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.

CLIFFORD CHANCE BRIEFINGS AND MATERIALS

• (17 Feb 2022) Talking Tech article – JPX begins research on digitally tracked green bonds utilising security tokens
• (16 Feb 2022) Clifford Chance article – Clifford Chance Partner Thomas Vinje interviews President of the Bundeskartellamt on the digital economy, recent tech competition cases and the new German regulatory tools targeting big tech
• (15 Feb 2022) Talking Tech article – E-privacy check-in: where we are and where we're headed
• (15 Feb 2022) Talking Tech article – Google Analytics declared illegal in France: big tech and business competitiveness at risk in EU
• (14 Feb 2022) Clifford Chance article – Tech sector continues to ripen for whistleblowing at a time when EU Directive may complicate investigations
• (11 Feb 2022) Talking Tech article – The Metaverse: what are the legal implications?

SPOTLIGHT: State of Blockchain Report 2021

Global blockchain deals and dollars shattered records in 2021, with funding growing 713% year-on-year as investors poured money into cryptoasset and non-fungible token start-ups. In this report, CBInsights sets out global investment trends across the blockchain sector, providing global data and analysis on deal-making, funding, and exits by private market blockchain companies.

GLOBAL LEGAL AND REGULATORY UPDATES

International

• (16 Feb 2022) Financial Stability Board updated assessment of the risks cryptoassets pose to financial stability. The report focuses on the risks posed by unbacked cryptoassets, stablecoins, decentralised finance (DeFi) and cryptoasset trading platforms. | Press release

Americas

Canada:       

• (14 Feb 2022) A Speech by the Deputy Prime Minister, Chrystia Freeland, in which she discusses the invocation of the Emergencies Act in response to widespread anti-vaccine mandate blockades and protests across Canada. The Act gives the Government enhanced powers for 30 days to, among other things, prohibit public assembly, travel and the use of specific property. Freeland notes that, under the Act, the Government is broadening the scope of the country's anti-money laundering and counter terrorist financing (AML/CFT) rules to cover crowdfunding platforms. Under the amended rules, all crowdfunding platforms, and the payment service providers they use, must register with the Financial Transactions and Reports Analysis Centre (FINTRAC) and report large and suspicious transactions to FINTRAC.

US:  

• (17 Feb 2022) The Justice Department has announced the establishment of a new taskforce, the National Cryptocurrency Enforcement Team (NCET), which will be responsible for identifying areas of cryptoasset-related criminal activity that require increased investigative or prosecutorial resources, with a particular focus on virtual currency exchanges, mixing and tumbling services and infrastructure providers. | Press release
• (16 Feb 2022) Accountability for Cryptocurrency in El Salvador Act, which has been introduced by a bipartisan group of senators (Jim Risch, Bill Cassidy and Bob Menendez). The Bill seeks to mitigate the potential risks posed by El Salvador's adoption of Bitcoin as legal tender. If passed it would require the State Department to produce a report on the risks and proposed mitigants.
• (15 Feb 2022) Discussion draft of the Stablecoin Innovation and Protection Act, which has been introduced by Representative Josh Gottheimer. The Bill proposes labelling certain stablecoins as 'qualified' if they can be redeemed on a one-for-one basis for the US dollar. These qualified stablecoins would be neither securities nor commodities under US law and would be issued either by federally-backed banks or by non-banks, with the support of a 'qualified stablecoin insurance fund' run by the Federal Deposit Insurance Corporation.
• (12 Feb 2022) Tweet from Senator Rob Portman in which he publishes a letter received from the Treasury Department suggesting that the Treasury intends to exempt crypto-miners, stakers and other 'ancillary parties' from the tax reporting requirements introduced under the Infrastructure Investment in Jobs Act (IIJA). Under the IIJA, crypto brokers are required to share data on their clients' transactions with the Internal Revenue Service.

APAC

India:             

• (14 Feb 2022) Speech on cryptocurrencies by the Deputy Governor of the Reserve Bank of India, T. Rabi Sankar. Sankar argues that cryptocurrencies do not fit the definition of currency, asset or commodity and that they should be banned rather than regulated in India.

Thailand:      

• (14 Feb 2022) Securities and Exchange Commission consultation (in Thai) on proposed amendments to the rules on advertising applicable to digital asset operators. The proposals are intended to improve the clarity of the rules and to bring them more in line with the rules of foreign regulators. Comments are due by 15 March 2022.

Europe

EU:  

• (15 Feb 2022) EU Parliament's Committee on Economic and Monetary Affairs (ECON) draft report on the EU Commission's proposal to require cryptoasset service providers to collect and make accessible complete information about the sender and beneficiary of any cryptoasset transfers. The ECON rapporteurs broadly support the proposal but set out a series of recommendations intended to strengthen the rules and ensure they effectively reflect the specific characteristics of cryptoassets.
• (14 Feb 2022) Speech by the President of the European Central Bank (ECB), Christine Lagarde, on the history and future of the euro. In her speech, Lagarde notes that the ECB intends to come to a final decision on the digital euro in 2024.
• (14 Feb 2022) ECB report on the effects of fintech lending on small and medium-sized enterprises.
• (11 Feb 2022) European Securities and Markets Authority (ESMA) roadmap for its sustainable finance workstreams 2022-24. Among other things, ESMA intends to identify examples of innovative technologies that could help the transition to a greener economy and to collect evidence on recent green fintech trends and interactions.

Belarus:        

• (14 Feb 2022) Decree (in Russian) on the register of addresses of virtual wallets and circulation of cryptocurrency, which has been signed into law. The Decree affirms the Government's support for the free circulation of cryptocurrencies and establishes a new identification process for virtual wallets that have been used in illegal activities and for the Government seizure of cryptoassets held by criminals. | Press release (in Russian)

Hungary:      

• (11 Feb 2022) Statement by the Governor of the Central Bank of Hungary, György Matolcsy, in which he sets out his support for ESMA's vice-chair, Erik Thedéen, who called for an EU-wide ban on 'proof of work' crypto-mining due to its high energy usage.

Russia:          

• (15 Feb 2022) The Central Bank of Russia has announced it has begun the first phase of its central bank digital currency (CBDC) pilot, which will involve participating citizens opening virtual wallets, converting non-cash fiat currency into CBDC, and then making transfers with other pilot participants. | Press release (in Russian)

UK:

• (17 Feb 2022) Final report of the Artificial Intelligence Public-Private Forum (AIPPF). The AIPPF is a joint initiative of the Bank of England and the Financial Conduct Authority (FCA), which was established to further dialogue on artificial intelligence (AI) innovation between the public and private sectors. The final report sets out the findings of the AIPPF's review of the barriers to AI adoption in UK financial services and the potential risks posed. The report also sets out potential ways to address such challenges and risks and guidance on best practice. | AIPPF webpage
• (14 Feb 2022) Committee of Advertising Practice (CAP) guidance on how its code applies to cryptoasset advertising. CAP notes that, while the FCA is planning to regulate crypto-advertising, in the meantime unregulated cryptoassets must comply with the CAP code and that, even after the FCA's regulations enter into force, adverts for non-fungible tokens (NFTs) will remain under the remit of CAP and the Advertising Standards Authority.
• (10 Feb 2022) Speech by the FCA's Chief Data, Information and Intelligence Officer, Jessica Rusu, in which she discusses the FCA's approach to data, innovation and technology.

Ukraine:          

• (17 Feb 2022) Bill on virtual assets (in Ukrainian), which has been passed by the Ukrainian Parliament at its second reading. In September 2021, the Bill was sent back to Parliament by President Volodymyr Zelensky with a number of recommended amendments. Parliament has now approved those amendments, including removing the Ministry of Digital Transformation from the list of authorities overseeing the cryptocurrency market. Instead, the National Securities and Stock Market Commission and the National Bank of Ukraine will have oversight responsibilities. Zelensky is expected to sign the Bill into law within the next ten days.

EVENTS

New technologies – new justice (3 March 2022):

Clifford Chance and the Helsinki Foundation for Human Rights are delighted to invite you to join a virtual conference involving an international group of scientists, practitioners and senior representatives from public bodies and NGOs, presenting their perspectives on the digitisation of the justice system in different European jurisdictions. The panels will discuss themes covered in a recent report jointly issued by the Helsinki Foundation for Human Rights and Clifford Chance, entitled New technologies – new justice – new questions, and address areas of courts' activities in which the impact of new technologies is most visible and where implementation of innovative solutions is most needed. | For more information and to register, please see the event page.

Warsaw Perspectives Series: Legal, regulatory and product challenges in insurance in light of cybersecurity and new technologies (6 April 2022):

IT systems, artificial intelligence, machine learning and data analysis tools are all being increasingly used by companies in the insurance sector but are also potentially sources of significant risk. Insurance companies and distributors are exposed to the regulatory risk associated with the creation and distribution of insurance products, and their clients to cyber risk and the risk associated with technological service providers. During this seminar, Clifford Chance Counsel Marta Bieniada will discuss how to take advantage of the benefits of technology in a way that is effective and safe for both clients and the firms offering the innovative services. Please note this seminar will be held in Polish. | For more information and to register, please see the event page.