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.

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CLIFFORD CHANCE PUBLICATIONS AND MATERIALS

 Clifford Chance briefing – US federal banking agencies issue rule requiring banks to notify regulators of cyber incidents within 36 hours

SPOTLIGHT

On Wednesday 8 December, join our panel of experts for an exploration of developments in the digital securities space. In this virtual session we will be looking at the ecosystem supporting digital assets, including the issuance process, settlement and custody, and discussing the realistic evolution of this space, including the opportunities and challenges for tokenisation and native securities. Click here to register

GLOBAL LEGAL AND REGULATORY UPDATES

International

• (2 Dec 2021) Bank for International Settlements (BIS) report on the use of suptech tools for prudential supervision and the associated benefits, risks and implementation challenges. | Press release

Africa

Egypt:            

• (25 Nov 2021) The House of Representatives has given preliminary approval to a proposed law on the use of fintech in non-banking financial activities. | Press release (in Arabic)

Mauritius:    

• (25 Nov 2021) The Financial Services Commission has announced the launch of a regulatory framework for crowdfunding. The framework is set out in Government Notice No.219 of 2021, which was published in September 2021. | Press release

Americas

US:  

• (2 Dec 2021) Speech by Federal Reserve Governor, Randal K. Quarles, on issues he hopes his successor will address once he leaves the Board of Governors at the end of the year. Quarles argues that innovations such as stablecoins should not be unduly hampered by regulation and notes that he views some of the proposals in the recent President's Working Group on Financial Markets' report, such as limiting wallet providers' affiliation with commercial entities, as unwarranted.
• (29 Nov 2021) The Federal Reserve Bank of New York has announced the launch of the New York Innovation Center (NYIC), in collaboration with the BIS Innovation Hub. NYIC will be tasked with supporting the agency's analysis of cryptoassets, including the roll-out of a central bank digital currency (CBDC), and fostering collaboration and information-sharing among central banks. | Press release | Launch speech by Federal Reserve Chair, Jerome Powell

APAC

Hong Kong:

• (26 Nov 2021) Hong Kong Monetary Authority guidance for banks wishing to implement regtech solutions for regulatory reporting and stress testing.

India:

• (29 Nov 2021) In light of the upcoming introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill to Parliament, a number of related parliamentary questions have been submitted to ministers, including:
•  
  • a question on whether the Government intends to recognise Bitcoin as a legal currency, to which the Minister of Finance responded it did not; and
  • a question on the introduction of an Indian CBDC, to which the Minister of Finance responded that the Government has received a proposal from the Reserve Bank of India (RBI) to expand the definition of 'bank note' in the RBI Act 1934 to include currency in digital form and that the Bank is planning a phased introduction of a CBDC.

Thailand:      

• (2 Dec 2021) Securities and Exchange Commission consultation on proposals to introduce a licencing regime for digital asset custodial service providers and requirements for the management of digital asset wallets. Responses are due by 31 December 2021.

Europe

EU:  

• (1 Dec 2021) The Council has adopted its negotiating mandate on the EU Commission's proposal to extend the scope of rules on information accompanying transfers of funds to apply to certain cryptoassets. The proposal requires cryptoasset service providers to collect and make accessible full information about the sender and beneficiary of any cryptoasset transfers, with the intention of improving the traceability of cryptoasset transfers and the identification of suspicious transactions. | Press release
• (1 Dec 2021) European Central Bank (ECB) opinion on the EU Commission's proposed extension of rules on information accompanying transfers of funds to cryptoassets. The ECB welcomes the proposal but calls for revisions including excluding CBDCs from the scope of the rules and aligning the date of application with the proposed regulation on markets in cryptoassets (MiCA).
• (1 Dec 2021) ECB report on CBDCs. It sets out recommendations for establishing an adequate functional scope for CBDCs and considers the different ways to incentivise private sector service providers' involvement, including in the distribution, use and processing of CBDCs.

France:          

• (28 Nov 2021) Speech by First Deputy Governor of the Bank of France, Denis Beau, on the challenges posed by introducing a digital euro. Beau argues that establishing an effective multi-dimensional regulatory regime for cryptoassets should take priority over the issuance of an EU CBDC.

Luxembourg:              

• (29 Nov 2021) Commission de Surveillance du Secteur Financier (CSSF) communique, which sets out guidance and new FAQs on the treatment of cryptoassets. CSSF emphasises that any entity under its prudential supervision interested in pursuing cryptoasset-related activities is required to carry out thorough due diligence and consider carefully the risks and benefits associated with the proposed new activity, taking into account the entity's existing business model and risk appetite.

UK:

• (29 Nov 2021) Policy paper from the Digital Regulation Cooperation Forum (which comprises representatives from the Competition and Markets Authority, Ofcom, the Information Commissioner's Office, and the Financial Conduct Authority), in which it announces the launch of a technology horizon scanning programme. Under the programme, the regulators commit to publishing their digital research on their websites, engaging with UK SMEs, tech start-ups and academia, and accelerating their knowledge building in new areas such as cloud computing technology, quantum and biometric technologies, and the internet of things.
• (22 Nov 2021) HM Revenue and Customs (HMRC) updated guidance on the application of its Digital Services Tax (DST), a 2% levy on the revenues of search engines, social media services and online marketplaces. The updated guidance clarifies that crypto-exchanges are subject to the DST, as HMRC has concluded that cryptoassets are not financial instruments and therefore exchanges will not be able to claim financial marketplace exemption.

Middle East

Israel:

• (14 Nov 2021) Order (in Hebrew) jointly issued by the Israel Money Laundering and Terror Financing Prohibition Authority and the Capital Market, Insurance and Savings Authority, which sets out new requirements for the transfer of virtual assets. Under the order, virtual asset service providers must identify and verify customers and report on their activities. The order also permits the transfer of gains from virtual asset investments to be transferred to Israeli banks if the trading of the assets is legal. | Press release

CLIFFORD CHANCE EVENTS

Artificial intelligence – can we go from chaos to cooperation? (7 December 2021):

AI is predicted to generate USD 13 trillion in economic activity by 2030, but there is little international agreement on what constitutes AI and even less on how to regulate this transformative — and potentially dangerous — form of technology. Clifford Chance and the American Enterprise Institute (AEI) are pleased to invite you to this virtual event in which panellists from Clifford Chance, AEI, the University of Oxford and NATO will consider the prospects of an AI arms race and the opportunities for international cooperation.

Artificial intelligence – can we go from chaos to cooperation? (7 December 2021):

AI is predicted to generate USD 13 trillion in economic activity by 2030, but there is little international agreement on what constitutes AI and even less on how to regulate this transformative — and potentially dangerous — form of technology. Clifford Chance and the American Enterprise Institute (AEI) are pleased to invite you to this virtual event in which panellists from Clifford Chance, AEI, the University of Oxford and NATO will consider the prospects of an AI arms race and the opportunities for international cooperation.

The digital securities ecosystem – opportunities and challenges ahead (8 December 2021):

Clifford Chance invites you to join our panel of experts for an exploration of developments in the digital securities space. In this virtual session we will be looking at the ecosystem supporting digital assets, including the issuance process, settlement and custody, and discussing the realistic evolution of this space, including the opportunities and challenges for tokenisation and native securities. | To register, please see the event registration form

Warsaw Perspectives Series: CBDCs and stablecoins – is a revolution in financial markets and payment services approaching? (15 December 2021):

New CBDC solutions are being implemented by central banks, governments and international organisations, and the private sector is developing various types of digital payment instrument as an alternative to fiat currency. Join Clifford Chance Partner, Andrzej Stosio, for a seminar on the fundamental impact these developments may have on global and local financial markets and the legal, regulatory and economic challenges they pose. Please note this seminar will be held in Polish.

Additional Information

This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. Clifford Chance is not responsible for third party content. Please note that English language translations may not be available for some content. 

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