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.

Spotlight: EU and US AI Regulatory Push Overlaps Across Global Business

As jurisdictions race to understand and build appropriate regulatory and governance structures around artificial intelligence, the EU is frequently regarded as the frontrunner. However, the US is forging its own federated approach and isn’t necessarily behind. For organisations, is alignment with one or the other the best path to success? Ultimately, the choice won’t be either-or.Historically, each jurisdiction has followed a distinct approach to regulating tech. The EU is seen as prescriptive, comprehensive, and wide-reaching, relying on a strong tradition of protecting fundamental rights and values through legislation. The US follows a federated approach to tech regulation, comprised of contemporaneous federal, state, and local laws, along with sector-specific standards and best practices, and variations based on perceived market needs.

CLIFFORD CHANCE PUBLICATIONS

• 18 Apr 2024) Clifford Chance briefing – UKJT Legal Statement on Digital Assets and English Insolvency Law
• (17 Apr 2024) Talking Tech article – Brands and Digital Platforms Beware: ACCC's War on Deceptive Influencer Marketing in the Digital Age
• (14 Apr 2024) Talking Tech article – EU and US AI Regulatory Push Overlaps Across Global Business

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (18 Apr 2024) The BIS Innovation Hub has published a first interim report on Project FuSSE (Fully Scalable Settlement Engine), focusing on quantum resistant cryptographic functionalities that allow robust digital signature processes. | Project webpage
• (17 Apr 2024) Speech by Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of Spain, on the use of artificial intelligence (AI) in banking and the prudential and financial stability challenges it poses.
• (17 Apr 2024) International Swaps and Derivatives Association (ISDA) Future Leaders in Derivatives (IFLD) white paper setting out guidance for industry stakeholders, regulators and technology providers seeking to harness generative artificial intelligence (genAI) in transforming the over-the-counter (OTC) derivatives market. Drawing on industry expertise and academic research, the white paper identifies a range of potential use cases for genAI in the derivatives market, including document creation, market insight and risk profiling. It also explores regulatory issues in key jurisdictions and addresses the challenges and risks associated with the use of genAI. | Press release
• (16 Apr 2024) ISDA animation video on a digital approach to derivatives documentation.

Americas

US:

• (17 Apr 2024) Lummis-Gillibrand Payment Stablecoin Act of 2024, which has been introduced as a bipartisan bill to the US Senate by Senators Kirsten Gillibrand and Cynthia Lummis. The Act would (i) require stablecoin issuers to maintain one-to-one reserves and prohibit unbacked, algorithmic stablecoins; (ii) prevent illicit or unauthorised use of stablecoins by issuers and users; and (iii) create federal and state regulatory regimes for stablecoin issuers. | Press release | Section-by-section overview | One-pager.

Asia

Hong Kong:  

• (17 Apr 2024) Hong Kong Monetary Authority (HKMA) has issued circulars to authorised institutions and stored value facility (SVF) licensees to share a report on its key observations and good practices identified in a recent thematic review of authorised institutions' transaction monitoring systems and artificial intelligence. | Circular to Authorised Institutions | Circular to SVF licensees
• (16 Apr 2024) HKMA circular setting out the key risk management considerations that it has regard to when it reviews proposals from authorised institutions involving the use of distributed ledger technology (DLT).

Europe

EU: 

• (18 Apr 2024) The EU Parliament's Committee on Economic and Monetary Affairs (ECON Committee) has adopted its report on the proposed regulation on a framework for financial data access (FiDA). The EU Commission proposed the FiDA package in June 2023. The framework is intended to establish clear rights and obligations to manage customer data sharing in the financial sector beyond payment accounts. The EU Parliament is expected to follow up the legislative file after the June 2024 European elections. | Press release
• (18 Apr 2024) European Supervisory Authorities (ESAs) consultation paper on draft regulatory technical standards (RTS) on the conduct of oversight activities in relation to the joint examination teams under the Digital Operational Resilience Act (DORA). Deadline for comments: 18 May 2024. | Press release
• (18 Apr 2024) European Central Bank (ECB) occasional paper on digital euro safeguards to protect financial stability and liquidity in the banking sector
• (17 Apr 2024) Slides used for a presentation on the digital euro by ECB Executive Board Member Piero Cipollone at a meeting with the Italian Banking Association

Luxembourg:

• (17 Apr 2024) Commission de Surveillance du Secteur Financier (CSSF) communiqué on the European Supervisory Authorities (ESAs)' voluntary dry run exercise for the collection of the registers of information required under DORA.

Poland:

•  (18 Apr 2024) The Ministry of Finance has published a bill (in Polish) amending certain acts in relation to ensuring the operational digital resilience of the financial sector. Amongst other things, the bill indicates that the Financial Supervision Authority will be the authority in Poland responsible for supervising compliance with DORA.

UK:  

• (23 Apr 2024) The Financial Conduct Authority (FCA) published an artificial intelligence (AI) update outlining its approach to AI following the UK Government’s response to the AI white paper. | Webpage
• (22 Apr 2024) FCA chief executive, Nikhil Rathi, delivered a speech announcing the regulator's plans to examine how Big Tech firms’ unique access to large sets of data could unlock better products, more competitive prices and wider choice for consumers and businesses. | Webpage
• (22 Apr 2024) Prudential Regulation Authority (PRA) published a letter providing an update on its AI strategy following a request from the Department for Science, Innovation and Technology (DSIT) Secretary of State and Economic Secretary to HM Treasury (HMT). | Webpage
• (19 Apr 2024) Report from the Joint Regulatory Oversight Committee (JROC), formed of the FCA, the Payment Systems Regulator (PSR), the Competition and Markets Authority (CMA) and HMT, including its recommendations for the structure, governance and funding of the future entity for UK open banking. JROC is seeking stakeholder feedback on some of its recommendations. Deadline for comments: 20 May 2024. | Press release
• (17 Apr 2024) Startup Coalition/Tony Blair Institute for Global Change report on a progressive vision for fintech, which sets out specific steps that the next Government should take to utilise fintech to drive growth and unlock opportunity across the UK. | Article
• (17 Apr 2024) House of Commons Library research briefing providing a selection of reading on AI, including UK Government policy. | Webpage

EVENTS

• Global Financial Markets Perspectives Series: AI Series: Regulating AI – examining global developments (online, 30 April 2024): This session will look at the global development of regulatory frameworks for AI, including emerging trends and diverging approaches being taken in different jurisdictions. This will include the EU’s AI Act, US developments at federal and state level, the UK perspective and the measures being taken in China to tackle regulation of generative AI and deepfakes. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: AI Series: Regulation of artificial intelligence in the UK and EU insurance sectors (hybrid, 16 May 2024): Our panel will take a closer look at developments in the regulation of AI systems in the UK and EU that are directed specifically at the insurance sector. This includes comparing the EU AI Act with the latest information on the PRA and FCA’s approach to AI regulation that will affect the insurance sector value chain. We will consider how the insurance sector in the UK and EU could prepare for these new regulations, with a focus on the potential implications for governance arrangements and systems and controls. | To register, please see the event series registration form
• Global Financial Markets Perspectives Series: AI Series: Contracting for AI (online, 13 June 2024): What makes procuring AI different from procurement of other software or services? How does this affect your contract terms and supplier onboarding and management processes? When there is limited scope for negotiation, where should you focus your efforts? In this session we will discuss strategy and practical tips for contracting for AI. | To register, please see the event series registration form