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

• The SEC's Evolving Cybersecurity Enforcement Landscape: CISO Liability

SPOTLIGHT

EU Tech Legislation to Watch in 2024:

The EU tech regulatory landscape is going through a major transformation, with an unprecedented number of developments in recent years. This not only relates to AI and new technologies, but many other interlinked societal and business-critical issues. As we move into 2024, we have prepared an overview of upcoming tech legislative developments to help you find out what is on the horizon. This includes a number of key fintech developments including the EU's digital finance package (including MiCA and DORA), reforms to payments frameworks including PSD3 and the digital euro, and the upcoming AI Act.                         

See our interactive PDF here. Or read our recent UK and EU Sell Side Horizon Scanner for more detail on some of these developments, including in relation to level 2 measures under MiCA and DORA.

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (15 Jan 2024) United Nations Office on Drugs and Crime report on casinos, money laundering, underground banking, and transnational organised crime in East and Southeast Asia, which highlights the nexus between illegal online casinos, e-junkets, and cryptocurrency exchanges that have proliferated in recent years alongside surging cross-border criminality throughout the region. | Press release
• (11 Jan 2024) The BIS Innovation Hub Swiss Centre, the Swiss National Bank and the World Bank have jointly launched Project Promissa, a joint experiment with the aim of building a proof of concept (PoC) of a platform for digital tokenised promissory notes. Using distributed ledger technology, Project Promissa is intended to simplify the management of the notes and provide a single source of truth for all counterparties throughout the notes' lifecycles. The International Monetary Fund is participating in the project as an observer. The goal is to complete the PoC and testing by early 2025.
• (10 Jan 2024) World Economic Forum Global Risks Report 2024. Amongst other things, the report considers: (i) the negative consequences of advances in artificial intelligence (AI) and related technological capabilities, (ii) cyber insecurity and cybercrime, and (iii) the risks associated with the concentration of critical technological assets, capabilities or knowledge among a small number of individuals, businesses or states that can control access to key technologies. | Webpage

Americas

US:  

• (10 Jan 2024) The Securities and Exchange Commission (SEC) has approved the listing and trading of a number of spot bitcoin exchange-traded products (ETPs). Clifford Chance acted as counsel to Van Eck Digital Assets LLC (together with its affiliates, VanEck), on the registration and launch of its bitcoin exchange-traded funds. | Approval Order | Statement by SEC Chair Gary Gensler | Statement by Commissioner Hester M. Peirce | Statement by Commissioner Mark T. Uyeda | Dissenting statement by Commissioner Caroline A. Crenshaw | Clifford Chance press release

APAC

South Korea:

• (10 Jan 2024) The Securities and Exchange Commission (SEC) has approved the listing and trading of a number of spot bitcoin exchange-traded products (ETPs). Clifford Chance acted as counsel to Van Eck Digital Assets LLC (together with its affiliates, VanEck), on the registration and launch of its bitcoin exchange-traded funds. | Approval Order | Statement by SEC Chair Gary Gensler | Statement by Commissioner Hester M. Peirce | Statement by Commissioner Mark T. Uyeda | Dissenting statement by Commissioner Caroline A. Crenshaw | Clifford Chance press release

Europe

EU:  

• (17 Jan 2024) The European Supervisory Authorities (ESAs) have published the first set of final draft technical standards under the Digital Operational Resilience Act (DORA) aimed at enhancing the digital operational resilience of the EU financial sector by strengthening financial entities’ Information and Communication Technology (ICT) and third-party risk management and incident reporting frameworks. In particular, the ESAs have published final draft: 
• • Regulatory Technical Standards (RTS) on ICT risk management framework and on simplified ICT risk management framework;
  • RTS on criteria for the classification of ICT-related incidents;
  • RTS to specify the policy on ICT services supporting critical or important functions provided by ICT third-party service providers (TPPs); and
  • Implementing Technical Standards (ITS) to establish the templates for the register of information.
• Press release
• (16 Jan 2024) The European Banking Authority (EBA) has extended its guidelines on money laundering (ML) and terrorist financing (TF) risk factors to cryptoasset service providers (CASPs). The amended guidelines are intended to help CASPs identify ML and TF risks by providing a non-exhaustive list of different factors which may indicate a CASP’s exposure to higher or lower levels of ML/TF risk due to its customers, products, delivery channels and geographical locations. | Press release
• (15 Jan 2024) European Central Bank (ECB) working paper entitled ‘Central Bank Digital Currency: when price and bank stability collide’
• (11 Jan 2024) The European Securities and Markets Authority (ESMA) has launched a common supervisory action (CSA) with national competent authorities (NCAs) to assess the implementation of pre-trade controls (PTCs) by EU investment firms using algorithmic trading techniques. The rules governing the use of PTCs are set out in MiFID2 and Commission Delegated Regulation (EU) 2017/589 (RTS 6), which specifies the organisational requirements of investment firms engaged in algorithmic trading. The CSA, alongside the related sharing of practices between NCAs, is intended to assist in the consistent application of these rules. The CSA will be conducted over the course of 2024. | Press release

UK:

• (16 Jan 2024) The Financial Conduct Authority (FCA) has written to the boards of investment-based crowdfunding (IBCF) platforms and loan-based peer-to-peer (P2P) lending platforms setting out its supervisory expectations. | Letter to IBCF platforms | Letter to P2P lending platforms
• (15 Jan 2024) The Information Commissioner’s Office (ICO) has launched a consultation series on generative AI, examining how aspects of data protection law should apply to the development and use of the technology. The first call for evidence focuses on the lawful basis for scraping data from the web or processing web-scraped data to train generative AI models. Deadline for comments: 1 March 2024 | Press release

EVENTS

• GBBC Virtual Members Forum with Clifford Chance and R3 (online, 1 February 2024): Join this presentation and live Q&A with Clifford Chance and R3 as part of the Global Blockchain Business Council (GBBC) Virtual Members Forum. Diego Ballon Ossio and Jack Hardman, Partners at Clifford Chance, will join R3's Chief Economist, Alisa DiCaprio, to delve into a comprehensive overview of how central bank digital currency (CBDC) projects have evolved over the past year, highlighting the interaction between policy decisions, legal considerations and technical designs in CBDCs. Clifford Chance and R3 will offer insights into how CBDCs can contribute to broader economic objectives, including the impact of CBDCs on financial stability and their potential role in promoting financial inclusion, as well as the legal structures necessary for successful CBDC deployment. | Registration page