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 briefing – Distressed cryptoassets: enforcement of security interests, restructuring, and bankruptcy under US law

SPOTLIGHT: Our top 10 reads for Summer 2022:

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

• (18 Jul 2022) Informal comments from the Chief Executive Officer of the International Swaps and Derivatives Association, Scott O'Malia, on the recent proposals from the Basel Committee on Banking Supervision regarding the prudential treatment of banks' cryptoasset exposures. Among other things, O'Malia supports the committee's move away from strict capital requirements but calls for the proposals regarding the limit on banks' exposure to cryptoassets to be reconsidered.
• (17 Jul 2022) Recording of a G20 panel discussion on central bank digital currencies (CBDCs) and cryptoassets. Participants included representatives from the Bank for International Settlements, the International Monetary Fund, and the central banks of Australia, Hong Kong, and Switzerland. They discussed recent events in the cryptoasset markets and their impact on financial stability, as well as the potential role of CBDCs, including as an alternative to private cryptoassets.
• (14 Jul 2022) International Organization of Securities Commissions report setting out its recommendations on the use of innovation facilitators (i.e. innovation hubs, regulatory sandboxes and regulatory accelerators) in growth and emerging markets. | Press release

Americas

Canada:       

• (13 Jul 2022) Office of the Superintendent of Financial Institutions guidance on its expectations regarding financial institutions' management of technology and cyber risks. | Press release

Paraguay:   

• (14 Jul 2022) Bill to regulate the industry and commercialisation of virtual assets and cryptoassets (in Spanish), which has been passed by the Senate. The bill establishes a legal framework for the mining, commercialisation, exchange, transfer, custody and administration of cryptoassets and instruments that provide control over cryptoassets, overseen by a newly created supervisory authority, the National Commission of Virtual Assets. The bill now needs to be signed by President Mario Abdo Benítez before it enters into force. | Press release (in Spanish)

US:  

• (15 Jul 2022) Letter from a group of US Senators and Members of Congress to the Department of Energy and the Environmental Protection Agency to inform them of their findings regarding the energy consumption of cryptocurrency mining and to ask them to introduce requirements that crypto-miners report their emissions and energy use.

APAC

India:             

• (18 Jul 2022) Ministry of Finance response to a parliamentary question on the work the Government and the Reserve Bank of India have been doing to regulate the use of cryptocurrencies in India.

Singapore:   

• (18 Jul 2022) Personal Data Protection Commission guidance on personal data protection considerations for firms wishing to deploy blockchain applications. | Press release

Europe

EU:  

• (19 Jul 2022) EU Commission response to a question from the EU Parliament on whether it intends to introduce trade restrictions on cryptocurrencies.
• (18 Jul 2022) The EU Council has voted to formally adopt the EU Commission's proposal for a Regulation on Contestable and Fair Markets in the Digital Sector (the Digital Markets Act). The Digital Markets Act was formally adopted by the EU Parliament on 5 July 2022 and is expected to be published in the Official Journal shortly. Once enacted, it will introduce new and far-reaching rules for the digital sector, with a particular focus on the behaviour of so-called digital 'gatekeepers'. The EU Council notes that it intends to adopt a related proposal, the Regulation on a Single Market for Digital Services (the Digital Services Act), in September 2022. | Press release
• (15 Jul 2022) The provisional political agreement on the Digital Operational Resilience Act (DORA), which was agreed between the EU Parliament and EU Council on 11 May 2022. DORA seeks to establish a uniform set of requirements for the security of network and information systems of companies and organisations operating in the financial sector, as well as any critical third parties which provide services to them. The provisionally politically agreed version of DORA must be formally approved by the co-legislators before being published in the Official Journal. The indicative date for the EU Parliament to vote on the text is currently scheduled for 9 November 2022.
• (14 Jul 2022) European Data Protection Board (EDPB) response to the EU Commission's consultation on a digital euro. EDPB argues that a high level of privacy and data protection is required to ensure consumers' trust in the project, and that, if full anonymity is ruled out, the digital euro should aim to allow a high degree of pseudonymisation. The European Central Bank (ECB) has also, on 13 July 2022, published a report and blogpost setting out its views on the key objectives and design considerations for the project.
• (13 Jul 2022) The EU Commission has adopted a series of regulations setting out regulatory technical standards (RTS) and implementing technical standards (ITS) under Regulation (EU) 2020/1503 on European crowdfunding service providers (ECSPs) (the Crowdfunding Regulation). These include:
•  
  • RTS on conflicts of interest requirements for ECSPs
  • RTS on calculating the default rates of loans
  • RTS on ECSPs' business continuity planning
  • ITS on reporting on projects funded through ECSPs
  • ITS on cooperation among national competent authorities (NCAs)
  • RTS on key investment information sheets
  • RTS on complaints handling
  • RTS on knowledge and loss-bearing ability assessments for investors
  • ITS on national marketing requirements
  • ITS on the cooperation between NCAs and the European Securities and Markets Authority
  • RTS on the exchange of information between NCAs in relation to investigations and enforcement
  • RTS on ECSPs' individual portfolio management of loans
  • RTS on the authorisation process for ECSPs
• The EU Commission has also adopted a delegated regulation, which extends the transitional period of the Crowdfunding Regulation from 10 November 2022 to 10 November 2023.
• (13 Jul 2022) Speech by ECB Supervisory Board Member, Elizabeth McCaul, on the money laundering and terrorist financing challenges posed by the increasing digitalisation of the financial services sector.
• (5 Jul 2022) EU Commission new innovation agenda, which is intended to make Europe more competitive in the global innovation space. The agenda includes plans to improve access to finance for European start-ups and scale-ups, and the creation of more regulatory sandboxes to allow innovative firms to experiment and test their solutions. | Press release

Russia:          

• (14 Jul 2022) Act on Banks and Banking Activities (in Russian), which has been signed into law by President Vladimir Putin. Among other things, the new act amends various pieces of legislation to prohibit the use of digital financial assets for payments for goods and services. | Act overview webpage (in Russian)

UK:

• (18 Jul 2022) Government policy paper and action plan on the regulation of artificial intelligence in the UK.
• (14 Jul 2022) Speech by the Chief Executive of the Financial Conduct Authority (FCA), Nikhil Rathi, on the FCA's approach to regulating the financial services sector of the future. Among other things, Rathi notes that the FCA intends to take a new approach to digital regulation, including by seeking greater input from communications, privacy and competition regulators, and increasing collaboration with international regulators on issues such as cryptoassets.
• (13 Jul 2022) Parliament Treasury Committee call for evidence as part of its inquiry into the role of cryptoassets in the UK. In particular, the committee is seeking feedback on whether cryptocurrencies are likely to replace traditional currencies, what opportunities and risks the use of cryptoassets pose for individuals and the economy, and their impact on social inclusion. | Press release