Global Fintech Update
29 March 2023
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
- (28 Mar 2023) Clifford Chance briefing – Payments Trends 2023: our predictions for the next 12 months
- (27 Mar 2023) Talking Tech – HKSE conclusions on Chapter 18c: the new listing regime for specialist technology companies
- (23 Mar 2023) Talking Tech – Digital securities now a reality in Italy
- (23 Mar 2023) Clifford Chance briefing – Ready for lift off: French law evolves to be ready for the EU Pilot Regime
- (23 Mar 2023) Talking Tech – Fintech and Competition Law: risks and opportunities
- (22 Mar 2023) Talking Tech – APAC 2023: Tech Themes - data at the core
GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS
- (23 Mar 2023) The Bank for International Settlements (BIS) Innovation Hub report, Project Nexus: Enabling instant cross-border payments: Conclusions from a technical proof of concept between the Eurosystem, Malaysia and Singapore. The report provides details on the early experiments and technical specifications for the multilateral interlinking of payment systems using the Nexus model and outlines the next phase of the project to work on the real-world potential of a multilateral network that could be scaled up across more countries. | Webpage | Press release
- (23 Mar 2023) Securities and Exchange Commission Investor Alert urging investors to be cautious if considering an investment involving cryptoasset securities. It warns that investments in cryptoasset securities can be exceptionally volatile and speculative, and that those offering cryptoasset investments or services may not be complying with applicable law, including federal securities laws.
- (23 Mar 2023) Financial Accounting Standards Board exposure draft of a proposed accounting standards update regarding accounting for and disclosure of cryptoassets. The amendments in the proposed update would require that an entity measure certain cryptoassets at fair value in the statement of financial position each reporting period and recognise changes in fair value in net income. Deadline for comments: 6 June 2023 | Electronic Feedback Form
- (22 Mar 2023) Office of Financial Research working paper on digital currency and banking-sector stability, which concludes that (i) the probability of the banking sector being in crisis states can grow significantly with the introduction of digital currency; (ii) while banking-sector stability suffers, household welfare can improve significantly; and (iii) financial frictions may limit the potential benefits of digital currencies.
- (29 Mar 2023) European Banking Authority (EBA) consultation on amendments to its guidelines on risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision. The amendments extend the scope of the guidelines to AML/CFT supervisors of cryptoasset service providers. Deadline for comments: 29 June 2023 | Press release
- (28 Mar 2023) The EU Parliament's Committees on Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) have adopted their position on legislative proposals for a sixth directive on AML/CFT (AMLD6) and an AML regulation (AMLR1). Key elements of the proposed AMLD6 and AMLR1 include expanding the scope of EU AML/CFT rules to cover the entire crypto sector, including due diligence obligations on cryptoasset service providers. To restrict transactions in cryptoassets, MEPs want to cap payments that can be accepted by persons providing goods or services, setting a limit of up to EUR 1,000 for cryptoasset transfers where the customer cannot be identified. The EU Council agreed its position on the proposals in December 2022 and trilogue negotiations can now begin in order for the co-legislators to agree on a final version of the texts. | Press release
- (28 Mar 2023) European Banking Federation (EBF) vision paper on a Digital Euro Ecosystem, in which the EBF sets out its perspective on the digital money ecosystem of the future, where a retail digital euro, a wholesale CBDC and bank-issued money tokens could all play a role in enabling innovation, supporting customer needs and ensuring that Europe stays at the forefront of digital finance and the digital economy. The paper argues that a retail digital euro could be envisaged in the mix of new tools and solutions to meet evolving payment needs, as long as it adds value to consumers, is appropriately designed, in close cooperation with the private sector, and mitigates the accompanying risks. | Press release
- (27 Mar 2023) EU Commission written answer to EU Parliament question on how the Commission will ensure maximum international cooperation on the monitoring and regulation of cryptoassets and its assessment of the compatibility of the UK's plans to regulate crypto with the Markets in Cryptoassets (MiCA) Regulation.
- (23 Mar 2023) Association for Financial Markets in Europe (AFME) article on whether the EU's DLT Pilot Regime can truly champion a digital future.
- (23 Mar 2023) The EU Commission has adopted a decision to establish a High-Level Group on the Digital Markets Act (DMA) to provide the Commission with advice and expertise to ensure that the DMA and other sectoral regulations applicable to gatekeepers are implemented in a coherent and complementary manner. The High-Level Group may also provide expertise in market investigations into emerging services and practices, to help ensure that the DMA is future-proof. It will have a mandate of two years and will meet at least once per year.| Press release
- (22 Mar 2023) The National Assembly's Economic Affairs Committee has adopted Amendment No. CE48 (in French) to Bill No. 790 (in French) on combatting scams and excesses by influencers on social media. The amendment would prohibit online influencers from directly or indirectly promoting cryptoasset services from unlicensed providers. The Bill still needs to be approved by the Assembly and Senate.
- (29 Mar 2023) UK Government AI Regulation White Paper, which sets out a new approach to regulating artificial intelligence (AI) based on multiple regulators applying the following five principles to facilitate the innovative use of AI in their sectors: (i) safety, security and robustness, (ii) transparency and explainability, (iii) fairness, (iv) accountability and governance, and (v) contestability and redress. Organisations and individuals involved in the AI sector are encouraged to provide feedback on the white paper through a consultation that will run until 21 June 2023. | Webpage | Press release
- (27 Mar 2023) Draft Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) Order 2023, which has been laid before Parliament. The draft Order proposes to expand the scope of the financial promotion restriction in section 21 of the Financial Services and Markets Act 2000 (FSMA), by amending the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (2005/1529) (the FPO), to include financial promotions in respect of certain cryptoassets. It will seek to amend the FPO by creating a new controlled investment (defined as a 'qualifying cryptoasset'), as well as amending relevant controlled activities to incorporate reference to qualifying cryptoassets. The draft Order will also apply and modify certain existing exemptions in the FPO to qualifying cryptoassets and create a temporary, limited exemption to the financial promotion restriction (imposed by section 21(1) of FSMA), for cryptoasset businesses (which are not authorised persons) on the FCA's anti-money laundering register. | Draft explanatory memorandum | Webpage | Keeling schedule
- (27 Mar 2023) Minutes from the Bank of England (BoE)'s CBDC Engagement Forum, which was held on 2 Mar 2023. Participants discussed the HM Treasury/BoE consultation paper on the case for a retail CBDC or 'digital pound' and how to maintain an appropriate level of engagement in the next phase of work on the digital pound. | Annex: meeting slides
- (27 Mar 2023) The Economic Secretary to the Treasury, Andrew Griffith MP, has provided a written answer to a question from Harriet Baldwin MP confirming that, in consultation with HM Treasury, the Royal Mint is not proceeding with the launch of a non-fungible token at this time but will keep the proposal under review.
- (23 Mar 2023) The Central Bank of UAE (CBUAE) has launched its CBDC strategy, 'The Digital Dirham'. The first phase of the strategy, which is expected to be completed over the next 12 to 15 months, comprises the soft launch of mBridge to facilitate real value cross-border CBDC transactions for international trade settlement, proof-of-concept work for bilateral CBDC bridges with India, and proof-of-concept work for domestic CBDC issuance covering wholesale and retail usage. | Press release
Global Financial Markets Perspectives Series: Distributed Ledger Technology and European financial services – the impact of the new EU Pilot Regime (online, 30 March 2023): Our panellists will discuss the new EU Pilot Regime (which takes effect from 23 March 2023) for distributed ledger technology (DLT), and the extent to which its success or failure will impact the adoption of DLT in financial services in Europe. We will compare it with the UK’s financial market infrastructure sandbox proposal, as well as consider digital bond issuances and the link between the development of DLT market infrastructures and the tokenisation of financial products both in the EU and UK. | To register, please see the event series registration form.
Global Financial Markets Perspectives Series: How to navigate crypto distress (online, 18 April 2023): The cryptoasset markets are facing an extended period of volatility and uncertainty following the bankruptcy filings of significant market participants. Our international panel will discuss the key issues for crypto market participants right now, including the lessons learned from the recent market challenges and what steps businesses, regulators and other market participants should be taking to protect themselves against future liquidity and solvency concerns. | To register, please see the event series registration form.
Global Financial Markets Perspectives Series: Digital assets and private law (hybrid, 23 May 2023): Louise Gullifer, who is the first woman to be appointed to the prestigious role of Rouse Ball Professor of English law at Cambridge University, will talk to us in her capacity as a member of the UNIDROIT working group on Principles on digital assets and private law, and the implications for English law. | To register, please see the event series registration form.