Global Fintech Update
23 November 2022
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.
CLIFFORD CHANCE BRIEFINGS AND MATERIALS
- (18 Nov 2022) Talking Tech article – Cryptoassets - considerations for market participants in times of distress
- (15 Nov 2022) Talking Tech article – The case for a risk-based approach to data transfers: Clifford Chance and DLA Piper publish joint paper arguing for proportionality
Clifford Chance are delighted to be joining legal experts from the Crypto Valley Association and MLL for a discussion on the latest European and UK regulatory developments in the fast-moving areas of cryptoassets and digital securities. The panel discussion in Zurich at 6pm CET on 5 December will include updates on a range of relevant legislation across the EU, Switzerland and the UK. This is a hybrid event with online attendance also available.
See the Crypto Valley website for more information and to register.
You may also be interested in our new series of Insights on Financial Regulation calls in relation to the recently agreed EU Markets in Cryptoassets Regulation.
GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS
- (10 Nov 2022) Speech by Steven Maijoor, Executive Director of Supervision of the Dutch Central Bank and Chair of the Financial Stability Board working group on cryptoassets, in which he argued that successful financial innovations must be underpinned by public trust if they are to stand the test of time. Maijoor warned that the rapid growth of cryptoasset markets, in the presence of structural vulnerabilities and incomplete regulation and supervision, mean that they could soon reach a point where they represent a threat to the stability of the global financial system.
- (18 Nov 2022) The Financial Industry Regulatory Authority (FINRA) is conducting a targeted exam of firm practices regarding retail communications concerning cryptoasset products and services between 1 July and 30 September 2022. | Press release
- (17 Nov 2022) Federal Reserve Board paper providing an overview of the literature examining how the introduction of a central bank digital currency would affect the banking sector, financial stability, and the implementation and transmission of monetary policy in a developed economy such as the United States.
- (16 Nov 2022) Department of the Treasury report on assessing impacts of new entrant non-bank firms on competition in consumer finance markets, which calls for enhanced oversight of the consumer financial activities of non-bank firms. In particular, the report states that regulators should (i) provide a clear and consistently applied supervisory framework for bank-fintech relationships, (ii) robustly supervise bank-fintech lending relationships for compliance with consumer protection laws and their impact on consumers’ financial well-being, and (iii) support innovations in consumer credit underwriting designed to increase credit visibility, reduce bias, and prudently expand credit to underserved consumers. | Press release
- (15 Nov 2022) The Federal Trade Commission has announced that it is extending by six months the deadline for companies to comply with some of the changes the agency implemented to strengthen the data security safeguards financial institutions must put in place to protect their customers' personal information. The deadline for complying with some of the updated requirements of the Safeguards Rule is now 9 June 2023. | Press release
- (9 Nov 2022) The New York State Department of Financial Services (DFS) has requested public comments on amendments to the Cybersecurity Requirements for Financial Services Companies. The proposed amendments are intended to strengthen the DFS' risk-based approach to ensure cybersecurity risk is integrated into business planning, decision-making, and ongoing risk management. | Press release
- (11 Nov 2022) The Australian Competition & Consumer Commission (ACCC) has recommended new measures to address harms from digital platforms to Australian consumers, small businesses and competition. The fifth report of the ACCC’s five-year Digital Platform Services Inquiry proposes that platforms be subject to mandatory dispute resolution processes and stronger requirements for combating scams, harmful apps and fake reviews, among other measures. The report also proposes mandatory codes of conduct for certain platforms and services to protect and promote competition. | Press release
- (21 Nov 2022) Hong Kong Monetary Authority research memorandum providing an assessment of the volatility spillover from crypto to traditional financial assets and the role of asset-backed stablecoins.
- (21 Nov 2022) India's Ministry of Electronics and Information Technology has proposed a Digital Personal Data Protection Bill, which is intended to provide for the processing of digital personal data in a manner that recognises both the right of individuals to protect their personal data and the need to process personal data for lawful purposes.
- (17 Nov 2022) The European Central Bank (ECB) has become a member of Gaia-X, a non-profit association advocating digital sovereignty for Europe. Gaia-X develops common standards for digital services like cloud services, in order to allow data to be collected and shared in an environment of trust. | Press release
- (16 Nov 2022) The Digital Services Act (DSA), which creates harmonised EU rules for the regulation of intermediary services and illegal online content, has entered into force and the majority of its provisions will apply from 17 February 2024. | Press release | Q&A
- (15 Nov 2022) The ECB has issued a publication entitled 'Towards a framework for assessing systemic cyber risk', which examines whether and to what extent risks stemming from cyber attacks have the potential to undermine the stability of the financial system. The publication is part of the ECB's November 2022 Financial Stability Review.
- (14 Nov 2022) Italy’s data protection authority, the Garante, has prohibited the general use of facial recognition systems using biometric data until the entry into force of a specific law on the subject, and in any case until 31 December 2023, unless the processing is carried out for investigations by the judiciary or the prevention and repression of crimes. | Press release (in Italian)
- (21 Nov 2022) Speech by Bank of England (BoE) Deputy Governor, Jon Cunliffe, in which he reflected on recent crypto market developments and discussed the work that authorities are doing on the regulation of stablecoins and a potential central bank digital currency.
- (17 Nov 2022) The Information Commissioner's Office has published an update to its guidance on international data transfers, including a new section on transfer risk assessments (TRAs) and a TRA tool. | Blog post
- (16 Nov 2022) Speech by Financial Conduct Authority (FCA) Chief Executive, Nikhil Rathi, at the UK Finance annual dinner, in which he discussed how the Consumer Duty will help the FCA manage the entry of Big Tech firms into the UK retail financial service. Rathi argued that, while firms should take advantage of digitalisation, market developments must not leave groups of consumers behind, particularly those most vulnerable or the least digitally enabled. He also emphasised that the FCA wants to work with industry to ensure that the UK remains the largest destination for fintech investment in Europe.
- (16 Nov 2022) Law Commission call for evidence requesting information on how decentralised autonomous organisations (DAOs) can be characterised and how the law might accommodate them. Following the feedback received, the Law Commission intends to produce a scoping report considering how DAOs can operate under the existing law of England and Wales and identifying any areas of law or regulation in need of further consideration and potential reform. Deadline for comments: 25 January 2023 | Press release
Insights on Financial Regulation: MiCA – an overview (online, 24 November 2022): Clifford Chance is delighted to invite you to a series of Insights on Financial Regulation calls in relation to the recently agreed EU Markets in Crypto-assets Regulation (MiCA). MiCA establishes a broad regulatory framework for cryptoassets in the EU, introducing licensing of cryptoasset service providers and issuers of cryptoassets, including certain stablecoins and clarifying the regulatory obligations applicable to them. In this call we will give an overview of the new framework and how affected firms should be assessing appropriate licensing requirements for their business now. | To register, please see the event series registration form
Global Financial Markets Perspectives Series: Managing AI in an evolving legal landscape (online, 29 November 2022): Our experts will examine recent legal developments in a number of jurisdictions, consider key issues affecting the successful deployment and management of AI and machine learning, look ahead to expected changes to relevant regulatory regimes and discuss what businesses can do to prepare.| To register, please see the event series registration form
Insights on Financial Regulation: MiCA for custodians (online, 1 December 2022): In this call we will outline the new requirements that existing and new custodians of digital assets should be aware of, including custody liability requirements and new consumer protection rules. | To register, please see the event series registration form
Crypto asset regulation in Europe & the UK - What are the latest updates? (Zurich and online, 5 December 2022): Clifford Chance are delighted to be joining legal experts from the Crypto Valley Association and MLL for a discussion on the latest European and UK regulatory developments in the fast-moving areas of cryptoassets and digital securities. The panel discussion in Zurich at 6pm CET on 5 December will include updates on a range of relevant legislation across the EU, Switzerland and the UK. This is a hybrid event with online attendance also available. For more information and to register, please click here.
Insights on Financial Regulation: MiCA for stablecoin issuers (online, 15 December 2022): In this call we will outline the new requirements that potential issuers of cryptoassets and stablecoins should be aware of, including the introduction of licensing for issuers and location, disclosure and governance requirements. | To register, please see the event series registration form
Insights on Financial Regulation: MiCA for exchanges, brokers and other venues (online, 5 January 2023): In this call we will outline the new requirements that exchanges and brokers for digital assets should be aware of, including disclosure and governance requirements. | To register, please see the event series registration form