Monthly Crypto Round up October 2022

Monthly Crypto Round-up

October 2022

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in September 2022 along with our Clifford Chance crypto 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.

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Global Legal And Regulatory Updates, Industry Guidance And Publications

International

(30 Sep 2022) Basel Committee on Banking Supervision (BCBS) Basel III Monitoring Report for September 2022, which includes a special chapter on banks' exposures to cryptoassets. Total cryptoasset exposures reported by banks amounted to approximately EUR 9.4 billion, or 0.14% of total exposures on a weighted average basis across the sample of banks reporting cryptoasset exposures and 0.01% of total exposures when considering the whole sample of banks (i.e. including those that did not report cryptoasset exposures).
(13 Sep 2022) The Group of Central Bank Governors and Heads of Supervision that oversees the BCBS has reiterated the importance of designing a robust and prudent regulatory framework for banks' exposures to cryptoassets, which the BCBS is expected to finalise by the end of 2022. | Press release

Americas

(28 Sep 2022) US Senators Marsha Blackburn and Cynthia Lummis have proposed an amendment to the Cybersecurity Information Sharing Act of 2015 to include voluntary information sharing of cyber threat indicators among cryptocurrency companies.
(23 Sep 2022) The Governor of California, Gavin Newsom, has vetoed the Digital Financial Assets Law passed by the California State Assembly in August, which would have required digital asset exchanges and crypto companies to be licensed with the Department of Financial Protection and Innovation. The Governor said that it would be premature to create a licensing regime without first considering feedback to his May 2022 Executive Order on blockchain and responsible innovation as well as forthcoming federal legislation and regulation.
(16 Sep 2022) The White House has announced a "comprehensive framework for responsible development of digital assets", consisting of a set of new reports from various federal regulatory agencies outlining recommendations to protect consumers, investors, businesses, financial stability, national security, and the environment. | White House Fact Sheet
These include the following:
(16 Sep 2022) The Department of Justice has announced the establishment of the nationwide Digital Asset Coordinator Network to support its efforts to combat the threat posed by the illicit use of digital assets. | Press release
(15 Sep 2022) Testimony of Securities and Exchange Commission Chair, Gary Gensler, before the United States Senate Committee on Banking, Housing, and Urban Affairs, reiterating his position that most cryptotokens are securities and noting that the SEC is working with crypto intermediaries to ensure they register each of their functions.
(15 Sep 2022) Testimony of Commodity Futures Trading Commission Chairman, Rostin Behnam, before the United States Senate Committee on Agriculture, Nutrition, and Forestry, regarding the Digital Commodities Consumer Protection Act.
(9 Sep 2022) The Securities and Exchange Commission (SEC) has announced plans to add a dedicated Office of Crypto Assets to the Division of Corporation Finance's Disclosure Review Program to review filings involving cryptoassets. | Press release
(8 Sep 2022) Speech by SEC Chair, Gary Gensler, encouraging crypto projects and intermediaries as well as certain stablecoins to register with the SEC to ensure investor protection, and also discussing the Commodity Futures Trading Commission's role in overseeing and regulating crypto non-security tokens and related intermediaries.
(8 Sep 2022) The White House has published a report on the climate and energy implications of cryptoassets in the United States.
(7 Sep 2022) Speech by Acting Comptroller of the Currency, Michael J. Hsu, reaffirming the Office of the Comptroller of the Currency's “careful and cautious” approach to crypto activities.
(7 Sep 2022) Speech by US Federal Reserve Board (FRB) Vice Chair for Supervision, Michael Barr, indicating that the FRB intends to work with other bank regulatory agencies to ensure that crypto activity inside banks is well regulated, based on the principle of same risk, same activity, same regulation, regardless of the technology used for the activity, and also calling on Congress to legislate to bring stablecoins, particularly those designed to serve as a means of payment, inside the prudential regulatory perimeter.
(1 Sep 2022) Proposed Rule by the Commodity Futures Trading Commission and the Securities and Exchange Commission, which would require large advisers to certain hedge funds to report their exposure to cryptoassets. Comments are due by 11 October 2022.

APAC

Australia:

(19 Sep 2022) Australian Senator Andrew Bragg has presented a Private Member's Bill, The Digital Assets (Market Regulation) Bill 2022, which provides for the regulation of activities relating to digital assets and reporting by certain banks that facilitate digital yuan, China's central bank digital currency. | Press release
(6 Sep 2022) Australian Treasury consultation on proposed legislation to exclude cryptoassets from being treated as a foreign currency for Australian income tax purposes, following the decision of the Government of El Salvador to adopt Bitcoin as a legal tender. The consultation ended on 30 September 2022.

Hong Kong:

(20 Sep 2022) Hong Kong Monetary Authority position paper setting out its policy stance on Hong Kong's retail central bank digital currency, the e-HKD, and outlining its next steps.| Press release

Republic of Korea:

(6 Sep 2022) The Financial Services Commission (FSC), together with the Financial Supervisory Service, Korea Exchange, Korea Securities Depository, and the Capital Market Research Institute, have held a policy seminar to discuss the Republic of Korea's national strategy on security tokens. The FSC intends to publish guidelines for the issuance and commercialisation of security tokens in Q4 2022. | Press release (in Korean)

Thailand:

(1 Sep 2022) The Securities and Exchange Commission has issued an amendment to the rules on the advertising and promotion of digital assets, which is intended to ensure that advertising is clear and appropriate and allows investors to consider the risks involved. The amended rules are effective from 1 September 2022. | Press release (in Thai)

Europe

(27 Sep 2022) European Securities and Markets Authority (ESMA) report on the distributed ledger technology pilot regime (DLT Pilot), which sets out ESMA's proposed way forward and includes the feedback received following the Call for Evidence launched in January and a workshop organised in March 2022. ESMA has concluded that there is no need to amend the regulatory technical standards on transparency and data reporting requirements before the DLT Pilot starts applying in March 2023. | Press release
(26 Sep 2022) European Economic and Social Committee opinion on challenges and opportunities of cryptoassets, in which it backs increased regulation, with robust, coherent rules to better protect investors across the EU in line with current measures applied to traditional financial services. | Press release
(26 Sep 2022) Speech by Fabio Panetta, Member of the Executive Board of the European Central Bank, on "Demystifying wholesale central bank digital currency".
(8 Sep 2022) Speech by European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, Mairead McGuinness, discussing, amongst other things, the EU's plans for a digital euro.

France

(9 Sep 2022) The Association française des marches financiers (AMAFI) has published its response to the European Securities and Markets Authority's consultation on guidelines on standard forms, formats and templates to apply for permission to operate a distributed ledger technology market infrastructure. | AMAFI response (subscribers only)

Germany

(7 Sep 2022) Speech by Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank, on why the digital euro is needed, what it could deliver, and when a decision on the digital euro will be made.

Russia

(13 Sep 2022) The Russian Prime Minister, Mikhail Mishustin, has instructed the Russian Government to reach a consensus on regulating the issuance and circulation of digital currencies, cryptocurrency mining, and cross-border transactions in digital currencies, by 19 December 2022. | Press release (in Russian)

(28 Sep 2022) Speech by Bank of England (BoE) Deputy Governor for Financial Stability, Sir Jon Cunliffe, regarding the effects of crypto technology on post-trade infrastructures. It sets out the BoE's view on the disruptive effects that tech may have on current capital market structures, how this may bring benefits as well as challenges and how the BoE is planning to approach this.
(22 Sep 2022) The Economic Crime and Corporate Transparency Bill has been introduced to Parliament and given its first reading. The Bill includes additional powers to seize and recover suspected criminal cryptoassets. MPs will next consider the Bill at second reading on 13 October 2022. | Factsheet: cryptoassets - key terms and definitions | Fact sheet: cryptoassets technical | Fact sheet: cryptoassets - legislation
(7 Sep 2022) House of Commons Library research briefing and Westminster Hall debate on the UK Government's regulatory approach to cryptoassets and currencies.
(6 Sep 2022) UK Government response to the House of Commons Treasury Committee's future of financial services regulation inquiry report, in which the UK Government notes its commitment to consulting on a potential UK central bank digital currency jointly with the Bank of England during 2022.

Middle East

(12 Sep 2022) The Financial Services Regulatory Authority of Abu Dhabi Global Market has published a set of guiding principles on its approach to virtual asset regulation and supervision as a way to outline its expectations for the asset class and service providers in the sector. | Press release

EVENTS

Our Global Financial Markets Perspectives Series Autumn 2022 Events Programme is now available. This will include the following events:

Space Tech – a universe of ‘here and now’ investment opportunities (8 November 2022)
The future of banking – can central bank digital currencies and custody of digital assets change the financial markets? (15 November 2022)
Managing artificial intelligence in an evolving legal landscape (29 November 2022)

Talking Tech event: The metaverse – legal and economic perspectives on a growing industry (Frankfurt, 19 October 2022): The metaverse has been described as the future of the internet – a digital world where we will live, work and play. Will our existing legal frameworks be fit-for-purpose? Members of our Clifford Chance Tech Group, together with Prof David Wuttke from the Technical University of Munich and Thomas Richter, in-house legal counsel technology at Deutsche Bank, will be available to provide you with a glimpse into some of the technological, commercial, and legal challenges the metaverse will bring. | You will also have the opportunity to try out various access options on site, such as a virtual reality headset. | For more information and to register, please see the event webpage.