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.

SPOTLIGHT

New rules on cryptoasset exposures of EU banks

The new EU banking package (CRR3/CRD6) amending the Capital Requirements Regulation and Directive (CRR/CRD) includes a transitional regime for the risk-weighting of EU banks' exposures to cryptoassets that will apply until new legislation implements the Basel Committee's standard on cryptoassets, as well as new provisions on the reporting, disclosure, governance and supervisory review of cryptoasset exposures.

The texts of CRR3 and CRD6 have been adopted by resolutions of the European Parliament. The texts will be published in the Official Journal after endorsement by the Council of the EU and revision and translation into the EU's official languages. CRR3 and CRD6 will then enter into force 20 days after publication. The transitional regime for the risk-weighting of cryptoasset exposures applies from entry into force (which could be in the next few months, depending on when CRR3 and CRD6 are published in the Official Journal) but other new requirements will apply later.

CLIFFORD CHANCE PUBLICATIONS

• (14 May 2024) Clifford Chance briefing – UAE Open Finance Regulation – What do I need to know?
• (13 May 2024) Talking Tech article – Cybersecurity update: Singapore's Cybersecurity Act extends its reach

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (14 May 2024) Project Agorá, launched by the Bank for International Settlements (BIS), a group of central banks and the Institute of International Finance (IIF), is inviting the private sector to join its exploration of how tokenisation can enhance the functioning of wholesale cross-border payments. The call for private sector participation in Project Agorá will be open until 31 May 2024. | Press release
• (13 May 2024) The Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision (BCBS), has announced that it is postponing the implementation of its prudential standard for banks' cryptoasset exposures from 1 January 2025 to 1 January 2026. The BCBS consulted on a set of targeted revisions to the standard in December 2023 and it expects to discuss whether to make any revisions to the standard later in 2024. | Press release
• (8 May 2024) Speech by Pablo Hernández de Cos, Governor of the Bank of Spain, on cyber risk and its implications for financial stability.

APAC

Singapore:    

• (8 May 2024) The 9th UK-Singapore Financial Dialogue has taken place in Singapore. Amongst other things, the UK and Singapore exchanged views on their respective approaches to managing risks and capturing opportunities in the digital space, including in relation to artificial intelligence (AI), cryptoassets, central bank digital currency (CBDC), and tokenisation and distributed ledger technology (DLT). | Press release

Europe

EU:  

• (14 May 2024) The Eurosystem has announced that it has successfully completed the first experiment in using DLT for the settlement of wholesale transactions in central bank money. The experiment, carried out by Oesterreichische Nationalbank, covered the tokenisation and simulated delivery-versus-payment (DvP) settlement of government bonds in a secondary market transaction against central bank money. Further trials and experiments will be conducted over the next six months on the three Eurosystem interoperability-type solutions proposed for central bank money settlement of wholesale financial transactions recorded on DLT platforms. | Press release
• (13 May 2024) The EU Parliament's Committee on Economic and Monetary Affairs (ECON Committee) has published its report on a framework for financial data access (FiDA), which it adopted on 18 April 2024.
• (13 May 2024) Association for Financial Markets in Europe (AFME) blog post summarising a recent industry workshop discussion on the challenges and opportunities of pooled testing in light of the incoming Digital Operational Resilience Act (DORA).
• (8 May 2024) EU Commission request to the European Insurance and Occupational Pensions Authority (EIOPA) for technical advice on specific items in Solvency II, including the standard formula capital requirements for investments in cryptoassets. | Covering letter
• (8 May 2024) European Securities and Markets Authority (ESMA) Spotlight on Markets Newsletter April 2024, which includes articles on cryptoassets and DORA.
• (3 May 2024) Letter from Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, to ESMA Chair Verena Ross on the implementation of the DLT Pilot Regime (Regulation (EU) 2022/858). In response to perceived uncertainty amongst market participants about the duration of the DLT Pilot Regime, the letter emphasises that there is no expiration date for the regime and that at present no proposal to terminate the regime is envisaged.

UK:

• (8 May 2024) The 9th UK-Singapore Financial Dialogue has taken place in Singapore. Amongst other things, the UK and Singapore exchanged views on their respective approaches to managing risks and capturing opportunities in the digital space, including in relation to AI, cryptoassets, CBDC, and tokenisation and DLT. | Press release

EVENTS

• 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