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

• (21 Nov 2023) Clifford Chance briefing – Government to amend DMU legislation strengthening rights of appeal for platforms

SPOTLIGHT

 ICMA considerations for risk factors and disclosure in DLT bond offering documents

A team of Clifford Chance lawyers were delighted to support the International Capital Market Association (ICMA) with its latest publication that offers further insight into legal aspects of distributed ledger technology (DLT) and blockchain relating to the issuance of debt securities. ICMA’s DLT Bonds Legal Subgroup (chaired by Counsel Alex Tollast) analysed the offering documents of DLT-based debt securities issued by major institutions internationally (covering Australian, English, French, German, Hong Kong, Luxembourg, Spanish and Swiss law) to identify areas of emerging convergence for risk factors and disclosure in digital bond documentation

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (21 Nov 2023) International Capital Market Association (ICMA) paper which offers further insight into legal aspects of distributed ledger technology (DLT) and blockchain relating to the issuance of debt securities. | Press release
• (20 Nov 2023) International Monetary Fund (IMF) blog post entitled ‘Central Bank Digital Currency Development Enters the Next Phase’
• (17 Nov 2023) Bank for International Settlements (BIS) working paper on central bank digital currency (CBDC) and privacy, which presents the results of a randomised survey experiment to show that privacy protection is among the key features to consider in the design of CBDC. | Webpage
• (16 Nov 2023) BIS Financial Stability Institute (FSI) Insights paper on managing cloud risk and oversight of critical cloud service providers in the financial sector | Webpage
• (15 Nov 2023) International Organization of Securities Commissions (IOSCO) final report on policy recommendations for crypto and digital asset markets, which cover: (i) conflicts of interest arising from vertical integration of activities and functions; (ii) market manipulation, insider trading and fraud; (iii) custody and client asset protection; (iv) cross-border risks and regulatory cooperation; (v) operational and technological risk; and (vi) retail distribution. | Press release

Americas

Canada:

• (20 Nov 2023) Office of the Superintendent of Financial Institutions (OSFI) consultation on the public disclosure of cryptoasset exposures by federally regulated financial institutions in Canada. The consultation is being run in parallel to the Basel Committee on Banking Supervision (BCBS) consultation on disclosure of cryptoasset exposures for internationally active banks. OSFI will issue draft guidelines on public disclosures by autumn 2024. Final guidelines will be communicated by winter 2025, taking effect in Q4 2025. Deadline for comments: 31 January 2024. | Press release

US:  

• (21 Nov 2023) Binance has pleaded guilty and agreed to pay over USD 4 billion to resolve the US Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act. Binance’s CEO, Changpeng Zhao, has also pleaded guilty to failing to maintain an effective anti-money laundering programme, in violation of the BSA, and has resigned as CEO of Binance. | Press release
• (20 Nov 2023) The Securities and Exchange Commission (SEC) has filed a complaint against the crypto exchange Kraken, alleging that it has acted as an unregistered broker, dealer, exchange, and clearing agency with respect to cryptoasset securities.
• (15 Nov 2023) New York State Department of Financial Services (NYDFS) industry letter setting out final guidance regarding the listing of virtual currencies, which is effective immediately and entirely supersedes the prior guidance.

APAC

Kazakhstan:

• (15 Nov 2023) The National Bank of Kazakhstan has launched its CBDC pilot – the digital tenge pilot platform – with the participation of second-tier banks and their clients. | Press release (in Kazakh)

Philippines:

• (16 Nov 2023) Bureau of the Treasury Notice of Offering announcing that the Philippines intends to issue Tokenised Treasury Bonds due in 2024 in the form of one-year Tokenised Treasury Bonds denominated in Philippine Peso

Singapore:

• (16 Nov 2023) The Monetary Authority of Singapore (MAS) has announced three initiatives intended to ensure the safe and innovative use of digital money in Singapore, namely: (i) a blueprint outlining the infrastructure required for a digital Singapore dollar; (ii) expanding digital money trials; and (iii) a plan to issue a live CBDC for wholesale settlement. | Press release
• (15 Nov 2023) The MAS has announced the successful conclusion of phase one of Project MindForge, which is intended to develop a risk framework for the use of Generative Artificial Intelligence (GenAI) for the financial sector. The MAS has also released an executive summary of the upcoming whitepaper detailing the risk framework, which will be published in January 2024. | Press release

Europe

EU:  

• (17 Nov 2023) European Central Bank (ECB) presentation slides on ‘The digital euro: a digital form of cash’
• (16 Nov 2023) The EU Commission has published for consultation two draft Delegated Regulations setting out certain criteria and fees relating to critical ICT third-party service providers (CTPPs) under the Digital Operational Resilience Act (DORA). The first Delegated Regulation specifies the criteria for the designation of ICT third-party service providers as critical. The second Delegated Regulation specifies the amount of the oversight fees that can be charged by the European Supervisory Authority that is acting as Lead Overseer to CTPPs and the way in which those fees are to be paid. Deadline for comments: 14 December 2023.
• (16 Nov 2023) Speech by European Securities and Markets Authority (ESMA) Chair Verena Ross on the next steps on the MiCA journey. Amongst other things, Ross discussed some of the key features of ESMA’s second consultation paper on Level 2 measures under the Markets in Cryptoassets Regulation (MiCA), how ESMA is preparing for the transition to the new MiCA regime and fostering supervisory convergence among national competent authorities

UK:

• (21 Nov 2023) UK Finance blog post on ‘Are we embracing AI in finance?’

EVENTS

• Global Financial Markets Perspectives Series: AI Series: Intellectual property and artificial intelligence – a review of new legal challenges (online, 28 November 2023): In this session we will look at the key IP issues for businesses arising from AI. We will focus on the use of AI, including large language models and generative AI, as well as legal questions around the concepts of inventorship and patentability. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: Space tech for smart cities (online, 5 December 2023): Smart cities are using technology to make cities faster, smarter, more efficient and sustainable. The market for smart city related services is growing fast, with the European Space Agency referencing a forecast growth of +57% between 2020-2025. Many of these smart city services and associated technology are heavily reliant, if not entirely dependent, on space tech. Our panel will explore the importance of space tech to smart cities, the latest developments, and the opportunities and risks for financial investors in the sector. | To register, please see the event series registration form