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

• Talking Tech article – EU/UK-US data privacy framework approved

SPOTLIGHT

Spotlight: Keeping pace with EU payments: the PSD3 and Open Finance proposals

In June 2023, the European Commission published a proposal for an updated Payment Services Directive (PSD3) and Payment Services Regulation making targeted amendments to the existing EU payments regulatory regime, alongside a new open finance proposal (FIDA). While the majority of the proposed amendments are unlikely to take effect before 2025, some of the changes proposed may have a significant impact on businesses including the requirement for existing payment institutions and e-money institutions to reapply for licences.

In case you missed it, in our recent briefing we summarise some of the key changes, the potential timeline and what impacted firms can do now to prepare

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (4 Oct 2023) Bank for International Settlements (BIS) report on Project Atlas, a collaboration between the BIS Innovation Hub Eurosystem Centre, De Nederlandsche Bank and the Deutsche Bundesbank, which involves the creation of a data platform that sheds light on the macroeconomic relevance of cryptoasset markets and decentralised finance (DeFi). A first proof of concept of Project Atlas was developed focusing on international flows of cryptoassets. The initial findings indicate that, although relatively small compared with total on-chain network traffic, identified flows between crypto exchanges are significant and substantial economically. | Webpage
• (29 Sep 2023) International Monetary Fund (IMF) working paper on assessing macrofinancial risks from cryptoassets, which proposes a country-level Crypto-Risk Assessment Matrix (C-RAM) to summarise the main vulnerabilities, useful indicators, potential triggers and potential policy responses related to the crypto sector. | Webpage
• (28 Sep 2023) BIS final report on Project Mariana on the cross-border exchange of wholesale central bank digital currency (CBDCs) using automated market-makers. The Mariana proof of concept demonstrates technical feasibility of so-called automated market-makers for cross-border trading and settlement of hypothetical Swiss franc, euro and Singapore dollar wholesale CBDCs (wCBDCs). It borrows ideas and concepts from DeFi and leverages a public blockchain to design and test a transnational FX interbank market using wCBDCs. Project Mariana is a collaboration between the BIS Innovation Hub, the Bank of France, the Monetary Authority of Singapore and the Swiss National Bank. | Webpage
• (28 Sep 2023) World Federation of Exchanges (WFE) report, ‘Promoting Sound Marketplaces – DeFi/CeFi, Crypto Platforms & Exchanges’, which sets out six principles to promote sound marketplaces in crypto-trading. | Webpage
• (27 Sep 2023) BIS working paper on CBDC and the operational framework of monetary policy, which considers what effect a retail CBDC would have on monetary policy implementation in the euro area, and how this would shape the macroeconomic effects of a CBDC. | Webpage
• (26 Sep 2023) International Securities Lending Association (ISLA) explanatory note on CBDCs | ISLA Digital Assets Technology in Brief webpage

Americas

US:  

• (28 Sep 2023) Off-Chain Digital Commodity Transaction Reporting Bill, which has been introduced to Congress by U.S. Representative Don Beyer (D-VA) and would require digital asset trading platforms to report all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC). | Press release

Europe

EU:  

• (29 Sep 2023) The EU Commission has adopted a delegated regulation setting out regulatory technical standards (RTS) specifying requirements for the credit scoring of crowdfunding projects and the pricing of crowdfunding offers, as well as the risk management policies and procedures of crowdfunding service providers (CSPs). The delegated regulation will enter into force on the twentieth day following its publication in the Official Journal.
• (29 Sep 2023) European Supervisory Authorities (ESAs) response to the EU Commission's call for advice on two delegated acts under the Digital Operational Resilience Act (DORA), in which they set out further criteria for identifying critical ICT third-party service providers (CTPPs) and determine the oversight fees they must pay. | Press release
• (29 Sep 2023) European Banking Authority (EBA) response to the EU Commission's call for advice on two delegated acts under the Markets in Cryptoassets Regulation (MiCA), in which it sets out its proposals for the criteria for determining the significance of asset-referenced tokens (ARTs) and electronic money tokens (EMTs), and for the fees that may be charged by the EBA to significant ART and EMT issuers. | Press release
• (28 Sep 2023) European Central Bank (ECB) blog post on how the ECB is currently using artificial intelligence (AI) for some tasks and exploring its future use for others.
• (28 Sep 2023) ECB podcast on how tech is shaping banking supervision.
• (27 Sep 2023) EU Commission State of the Digital Decade report, which takes stock of the EU’s progress towards a successful digital transformation as set out in the Digital Decade Policy Programme 2030. | Press release

Germany:

• (27 Sep 2023) German Federal Financial Supervisory Authority (BaFin) consultation on a draft circular on minimum requirements for the risk management of payment services institutions and e-money institutions (ZAG-MaRisk) within the meaning of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG). Deadline for comments: 6 December 2023 | Consultation page

UK:

• (27 Sep 2023) Financial Conduct Authority (FCA) webpage setting out the findings of its review of how firms in the peer-to-peer and investment based crowdfunding portfolios have complied with new rules on financial promotions of high-risk investments. The webpage outlines several examples of good and poor practice and calls on firms offering HRIs (including cryptoassets) to retail clients to consider the examples and adjust their processes accordingly.
• (27 Sep 2023) The Association of British Insurers (ABI) has launched a free interactive tool to help SMEs assess their cyber security and plug any identified gaps.| Press release | Q&A

EVENTS

Global Financial Markets Perspectives Series: The payments revolution – how will CBDCs, stablecoins and tokenised deposits transform settlement globally (online, 10 October 2023): The payments landscape is rapidly evolving as a growing number of jurisdictions consider the introduction of central bank digital currencies (CBDCs), the development of private-sector alternatives and significant regulatory changes. We will explore the impact of these changes across the globe including the legal challenges that must be addressed. We will also discuss the opportunities that private alternatives to CBDCs such as stablecoins and tokenised cash deposits offer for facilitating faster settlement, for digital securities and more widely, and how global legal frameworks are adapting accordingly.| To register, please see the event series registration form