roles of data contributors and data intermediaries in the context of a data collaboration arrangement.

Thailand:      

• (19 Mar 2021) Bank of Thailand guidance on the regulation​ of Baht-backed stablecoins and other forms of stablecoins. The Bank notes that firms wishing to offer services related to Baht-backed stablecoins must consult with the Bank before beginning operations.

Europe

EU:

• (24 Mar 2021) EU Commission consultation on the potential barriers to ensuring a wide availability and use of instant payments in the EU. Comments are due by 2 June 2021. | Consultation strategy
• (24 Mar 2021) Members of the EU Parliament's Economic and Monetary Affairs (ECON) and Legal Affairs committees have exchanged views with experts on supervisory and policy related lessons learned from the Wirecard collapse. | Press release
• (22 Mar 2021) EU Council adopted conclusions on the EU's cybersecurity strategy. | Strategy webpage
• (17 Mar 2021) The ECON Committee has published its draft reports on the EU Commission's:(16 Mar 2021) Minutes from the EU Parliament's Fintech Working Group meeting on the use of distributed ledger technology (DLT) in finance. | Slides on DLT, cryptoassets and CBDCs
  • proposed regulation on digital operation resilience for the financial sector (the Digital Operational Resilience Act (DORA)); and
  • proposed DORA Directive, which will amend various financial services directives to add cross-references to DORA and to update responsibilities for technical standards.

Germany:    

• (24 Mar 2021) The Deutsche Bundesbank, in collaboration with the Deutsche Börse and the German Finance Agency, has successfully tested a DLT-based interface for settling electronic securities in central bank money.​ | Press release
• (19 Mar 2021) The Federal Financial Services Supervisory Authority (BaFin) has issued a consumer warning regarding cryptoassets. The warning endorses the recent notices issued by the European Supervisory Authorities reminding consumers that cryptoassets are risky and highly speculative investments. | Press release (in German)

Malta:           

• (24 Mar 2021) Malta Financial Services Authority (MFSA) notice, which enacts a set of amendments to the Virtual Financial Assets (VFA) Act. The amendments add the transfer of VFAs to the list of VFA services covered by the Act​, and adjust the definition of VFA exchanges to clarify that it covers the exchange of one VFA for another, a VFA for a fiat currency or a fiat currency for a VFA.
• (15 Mar 2021) MFSA consultation​ on the implementation in Malta of the EU Crowdfunding Regime. Responses are due by 5 April 2021.

UK:

• (26 Mar 2021) Financial Conduct Authority (FCA) feedback statement to its call for input on open finance. The statement sets out the FCA's feedback to respondents' views and the next steps for the open finance initiative, including assessing the regulatory framework that would be needed to support open finance and working with the Government and industry stakeholders to identify what industry roadmaps are needed to support legislation. | Press release
• (24 Mar 2021) Full list of responses to the Intellectual Property Office's consultation on the potential implications of artificial intelligence (AI) on the UK's intellectual property (IP) policy. In light of the responses, the Government intends to, among other things, consult on policy to protect AI-generated inventions and work, and to differentiate it from human work, publish enhanced IPO guidelines on patent exclusion practice for AI inventions, and review the ways in which copyright owners license works for use with AI.
• (23 Mar 2021) Full list of responses to the House of Commons Treasury Committee's consultation on the future of financial services. Respondents include the Bank of England, the Financial Conduct Authority, the Association of British Insurers, the International Regulatory Strategy Group and UK Finance.
• (19 Mar 2021) Several institutions have published their responses to HM Treasury's call for evidence on the UK's regulatory approach to cryptoassets and stablecoins, including:
  • the Association for Financial Markets in Europe;
  • the Financial Markets Law Committee;
  • the Investment Association; and
  • the International Swaps and Derivatives Association.

CLIFFORD CHANCE EVENTS

Perspectives series: CBDCs and the theory of money (29 April 2021):

The development of central bank digital currencies (CBDCs) – a digital representation of fiat money issued by a central bank – has been accelerated by COVID-19 and the resulting shift to digital payments, as well as the ongoing regulatory concern around proposed private global stablecoins such as Facebook’s Diem (formerly Libra). In this session, our international panel will consider the different approaches being taken by central banks globally, including the digital euro, renminbi and dollar, what practical adoption of CBDCs may look like and the legal structures that might be employed, and the consequences for businesses. | To register, please see the event registration form.

Warsaw Perspectives series: Three years of GDPR – what now? An attempt to assess and determine the perspective for the development of the European privacy protection system (12 May 2021):

The GDPR has become a part of our everyday lives. During this seminar, we will consider what has changed in personal data protection over the last three years, how the financial sector is affected by these changes, to what extent the regulatory authority should use its powers and what other changes are to be expected. | Please note this seminar will be delivered in Polish, for more information and to register, please contact the Warsaw Perspectives team

Additional Information

This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. Clifford Chance is not responsible for third party content. Please note that English language translations may not be available for some content. 

The content above relating to the People's Republic of China (PRC) is based on our experience as international counsel representing clients in business activities in the PRC and should not be construed as constituting a legal opinion on the application of PRC law. As is the case for all international law firms with offices in the PRC, whilst we are authorised to provide information concerning the effect of the Chinese legal environment, we are not permitted to engage in Chinese legal affairs. Our employees who have PRC legal professional qualification certificates are currently not PRC practising lawyers.