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 briefing – US Securities and Exchange Commission continues focus on cybersecurity with enforcement action against London-based publisher

Clifford Chance briefing – Luxembourg insurance regulator amends cloud outsourcing rules

SPOTLIGHT: 

Spotlight: Do UK e-money and payment services firms hold safeguarded funds on trust?

In a recent decision, the UK High Court held that the customer funds of an insolvent UK authorised e-money firm are not held on trust for customers. This conflicts with both an earlier High Court decision (which held that customer funds of an insolvent UK authorised payment services firm were held on trust), and with guidance from the Financial Conduct Authority (which stated that both e-money and payment services firms hold their customer funds on trust).

GLOBAL LEGAL AND REGULATORY UPDATES

Africa and the Middle East

Arab countries:

• (18 Aug 2021) Arab Monetary Fund policy guide, which sets out a road map and guidance for the adoption of distributed ledger technologies (DLT) in the financial sector .| Press release

Ghana:         

• (11 Aug 2021) The Bank of Ghana has announced it intends to pilot a central bank digital currency (CBDC) in partnership with the German payment services firm, Giesecke+Devrient. The pilot will analyse the economic, regulatory and technical requirements of an e-Cedi, and test it with banks, payment service providers, merchants, and consumers. | Press release

Americas

El Salvador:

• (17 Aug 2021) The Central Bank of El Salvador has published for consultation two documents regarding the application of the country's Bitcoin Law, which was passed in June 2021 and will introduce Bitcoin as legal tender in El Salvador from 7 September 2021: draft guidelines on the authorisation of the digital wallet platform for Bitcoin and dollars (in Spanish); and draft technical standards to facilitate the application of the Bitcoin Law​ (in Spanish). Responses are due by 6 September 2021.

Jamaica:      

• (9 Aug 2021) The Bank of Jamaica has announced it has minted the first batch of its CBDC. A total of JMD 230 million will be issued to deposit-taking institutions and authorised payment service providers as part of the pilot exercise, which will run until December. | Press release

US:  

• (17 Aug 2021) The Blockchain Regulatory Certainty Act has been reintroduced to Congress by Representatives Tom Emmer and Darren Soto. The bill was first introduced in January 2019, but stalled after being referred to the House Committees on Financial Services and the Judiciary. It is intended to exempt blockchain developers and service providers, including cryptocurrency miners, from money transmission laws. | Press release
• (16 Aug 2021) Joint letter to the Chairs of the Securities and Exchange Commission and the Commodity Futures Trading Commission, Gary Gensler and Rostin Behnam, from congressmen Patrick McHenry and Glenn Thompson calling for greater collaboration between the two agencies on digital assets and the impact that the regulation of them will have on America's innovation and economic competitiveness

APAC

Australia:     

• (18 Aug 2021) Warning issued by the Australian Securities and Investments Commission (ASIC) on the risks of trading cryptoasset-related financial products through unlicensed entities. ASIC calls on consumers to only invest via financial institutions that hold an Australian financial services or markets licence.

China:          

• (13 Aug 2021) The draft Personal Information Protection Law has been submitted to the National People's Congress for deliberation. Among other things, the bill prohibits the excessive collection of personal information by mobile apps and introduces provisions designed to mitigate the risks of bias and the lack of transparency in algorithmic decision-making. | Press release (in Chinese)

Thailand:     

• (19 Aug 2021) Bank of Thailand report​ setting out the findings of its study and survey on the implications of a retail CBDC on the Thai financial sector. Based on the findings, the Bank has established guidelines for the development and testing of a CBDC as a cash-like payment system.

Europe

EU:

• (17 Aug 2021) Report from the EU Parliament Economic and Monetary Affairs Committee on the EU Commission's proposed pilot regime for market infrastructures based on DLT. This report was adopted on 13 July 2021.
• (16 Aug 2021) EU Commission answer to a question on the work it is doing to regulate cryptoassets and protect investors from potential harm.

Luxembourg:             

• (5 Aug 2021) Commissariat aux Assurances (CAA) circular​ (in French) which updates its guidance to insurance undertakings regarding outsourcing to cloud computing service providers. The amended guidance introduces additional requirements on, among other things, reporting to the CAA, establishing an information security function, and the contents of outsourcing contracts. | Clifford Chance summary

UK:

• (17 Aug 2021) Letter from the Financial Conduct Authority (FCA) to the chief executives of firms active in the investment-based crowdfunding market. The letter sets out the key risks the FCA has identified in the market, the steps it is taking to address them, and its expectations of firms.
• (13 Aug 2021) City of London Law Society response to the Law Commission's consultation on the 'possessability' of digital assets.

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.