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Monthly Crypto Round-up

January 2024

Crypto Fintech 5 January 2024

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in December 2023 along with our Clifford Chance crypto 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.

If you would like to receive future Round-ups directly to your inbox, please complete this preferences form. You can sign up for the Global Crypto Round-up under the 'Briefings and regular newsletters' heading. 

CLIFFORD CHANCE PUBLICATIONS

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

  • (19 Dec 2023) International Organization of Securities Commissions (IOSCO) final report on policy recommendations for decentralised finance (DeFi), which are intended to address market integrity and investor protection concerns arising from DeFi by supporting greater consistency of regulatory frameworks and oversight in member jurisdictions. The recommendations cover the following six areas: (i) understanding DeFi arrangements and structures; (ii) achieving common standards of regulatory outcomes; (iii) identification and management of key risks; (iv) clear, accurate and comprehensive disclosures; (v) enforcement of applicable laws; and (vi) cross-border cooperation. | Press release
  • (14 Dec 2023) Basel Committee on Banking Supervision (BCBS) consultative document on targeted adjustments to the BCBS standard on banks' exposures to cryptoassets The BCBS related to the criteria for stablecoins to receive a preferential ‘Group 1b’ regulatory treatment. The Committee will also consult on various technical amendments to help promote a consistent understanding of the standard. The Committee has concluded that cryptoassets that use permissionless blockchains create risks that cannot be sufficiently mitigated at present and has therefore agreed to retain the existing treatment for such cryptoassets. The Committee also reviewed the risks arising from banks providing cryptoasset custody services and emphasised the importance of full implementation of the principles for operational resilience and those for the sound management of operational risk. The Committee intends to continue to monitor the evolution of banks' cryptoasset custody activities and, taking account of market developments, will consider whether any additional work may be needed. Deadline for comments: 28 March 2024. | Webpage | Press release
  • (12 Dec 2023) Bank for International Settlements (BIS) Consultative Group on Innovation and the Digital Economy (CGIDE) report on high-level technical requirements for a functional central bank digital currency (CBDC) architecture | Webpage

Americas

US

  • (15 Dec 2023) The Securities and Exchange Commission (SEC) has denied a petition for rulemaking filed on behalf of Coinbase Global, Inc. in July 2022, which called on the SEC to propose and adopt rules to govern the regulation of securities that are offered and traded via digitally native methods, including potential rules to identify which digital assets are securities. In denying the petition, the SEC disagreed with Coinbase’s assertion that the application of existing securities statutes and regulations to cryptoasset securities, issuers of those securities, and intermediaries in the trading, settlement, and custody of those securities is unworkable. | SEC letter denying the petition | Statement by SEC Chair Gary Gensler
  • (14 Dec 2023) Financial Stability Oversight Council (FSOC) 2023 Annual Report, which reiterates the FSOC’s recommendations from last year’s Annual Report that Congress pass legislation to close gaps in (i) the regulation of spot markets for cryptoassets that are not securities and (ii) the regulation of stablecoins | Webpage
  • (13 Dec 2023) The Financial Accounting Standards Board (FASB) has published an Accounting Standards Update (ASU) intended to improve the accounting for and disclosure of certain cryptoassets by requiring an entity to measure those cryptoassets at fair value each reporting period with changes in fair value recognised in net income. | Press release

APAC

Hong Kong

  • (27 Dec 2023) Financial Services and the Treasury Bureau (FSTB) and Hong Kong Monetary Authority (HKMA)
  • joint consultation on a legislative proposal to implement a regulatory regime for stablecoin issuers. The HKMA also intends to introduce a sandbox arrangement to communicate its supervisory expectations and guidance on issuing fiat-referenced stablecoins in Hong Kong. Deadline for comments: 29 February 2024. | Press release
  • (22 Dec 2023) Securities and Futures Commission (SFC) and HKMA joint circular on intermediaries’ virtual asset-related activities

South Korea

  • (11 Dec 2023) The Financial Services Commission (FSC) has proposed rules setting out detailed requirements under the Act on the Protection of Virtual Asset Users, which is intended to protect virtual asset users and establish a sound order in virtual asset transactions, and is scheduled to take effect on 19 July 2024. Deadline for comments on the proposed rules: 22 January 2024 | Press release

EUROPE

EU

  • (21 Dec 2023) European Banking Authority (EBA) consultation paper on two sets of guidelines on internal policies, procedures and controls to ensure the implementation of EU and national restrictive measures. Amongst other things, the guidelines set out what payment service providers (PSPs) and cryptoasset service providers (CASPs) need to have in place to ensure compliance with restrictive measures in the context of transfers of funds and transfers of cryptoassets under Article 23 of Regulation (EU) 2023/1113. Deadline for comments: 24 March 2024. | Press release
  • (7 Dec 2023) EBA consultation paper on draft RTS setting out the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens (ARTs) under the Markets in Cryptoassets Regulation (MiCA). Deadline for comments: 7 March 2024 | Press release
  • (5 Dec 2023) European Central Bank (ECB) Q&A document which answers questions received via the survey on Eurosystem plans for trials and experiments on new technologies for wholesale central bank money.

Italy

  • (5 Dec 2023) The Bank of Italy and the Bank of Korea have signed a memorandum of understanding to strengthen cooperation on IT and payment systems, including CBDC | Press release.

Switzerland

  • (20 Dec 2023) Financial Market Supervisory Authority (FINMA) guidance on staking services. Among other things, the guidance states that: (i) until such time as there is further clarification of the issue of segregating assets in legislation or case law, in the event of a supervised entity’s bankruptcy, the staked cryptoassets are to be segregated from a bankrupt estate and returned to custody account customers; and (ii) staking will not attract capital requirements for the supervised institution, provided it has implemented risk-mitigating measures and informed customers of the risks in an appropriate manner.

UK

MIDDLE EAST

UAE

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