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.

Latest Clifford Chance Publications

• 24 Jun 2022) Talking Tech article – Japan to have world's first clear regulatory framework for stablecoins
• (22 Jun 2022) Talking Tech article – The Digital Services Act: what is it and what impact will it have?
• (22 Jun 2022) Talking Tech article – Non-fungible tokens: an introduction and some key intellectual property considerations
• (22 Jun 2022) Talking Tech article – Artificial intelligence (AI) in financial services: what are the challenges?
• (21 Jun 2022) Talking Tech article – US lawmakers release draft of comprehensive federal data privacy bill

SPOTLIGHT

Crypto custody regulation – what rules apply globally? Clifford Chance Jurisdictions Tracker

Policy makers around the world have introduced specific regulatory regimes for cryptoasset custody businesses in response to growing market activity. In order to help firms navigate this fast-evolving area, Clifford Chance has prepared an international Cryptoasset Custody Rules Tracker (last updated in June 2022). This tracker provides a high level summary of certain global regimes, including which activities fall within scope of the regime and the identity of the relevant regulator(s). In some cases, these regimes may apply alongside existing financial services and other regulation.

Use our Cryptoasset Custody Rules Tracker 

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

Americas

US:  

• (22 Jun 2022) White paper published by Congressman Jim Himes on central bank digital currencies (CBDCs). Himes argues that the US should authorise the Federal Reserve to issue a US CBDC, citing various advantages over private stablecoins and cryptoassets, such as its ability to be backed by the US Government in the same way as fiat currency. Himes also states that a CBDC would not replace existing payment systems and currencies, but rather give consumers and businesses greater choice.
• (22 Jun 2022) Recording of the semi-annual monetary policy hearing before the Senate Committee on Banking, Housing, and Urban Affairs. In his testimony, the Federal Reserve Chair, Jerome Powell, discusses the guidance published by the Securities and Exchange Commission (SEC) in April 2022, in which the SEC advised public companies that, if they held customers' digital assets, then they would need to consider those assets as belonging to their own balance sheets. Powell notes that this guidance is contrary to the treatment of other custody assets, which are usually viewed as off balance sheet, and therefore requires careful consideration.

APAC

China:

• (24 Jun 2022) National People's Congress (NPC) consultation on a draft Law on Anti-Telecom and Cyber Fraud. The draft law is intended to introduce stricter measures to combat fraud committed using telecommunications and cyber networks. Comments are due by 23 July 2022.

Hong Kong:

• (24 Jun 2022) Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022, which has been gazetted and is scheduled to be introduced into the Legislative Council for its first reading on 6 July 2022. The bill seeks to, among other things, introduce a licensing regime for, and impose anti-money laundering and counter-terrorist financing obligations on, virtual asset service providers. | Press release

India:             

• (22 Jun 2022) Ministry of Finance circular, which contains guidance on the functioning of the 1% tax deducted at source (TDS) provision of the Finance Act 2022. The TDS provision, which enters into force on 1 July 2022, introduces a 1% tax on all payments towards cryptoassets above INR 10,000 a year. The circular provides further details on the calculation and offsetting of the tax, as well as the reporting requirements for cryptoasset exchanges.

Thailand:      

• (23 Jun 2022) Securities and Exchange Commission (Thai SEC) consultation (in Thai) on proposed amendments to its regulations on initial coin offerings. In particular, the Thai SEC is proposing to introduce amendments to prevent conflicts of interest and to clarify the rules on outsourcing. Comments are due by 26 July 2022. | Press release (in Thai)

Uzbekistan:             

• (24 Jun 2022) Order (in Uzbek) from the National Agency for Prospective Projects on the registration of crypto-miners. The order states that crypto-mining companies must register and obtain a certificate before commencing operations, and that they are only permitted to mine using solar power.

Europe

Europe/EU:

• (24 Jun 2022) The EU Council has announced it has agreed a mandate for negotiations with the EU Parliament on the EU Commission's proposed Machinery Products Regulation. The proposed regulation is intended to address the health and safety risks posed from the use of machinery, including emerging technologies such as AI. | Press release
• (24 Jun 2022) European Financial Services Round Table (EFR) position paper on AI and on the EU Commission's proposed AI Act. The paper sets out the EFR's recommendations regarding the draft legislation, including narrowing its definition of AI and requiring all competent authorities to comply with the EU AI Board criteria. | Press release

Spain:            

• (27 Jun 2022) The Government of Spain and the EU Commission have announced the launch of Spain's pilot regulatory AI sandbox. The sandbox is intended to test the requirements for high-risk AI systems as set out in the EU Commission's proposed AI Act. | Press release

UK:

• (24 Jun 2022) Terms of reference for the Joint Regulatory Oversight Committee, which has been established to oversee the planning and preparation for the launch of a new independent entity, responsible for furthering the implementation of open banking in the UK.
• (23 Jun 2022) Financial Conduct Authority report setting out an overview and the key lessons learned from its second digital sandbox pilot, which focused on solutions for regulatory challenges relating to environmental, social and governance data and disclosure. | Press release

EVENTS

European Perspectives Series: The Digital Services Act – new rules for digital intermediaries (12 July 2022):

The Digital Services Act (DSA) will create new standards for digital services in the EU, regulating illegal content online, the protection of users' rights, and the liability of a wide variety of providers of digital 'intermediary services', including cloud providers, online marketplaces and app stores. The text of the provisional agreement, recently endorsed by the EU Parliament's Internal Market Committee, is expected to be put to a final vote in July before it is formally adopted by the EU Council and published in the EU Official Journal. These regulations are the first major overhaul of EU rules for the online sector for two decades. We are delighted to invite you to join our webinar where tech experts from across the Clifford Chance network will give an overview of the DSA, examine who is affected and how, discuss what happens next, and explain how businesses can prepare. | For more information and to register, please see the event webpage.