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Clifford Chance

Clifford Chance

Fintech

Talking Tech

Global Fintech Update

7 July 2023

Fintech Banking & Finance 8 June 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 PUBLICATIONS AND MATERIALS

SPOTLIGHT 

Spotlight: Securities Finance Transformation Survey

Clifford Chance, the International Securities Lending Association (ISLA), the ValueExchange, HQLAᵡ, and the Pan Asia Securities Lending Association (PASLA) have launched a Securities Finance Transformation’ survey, designed to provide clarity on where, why and how technology already is and could be transforming the securities finance landscape. The survey will help to shape new industry benchmarks that fuel market discussions across the industry so please do share with colleagues and contacts that may be interested. Deadline for responses: 16 June 2023.

Access the survey.

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

  • (5 Jun 2023) The Bank for International Settlements (BIS) Innovation Hub Eurosystem Centre, Banque de France and Deutsche Bundesbank have published their report on Project Leap, which successfully set up a quantum-safe communication channel to shield financial data. The project sought to address the threat that future quantum computers represent to today's cryptographic algorithms, and thereby to the confidentiality of financial data. | Project webpage | Press release
  • (2 Jun 2023) BIS working paper on privacy regulation and fintech lending, focusing on the effects of the California Consumer Privacy Act (CCPA) on bank and fintech lending in the US mortgage market. | Webpage
  • (31 May 2023) BIS Financial Stability Institute (FSI) Executive Summary of the Basel Committee on Banking Supervision (BCBS)’s December 2022 final standard on the prudential treatment of cryptoasset exposures, which outlines minimum regulatory, supervisory review and disclosure requirements of banks' cryptoasset exposures under Pillars 1, 2 and 3 of the Basel Framework. Internationally active banks in BCBS member jurisdictions are expected to adopt the standard by 1 January 2025. | Webpage
  • (31 May 2023) The BIS Innovation Hub's Nordic Centre has successfully concluded Project Aurora, a proof of concept that explores new ways of combating money laundering with a combination of payments data, privacy-enhancing technologies, artificial intelligence (AI) and enhanced cooperation across institutions and borders. | Report | Project webpage

Africa

Kenya:           

  • (2 Jun 2023) The Central Bank of Kenya (CBK) has published a report summarising the comments it received on its February 2022 discussion paper on central bank digital currency (CBDC). The report concludes that the implementation of a CBDC in Kenya may not be a compelling priority in the short to medium term, but the CBK intends to continue to monitor developments in CBDCs to inform future assessments of the need for CBDC in Kenya. | Press release

 

Americas

US:  

  • (6 Jun 2023) Commodity Futures Trading Commission (CFTC) Chairman, Rostin Behnam, has testified before the House Committee on Agriculture hearing on ‘The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets’. | Opening statement | Hearing page with video recording
  • (5 Jun 2023) The Securities and Exchange Commission (SEC) has charged Coinbase, Inc. for operating its cryptoasset trading platform as an unregistered national securities exchange, broker, and clearing agency and for failing to register the offer and sale of its cryptoasset staking-as-a-service program. | Press release
  • (5 Jun 2023) The SEC has charged Binance Holdings Ltd., its US-based affiliate, BAM Trading Services Inc., and their founder, Changpeng Zhao, with a variety of securities law violations, including operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities. | Press release
  • (5 Jun 2023) Congressmen Brad Sherman and Stephen Lynch, both Democrat members of the House Committee on Financial Services, have sent a letter to the United States Treasury Department and the Internal Revenue Service to urge the prompt release of proposed regulations that would bring the cryptocurrency industry into full tax compliance.
  • (2 Jun 2023) Digital Asset Market Structure Discussion Draft, which sets out draft legislation providing a statutory framework for digital asset regulation intended to provide clarity, fill regulatory gaps, and foster innovation, while providing adequate consumer protections. The draft has been released by Republican Congressmen Patrick McHenry, Chairman of the House Financial Services Committee, and Glenn ‘GT’ Thompson, Chairman of the House Committee on Agriculture. | Press release | Section-by-section summary
  • (1 Jun 2023) CFTC advance notice of proposed rulemaking (ANPRM) seeking public comment on potential amendments to the Risk Management Program (RMP) requirements applicable to swap dealers and futures commission merchants. In an accompanying statement, Commissioner Christy Goldsmith Romero noted that evolving technologies like digital assets, AI, and cloud services, have emerged as areas that can carry significant risk, and that the CFTC should ensure that its risk management frameworks for banks and brokers reflect and keep pace with the significant evolution of financial stability risk. | Press release
  • (31 May 2023) Draft EU-US Terminology and Taxonomy for Artificial Intelligence, published by the Trade and Technology Council. The identified terms reflect a shared technical, socio-technical and values-based understanding of AI systems between the EU and US and are intended to serve as a foundation for future definitions, as well as future transatlantic cooperation on AI terminology and taxonomy. This list should be considered as preliminary, to be further expanded and validated also with input from experts and stakeholders in the coming months.

APAC

Australia:     

  • (2 Jun 2023) The Australian Securities & Investments Commission (ASIC) has confirmed that the updated ePayments Code is effective from 2 June 2023, following a 12-month transition period to allow subscribers time to get ready for, and ensure compliance with, changes providing clarity on a number of existing protections for consumers. | Press release

Hong Kong:

Singapore:   

  • (31 May 2023) The Monetary Authority of Singapore (MAS) and Google Cloud have signed a memorandum of understanding (MoU) to collaborate on generative AI solutions that are grounded in responsible AI practices. The partnership is intended to explore technology opportunities to advance the development and use of responsible generative AI applications within the MAS, as well as cultivating technologists with deep AI skillsets. | Press release

Europe

EU:  

  • (2 Jun 2023) European Securities and Markets Authority (ESMA) updated Q&A on the implementation of Regulation (EU) 2022/858 on a pilot regime for market infrastructures based on distributed ledger technology (DLT).
  • (31 May 2023) European Banking Authority (EBA) consultation on amendments to its guidelines on money laundering and terrorist financing (ML/TF) risk factors. The proposed changes extend the scope of the guidelines to cryptoasset service providers (CASPs) and set common regulatory expectations of the steps CASPs should take to identify and mitigate risks effectively. The amendments introduce new sector-specific guidance for CASPs and highlight factors that may indicate a CASP’s exposure to higher or lower ML/TF risk. Deadline for comments: 31 August 2023. | Webpage | Press release
  • (31 May 2023) Draft EU-US Terminology and Taxonomy for Artificial Intelligence, published by the Trade and Technology Council. The identified terms reflect a shared technical, socio-technical and values-based understanding of AI systems between the EU and US and are intended to serve as a foundation for future definitions, as well as future transatlantic cooperation on AI terminology and taxonomy. This list should be considered as preliminary, to be further expanded and validated also with input from experts and stakeholders in the coming months.
  • (30 May 2023) EU Parliament study on remaining regulatory challenges in digital finance and cryptoassets after the Markets in Cryptoassets Regulation (MiCA). The study analyses the need to adopt further EU financial regulation on decentralised finance after the implementation of MiCA and the revision of the Transfer of Funds Regulation, with a special view on crypto lending, crypto staking, crypto custody, the use of non-formal information, non-fungible tokesn (NFTs) and sustainability. | Webpage

Netherlands:

  • (24 May 2023) Dutch Ministry of Finance consultation on the implementation of Directive 2022/2556 on digital operational resilience for the financial sector, which, together with the accompanying Regulation 2022/2554 (DORA), aims to improve the cyber and information communication technology (ICT) resilience of the financial sector by imposing obligations regarding the ICT infrastructure of financial institutions. It also gives supervisory powers to the European Supervisory Authorities (ESAs) over critical third-party service providers that provide ICT-related services to financial institutions (such as cloud platforms or data analytics services). The aim for financial institutions is to make that sure they can withstand, respond to, and recover from all types of ICT-related disruptions and threats. The consultation will result in amendments to the Financial Supervision Act (Wet op het financieel toezicht) and is particularly relevant to banks, investment firms, payment services providers, collective investment institutions, insurance and reinsurance companies, and institutions for occupational retirement provision. Deadline for comments: 26 June 2023. | Draft Bill (in Dutch) | Draft Explanatory Notes (in Dutch)

UK:

  • (6 Jun 2023) The Joint Regulatory Oversight Committee (JROC) has set out a programme of work to take forward recommendations for the next phase of open banking in the UK and set up dedicated workstreams to action the six key themes and priorities outlined in the recommendations. To support this, the JROC has launched two new working groups on variable recurring payments (VRP) and the future open banking entity. The JROC has also tasked Open Banking Limited (OBL) to lead and coordinate workstreams on four of the other key themes. | Press release
  • (5 Jun 2023) All Party Parliamentary Group (APPG) for Crypto and Digital Assets report on the need for urgent regulation of the cryptocurrency and digital asset industry in the UK, which reports on the APPG’s official inquiry into the sector. The report makes a total of 53 recommendations to Government on key areas including the UK’s approach to the regulation of cryptocurrency, the role of UK regulators, CBDCs and the ‘Digital Pound’, and risks in terms of consumer protection and economic crime. | Press release

Middle East

Qatar:

  • (31 May 2023) Financial Action Task Force (FATF) mutual evaluation report on Qatar’s anti-money laundering and counter-terrorist financing measures, which calls on the Qatar Central Bank to take more proactive action to identify unlicensed virtual asset service providers (VASPs) breaching Qatar’s prohibition and coordinate with relevant authorities if required. | Press release

EVENTS

Payments – a primer on recent and upcoming developments for in-house lawyers (online, 8 June 2023): In this online webinar in collaboration with Lexology, international Clifford Chance payments experts will provide a focused update on the key global legal and regulatory updates for lawyers working in the payments sector. Our expert panel will pick out the main developments in the EU, Middle East, Singapore, UK and US, including a look at legislative changes, AML and sanctions, safeguarding of client monies, crypto and CBDC developments. | To register, please complete the online registration form

Global Financial Markets Perspectives Series: International data flows - navigating the global legal landscape (online, 15 June 2023): The legal landscape for cross-border data sharing is complex and evolving. Privacy laws and data localisation requirements are developing globally, and data transfer is in the regulatory spotlight. Joining this legal landscape are legislative proposals requiring the sharing of certain data, which may include personal data. We will examine recent legal developments impacting data flows, related international cooperation efforts and how organisations can navigate the challenges of international data transfer. | To register, please see the event series registration form.