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

• Clifford Chance video – Global Perspectives Series: Group litigation and class action (contains discussion of, among other things, the key risks in relation to claims arising from data breaches and misuse)
• Talking Tech article – Using Court orders to help recover stolen cryptocurrencies: Singapore High Court grants proprietary injunction over stolen BTC and ETH
• Talking Tech article – Copyright and artificial intelligence (AI): protecting value throughout AI process

SPOTLIGHT - Putting digital ethics back on the agenda - webinar

There is a growing spotlight on ethical principles such as fairness, transparency, accountability and access in tech. As the framework around digital ethics continues to evolve, Clifford Chance Counsel Jamal El-Hindi and Senior Associate Arnav Joshi will sit down with Professor Victoria Nash of the University of Oxford on Tuesday 29 March to discuss the hot topics for regulators, where the grey areas exist and how to deal with key ethical considerations.

Please visit our site to register

GLOBAL LEGAL AND REGULATORY UPDATES

International

• (24 Mar 2022) International Organization of Securities Commissions (IOSCO) report on the ways in which decentralised finance (DeFi) is evolving to mirror conventional financial markets. The report notes that IOSCO intends to set up a task force to further examine DeFi risks. | Press release
• (22 Mar 2022) The Bank for International Settlements Innovation Hub and the central banks of Australia, Malaysia, Singapore and South Africa have announced the completion of 'Project Dunbar', a joint initiative to test a multi-central bank digital currency (CBDC) platform for international settlements. The announcement states that Project Dunbar successfully demonstrated that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. | Press release
• (22 Mar 2022) Organisation for Economic Cooperation and Development consultation on a proposed reporting framework for cryptoassets, which is intended to increase transparency for global tax authorities. The proposals would require crypto-service providers to report on transactions and follow stricter requirements around the identification of their users. Comments are due by 29 April 2022.
• (21 Mar 2022) Financial Stability Board report on the impact of the COVID-19 pandemic on the ways in which individuals and firms engage with innovative financial service providers and traditional financial incumbents. | Press release
• (21 Mar 2022) IOSCO discussion paper on the risks posed by recent trends in retail investments, including the increasing use of digital trading platforms, gamification techniques, social media and cryptoassets. Responses are due by 23 May 2022. | Press release

Americas

Argentina:   

• (3 Mar 2022) Technical memorandum of understanding between the Argentine Minister of Economy, the country's central bank and the International Monetary Fund. The agreement, if voted through by the Argentine Senate, would restructure a USD 45 billion loan received by Argentina in 2018. It contains a provision stating that Argentina will seek to discourage the use of cryptocurrencies 'with a view to preventing money laundering, informality and disintermediation'.

Honduras:   

• (23 Mar 2022) Central Bank of Honduras communique (in Spanish) in which it clarifies that Bitcoin and other forms of cryptoassets are not regulated in the country and not recognised as legal tender.

US:  

• (23 Mar 2022) Accountability for Cryptocurrency in El Salvador Act, which has been approved by the Senate Foreign Relations Committee. The Bill, which was sponsored by Senators Jim Risch, Bill Cassidy and Bob Menendez, 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 an action plan for mitigating them. | Response from El Salvador's President Nayib Bukele
• (15 Mar 2022) National Institute of Standards and Technology report containing practical guidance on identifying and managing AI bias.

APAC

Australia:     

• (21 Mar 2022) Treasury consultation on a proposed set of minimum licensing and custody standards for cryptoasset secondary service providers. The proposals are based on the recommendations made by the Senate Select Committee on Australia as a Financial and Technology Centre. Comments are due by 27 May 2022.
• (21 Mar 2022) Speech by Senator Andrew Bragg in which he announces plans for a new Digital Services Act. The Act would bring together various legislative initiatives to reform the digital asset ecosystem in Australia and would be based on principles of technology neutrality, broad and flexible provisions, and regulation by Ministries rather than bureaucratic agencies. Bragg also discusses plans to review the taxation of digital assets and decentralised autonomous organisations.

India:             

• (21 Mar 2022) Ministry of Finance response to a parliamentary question on, among other things, the new tax policies for cryptoassets which are expected to come into effect on 1 April 2022. The response states that traders are not permitted to offset their losses from one cryptoasset against the profit on another.

Thailand:      

• (23 Mar 2022) The Securities and Exchange Commission has announced the issuance of new regulations on the provision of services by digital asset business operators. Specifically, the regulations ban digital asset business operators from providing any services or performing any activity that promotes the use of digital assets as a means of payment for goods and/or services. The regulations enter into force on 1 April 2022 and digital business operators have thirty days in which to comply. | Press release (in Thai)

Europe

EU:  

• (23 Mar 2022) EU Parliament's Economic and Monetary Affairs Committee report containing its negotiating position on the EU Commission's Markets in Cryptoassets (MiCA) proposal. The Committee announced key elements of its position on 14 March 2022, but had not published the report containing the full set of amendments until now. | Announcement
• (21 Mar 2022) EU Parliament 'at a glance' report which sets out the key elements of its negotiating position on the EU Commission's proposal for a regulation on a pilot regime for market infrastructure based on distributed ledger technology.
• (14 Mar 2022) European Data Protection Board consultation on draft guidelines on 'dark patterns' in social media platforms. Dark patterns are interfaces and user experiences that lead users into making unintended and potentially harmful decisions regarding the processing of their personal data. The draft guidelines are intended to provide practical recommendations to designers and users of social media platforms on how to assess and avoid them. Comments are due by 2 May 2022.

Ireland:         

• (22 Mar 2022) Central Bank of Ireland warning on the risks of investing in cryptoassets. The Bank warns investors of the risky and speculative nature of cryptoassets and advises people to be aware of misleading advertisements, particularly on social media.

UK:

• (24 Mar 2022) Financial Conduct Authority notice reminding its regulated firms of their existing obligations when interacting with, or exposed to, cryptoassets and related services.
• (24 Mar 2022) Prudential Regulatory Authority (PRA) Dear CEO letter highlighting the aspects of the existing regulatory framework that the PRA expects its regulated firms to consider when measuring and mitigating risks resulting from cryptoasset exposures.
• (24 Mar 2022) Bank of England (BoE) Financial Policy Committee report setting out its assessment of the role and financial stability implications of cryptoassets and DeFi in the UK and globally.
• (24 Mar 2022) BoE report summarising the responses the BoE received to its discussion paper on new forms of digital money, which was published in June 2021. The report also sets out the BoE's planned next steps on CBDCs and stablecoins, including consulting on the merits of further work to develop an operational and technology model for a UK CBDC, further assessment of the implications of stablecoin regulatory models, and further consideration of how to deal with the potential failure of systemic stablecoin entities.
• (23 Mar 2022) Competition and Markets Authority (CMA) letter to the Open Banking Implementation Entity (OBIE), following an update from the OBIE on the progress made on implementing the Open Banking initiative. The CMA summarises the final steps that should be taken to implement the initiative and calls on the OBIE to ensure they are completed.
• (22 Mar 2022) Advertising Standards Authority enforcement notice on the advertisement of cryptoassets. The notice instructs companies which advertise cryptocurrencies to review their advertisements and ensure they are compliant with the relevant rules. | Press release
• (18 Mar 2022) Responses from HM Treasury and the BoE to the recommendations in the House of Lords Economic Affairs Committee's report on the potential for a UK retail CBDC, which was published in January 2022.

Middle East

UAE:

• (21 Mar 2022) Abu Dhabi Global Market (ADGM) consultation on proposed enhancements to capital markets and virtual assets in the ADGM. Among other things, the ADGM is proposing to permit licensed firms to facilitate trading in non-fungible tokens (NFTs) (which it defines as intellectual property rather than investments or financial instruments) and to amend the requirements on the control of virtual asset public keys. Comments are due by 20 May 2022.

EVENTS

Global Perspectives Series: Putting digital ethics back on the agenda (29 March 2022):

There is a growing spotlight on ethical principles such as fairness, transparency, accountability and access in tech. As the framework around digital ethics continues to evolve, Clifford Chance Counsel Jamal El-Hindi and Senior Associate Arnav Joshi will sit down with Professor Victoria Nash of the University of Oxford to discuss the hot topics for regulators, where the grey areas exist and how to deal with key ethical considerations. | To register, please see the event registration form.

One Tech World Conference (1 April 2022):

Clifford Chance is delighted to be sponsoring this year's One Tech World Conference, a one-day virtual event championing diverse women in the tech industry. The event's core themes are innovation, emerging technology, careers and equity, diversity and inclusion. Join senior members of the Clifford Chance tech team for discussions on the future of tech, growing up in a digital world and the inclusivity of the blockchain sector. | To find out more information, visit the event website.

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.

Global Perspectives Series: What is the Metaverse? Will it change the world, and why should I care? (26 April 2022):

As a growing number of companies start to invest heavily in the Metaverse, Clifford Chance's panel of experts will consider the practical applications it's likely to have and explore the legal issues that may arise as it grows. With questions of data security, privacy, IP, copyright, antitrust, diversity and ethics starting to be linked to the Metaverse, our experts will analyse whether problems of the real world could take on a new, more worrying dimension in a virtual one. And as global banks start to take a presence in the Metaverse, our speakers will review the implications of a new economy opening up where wealth can be created, traded and enhanced using new digital currencies. | To register, please see the event registration form.