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 – Putting digital ethics bank on the agenda
• Talking Tech Article– Congress passes broad legislation requiring critical infrastructure sectors to report substantial cyber incidents and ransomware payments
• (29 Mar 2022) Clifford Chance article – Australian Securities and Investment Commission keeps a sharp eye on 'finfluencers' and doesn't 'double tap'
• (25 Mar 2022) Clifford Chance article – Digital Markets Act: European Parliament and Council seal the deal

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GLOBAL LEGAL AND REGULATORY UPDATE

International

• (31 Mar 2022) The Bank for International Settlements (BIS) Innovation Hub and the Monetary Authority of Singapore have announced they have developed a new prototype supervisory analytics platform. The platform applies advanced analytics, such as machine learning and natural language processing, to regulatory data, articles and news, in order to help regulatory authorities identify early warning indicators and potential risks to the banking system. | Press release

Americas

US:  

• (28 Mar 2022) Representatives Stephen Lynch, Jesús Chuy Garcia, Ayanna Pressley, and Rashida Tlaib have introduced the Electronic Currency and Secure Hardware Act to Congress. The bill, if passed, would grant the Treasury Department (rather than the Federal Reserve, as seen in previously proposed legislation) the right to develop and issue an electronic version of the US dollar. The proposed digital dollar would be token-based rather than account-based. | Press release
• (28 Mar 2022) Securities and Exchange Commission (SEC) proposed rule on the expansion of the definition of a securities dealer. The proposal would expand the definition to include people and businesses that use automated and algorithmic trading technology to execute trades or perform liquidity-providing roles. A footnote to the proposal confirms that the rules would also apply to activities relating to digital assets that have been deemed to be securities. | Statement from SEC Chair
• (25 Mar 2022) Office of Science and Technology Policy consultation seeking stakeholder views on the factors that contribute to the energy use and climate impact of digital assets and cryptocurrencies. Responses are due by 9 May 2022
• (23 Mar 2022) Government Accountability Office report on blockchain. The report contains an assessment of the technology and sets out four options intended to help policymakers implement blockchain technologies. | Summary

APAC

India:             

• (1 Apr 2022) Finance Act 2022, which has entered into force. Among other things, the bill introduces a capital gains tax of 30% on cryptoasset transfers, and a 1% tax deducted at source on all payments towards cryptoassets above INR 10,000 a year. | Parliamentary bulletin
• (24 Mar 2022) Speech by the Governor of the Reserve Bank of India (RBI), Shri Shaktikanta Das, announcing the launch of a new RBI Innovation Hub. The hub will be responsible for encouraging and supporting financial innovation in India and for establishing an ecosystem for the development of innovative prototypes, patents and proofs of concept.

Republic of Korea:    

• (25 Mar 2022) The Specific Financial Information Act has entered into force. The Act implements the Financial Action Task Fo​rce's travel rule, which requires cryptoasset service providers to share user and transaction data with each other, into domestic law. | Press release (in Korean)

Singapore:   

• (31 Mar 2022) The BIS Innovation Hub and the Monetary Authority of Singapore have announced they have developed a new prototype supervisory analytics platform. The platform applies advanced analytics, such as machine learning and natural language processing, to regulatory data, articles and news, in order to help regulatory authorities identify early warning indicators and potential risks to the banking system. | Press release

Thailand:      

• (31 Mar 2022) The Securities and Exchange Commission has announced it has issued new rules which require digital asset operators to prepare and submit trading data reports to their customers. The reports are intended to allow customers to check their transactions and support accurate tax filings. | Press release (in Thai)
• (25 Mar 2022) Bank of Thailand report setting out the responses it received to its consultation on proposed policies to support a digital economy and sustainable growth. The Bank intends to adapt its proposals in light of the feedback received and issue targeted consultations on the following topics: the engagement of banking groups in digital business; the payment system; the transition towards greater environmental sustainability; and the virtual bank licensing framework. 

Europe

EU:  

• (30 Mar 2022) European Systemic Risk Board (ESRB) concept note on the macroprudential framework for the banking sector. The ESRB proposes extending national authorities' macroprudential mandate to cover cyber risks. This would permit authorities to impose macroprudential measures to mitigate risks arising from the increasing importance of third-party tech providers in the financial system.
• (30 Mar 2022) Statement from Executive Board Member at the European Central Bank (ECB), Fabio Panetta, on the findings of the ECB's focus groups on the use cases for a digital euro. Panetta notes that the focus groups highlighted the importance of being able to use the digital euro in both online and physical stores to encourage uptake. He also notes that money laundering and terrorism financing checks may be simplified for small payments made in digital euros. | Focus group report
• (25 Mar 2022) The Council of the EU and the EU Parliament have reached a provisional political agreement on the proposed regulation on contestable and fair markets in the digital sector (the Digital Markets Act). The text must now be formally adopted by the co-legislators. | Council press release | EU Parliament press release | Clifford Chance summary
• (16 Mar 2022) Minutes from the EU Parliament Fintech Working Group meeting on whether the current EU regulatory and supervisory architecture is appropriate for the digital finance era.

UK:

• (31 Mar 2022) Speech by the Executive Director for Banking, Payment and Innovation at the Bank of England (BoE), Victoria Cleland, on the work the BoE is doing to modernise its payments infrastructure. Cleland focuses in particular on plans to improve the Real Time Gross Settlement (RTGS) service and to introduce a range of flexible and innovative settlement services.
• (30 Mar 2022) Financial Conduct Authority (FCA) call for input on the use of synthetic data in financial services. The FCA is seeking to understand the extent to which synthetic data, i.e. statistically realistic but 'artificial' data, can meet the increasing demand for large volumes of high-quality data to help develop and train innovative models and systems in the financial services sector. Responses are due by 22 June 2022.
• (30 Mar 2022) The FCA has announced that, for a select number of firms, it is extending the deadline for its temporary registration regime by one day, from 31 March 2022 to 1 April 2022. The regime permits cryptoasset firms that were in operation before 10 January 2020 and applied for registration with the FCA under the Money Laundering Regulations prior to 16 December 2020 to continue trading while the FCA processes their applications. | Press release
• (29 Mar 2022) Minutes from the BoE Central Bank Digital Currency (CBDC) Technology Forum, held on 8 March 2022. Members discussed the role of the BIS London Innovation Hub, CBDC interoperability, and the ways that CBDCs could help foster financial inclusion.
• (28 Mar 2022) FCA summary of the types of firm and technology that are supported by its Regulatory Sandbox and Innovation Pathways.
• (25 Mar 2022) The BoE has announced it is collaborating with the Massachusetts Institute of Technology on a twelve-month CBDC research project. The project will focus on the potential technical challenges, opportunities and risks involved in designing a CBDC system. | Press release
• (25 Mar 2022) Digital Regulation Cooperation Forum portal, which collates recent research on emerging and future digital developments from eight UK regulatory bodies.

EVENTS

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.