Clifford Chance

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in March 2024 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.

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GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (28 Mar 2024) Financial Action Task Force (FATF) report on the status of implementation of its Recommendation 15 on virtual assets and virtual asset service providers (VASPs) by FATF members and other jurisdictions with the most materially important VASP activity. The report finds that many countries have yet to fully implement the FATF’s requirements and that this lack of implementation leaves significant loopholes globally, which criminals and terrorists exploit.| Webpage
• (14 Mar 2024) Bank for International Settlements (BIS) working paper on DeFi leverage, which highlights the importance of considering user behaviour, market dynamics, and automated risk mitigation in the design and management of collateralised borrowing platforms with emerging tokenised assets.
• (6 Mar 2024) The BIS Innovation Hub Hong Kong centre has launched the second phase of Project Aurum, in collaboration with the Hong Kong Monetary Authority (HKMA). After testing the feasibility of a technological stack that integrates a wholesale interbank system and a retail e-wallet in its first phase, Project Aurum 2.0 will now focus on how to enhance privacy for retail central bank digital currencies (CBDC). | Project webpage

Africa

Nigera

• (15 Mar 2024) Securities and Exchange Commission (SEC) proposed major amendment to the rules on issuance, offering platforms and custody of digital assets

Americas

US

• (22 Mar 2024) Speech by SEC Chairman Gary Gensler on the benefits of mandatory disclosure, in which he argued that some participants in crypto securities markets seek to avoid the SEC's rules requiring registration of public offerings and ongoing disclosures.
• (12 Mar 2024) Joint US Copyright Office - US Patent and Trademark Office (USPTO) report on the intellectual property (IP) law and policy implications of non-fungible tokens (NFTs), which concludes that existing statutory enforcement mechanisms are currently sufficient to address infringement concerns related to NFT applications and that changes to IP laws, or to the Offices’ registration and recordation practices, are not necessary or advisable at this time. | Press release
• (7 Mar 2024) The Chair of the Board of Governors of the Federal Reserve System, Jerome H. Powell, has given evidence to the United States Senate Committee on Banking, Housing and Urban Affairs, stating, amongst other things, that the Fed is "nowhere near" recommending or adopting a central bank digital currency in any form | Video recording of hearing

APAC

Australia

• (14 Mar 2024) Federal Court of Australia judgment in Australian Securities and Investments Commission (ASIC) v Finder Wallet Pty Ltd [2024] FCA 228, which concluded that Finder Wallet Pty Ltd did not provide unlicensed financial services in relation to cryptoasset related product Finder Earn. ASIC had argued that the Finder Earn product was a debenture because customers deposited money with Finder Wallet on the understanding that their money would be repaid, together with a return for allowing Finder Wallet to use their capital. The Court rejected this contention and found that the product was not a debenture within the meaning of s 9 of the Corporations Act 2001. ASIC has 28 days to lodge any application for appeal to the Full Federal Court. | ASIC press release

Hong Kong

• (14 Mar 2024) The HKMA has announced the launch of Phase 2 of the e-HKD Pilot Programme, with a view to further exploring innovative use cases for an e-HKD in Hong Kong | Press release
• (12 Mar 2024) The HKMA has launched a stablecoin issuer sandbox arrangement, to tie in with its December 2023 consultation on the legislative proposal for implementing the regulatory regime for stablecoin issuers | Press release
• (7 Mar 2024) The HKMA has announced the launch of Project Ensemble, a new wholesale central bank digital currency (wCBDC) project to support the development of the tokenisation market in Hong Kong. | Press release

Indonesia

• (8 Mar 2024) The Indonesian Financial Services Authority (OJK) has issued new regulations (in Indonesian) to implement technological innovation in the financial sector, including in relation to digital financial assets and cryptoassets. The regulations are intended to create an integrated fintech ecosystem with an activity-based approach which aims to support innovation and ensure consumer protection and effective risk mitigation. | Press release (in Indonesian)

EUROPE

EU

• (27 Mar 2024) The EU Commission will be hosting a workshop on asset tokenisation on 11 June 2024, covering tokenisation of funds, secondary markets, and interoperability and standardisation. The workshop will be held physically in Brussels, bringing together selected stakeholders. The workshop will not be streamed online. The deadline for expressions of interest is 12 April 2024 23:59 Brussels time. | Event webpage
• (25 Mar 2024) European Securities and Markets Authority (ESMA) third consultation package under the Markets in Cryptoassets Regulation (MiCA), seeking feedback on the following four sets of proposed rules and guidelines: regulatory technical standards (RTS) on the detection and reporting of suspected market abuse in cryptoassets; guidelines on policies and procedures for cryptoasset transfer services, including the rights of clients;  guidelines on the suitability requirements for certain cryptoasset services and the format of the periodic statement for portfolio management; and  guidelines on ICT operational resilience for certain entities under MiCA. Comments are due by 25 June 2024.
• 25 Mar 2024) ESMA final report on the first package of technical standards under MiCA, on which it consulted in July 2023 and which comprises rules relating to the authorisation, identification and complaint handling procedures of cryptoasset service providers (CASPs). ESMA intends to publish its final report on RTS on conflicts of interest for CASPs (in accordance with Article 72(5) of MiCA) at a later stage to allow the European Banking Authority (EBA) to conclude its consultation process and ensure maximum alignment.
• (25 Mar 2024) ESMA final report specifying requirements for cooperation under MiCA, which contains two draft RTS and two draft ITS relating to: the exchange of information between competent authorities; procedures, forms and templates for the exchange of information between competent authorities; procedures, forms and templates for exchange of information between competent authorities and ESMA or the EBA; and the template for cooperation with third-country authorities.
• (25 Mar 2024) The EU Parliament has published a corrigendum which corrects some minor errors in the adopted text of MiCA, along with extending the period allowed for Member States to make a notification to the Commission, ESMA and the EBA about the existence of certain national law administrative penalties and measures in relation to MiCA.
• (18 Mar 2024) The European Central Bank (ECB) has announced that it is establishing seven new workstreams to develop the digital euro rulebook and has issued calls for candidates for each, inviting leading experts in payments infrastructure and architecture, technical specifications and scheme management to apply. | Press release
• (13 Mar 2024) EBA final draft RTS that set out the requirements, templates and procedures for handling complaints received by issuers of asset referenced tokens (ARTs), under the MiCA | Press release
• (8 Mar 2024) EBA consultation on draft guidelines for the plans to orderly redeem asset-referenced tokens (ARTs) or e-money tokens (EMTs) in the event that the issuer fails to fulfil its obligations under the MiCA. Deadline for responses: 10 June 2024 | Press release

France

• (21 Mar 2024) Haut Comité Juridique de la Place Financière de Paris (HCJP) report (in French) on MiCA, which contains contributions from Clifford Chance's Frédérick Lacroix and Pierre d'Ormesson and underlines the need to adapt French law to the new EU rules while ensuring the attractiveness of the Paris financial marketplace. Developments are proposed to facilitate the transfer of ownership of cryptoassets, with adaptations for intermediated cryptoassets

UK

• (26 Mar 2024) The Technology Working Group (TWG), a subset of the Economic Secretary’s Asset Management Taskforce, has published a second report on its work on the implementation of fund tokenisation in the UK.
• (19 Mar 2024) Financial Conduct Authority (FCA) Business Plan 2024/25, which states that the FCA plans to deliver a market abuse regime for cryptoassets in the coming year
• (19 Mar 2024) UK Finance blog post on securing digital assets in the age of digital currencies
• (11 Mar 2024) The FCA has announced that it will not object to requests from recognised investment exchanges to create a UK listed market segment for cryptoasset-backed exchange traded notes (CETNs). These products would only be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets.
• (6 Mar 2024) HM Revenue & Customs consultation on the UK implementation of the OECD Cryptoasset Reporting Framework and amendments to the Common Reporting Standard, seeking views on an extension to domestic reporting. Deadline for comments: 29 May 2024.

Middle East

Israel

• (11 Mar 2024) Bank of Israel paper on a 'Logical Architecture for the Digital Shekel System', which discusses the various architectures for operationalising a two-tier model for the design and issuance of a retail digital central bank currency (rCBDC)

UAE

• (8 Mar 2024) Dubai International Financial Centre (DIFC) Digital Assets Law DIFC Law No. 2 of 2024, which came into effect on 8 March 2024 and sets out the legal characteristics of digital assets as a matter of property law, as well as how digital assets may be controlled, transferred and dealt with by interested parties. The DIFC has also enacted a new Law of Security and related amendments to select existing legislation to cater for the consequences of the new digital assets regime and revised security regime. | Press release