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 publications and materials

The UK Law Society and Tech London Advocates report – Blockchain: legal and regulatory guidance (second edition) | Clifford Chance is a member of Tech London Advocates and Senior Associate Laura Douglas co-wrote the report's chapter on the regulation of cryptoassets.

Spotlight

The digital securities ecosystem: opportunities and challenges ahead

In case you missed the live session last month, you can now watch our webinar in which panellists from Clifford Chance, Ava Labs and Securrency look at the ecosystem supporting digital assets including the issuance process, settlement and custody and discuss the realistic evolution of this space, and the opportunities and challenges for tokenisation and native securities.

Global legal and regulatory updates

International

• (11 Jan 2022) International Monetary Fund research note on the growing links between cryptoassets and equity markets (focusing particularly on the US and emerging markets), and the potential financial stability implications. | Accompanying blog post

Americas

US:  

• (13 Jan 2022) Speech by the Acting Comptroller of the Office of the Comptroller of the Currency, Michael Hsu, on the future of cryptoassets and regulation. Among other things, Hsu calls for stablecoins to be regulated under similar rules as the banking sector.
• (13 Jan 2022) The Federal Deposit Insurance Corporation and the Financial Crimes Enforcement Network have announced they are holding a Tech Sprint for solutions designed to help financial institutions and regulators measure the effectiveness of digital identity verification processes. | Press release
• (12 Jan 2022) Bill introduced by Congressman Tom Emmer, which is intended to prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals. Emmer argues that CBDCs do not have the same benefits and protections as cash and, if introduced, would allow the Federal Reserve to collect personal information and track individual's transactions. | Press release
• (12 Jan 2022) Letter sent from a bipartisan and bicameral group from US Agricultural Committees to the newly confirmed Chair of the Commodity Futures Trading Commission (CFTC), Rostin Behnam. The letter calls on Behnam to provide guidance on cryptoassets and the CFTC's role in regulating them. | Press release
• (11 Jan 2022) Recording from the confirmation hearing of the Federal Reserve Chair, Jerome Powell, in which Powell states that the agency intends to release its report on cryptoassets in the coming weeks.
• (dated Dec 2021, published 10 Jan 2022) Government Accountability Office (GAO) report on the use of cryptoassets as a means of payment for human and drug trafficking. In the report, the GAO highlights crypto ATMs as particularly vulnerable to this kind of illegal activity, as they are less regulated than crypto-exchanges and transactions are harder to trace. The GAO calls on the Internal Revenue Service and Financial Crimes Enforcement Network to introduce stricter regulations to address these risks.

APAC

China:        

• (4 Jan 2022) Regulations (in Chinese) issued by the Cyberspace Administration of China, which set out rules for internet information service providers who make recommendations based on algorithms. The regulations include requirements around the governance, review and ethics of the algorithms, as well as the providers' data management and security. The regulations enter into force on 1 March 2022.

Hong Kong:

• (12 Jan 2022) Hong Kong Monetary Authority (HKMA) discussion paper on cryptoassets and stablecoins. The HKMA is seeking comment on its proposed regulatory approach for cryptoassets in general, and payment-related stablecoins in particular. Responses are due by 31 March 2022. | Press release

Singapore:   

• (7 Jan 2022) Monetary Authority of Singapore report on the 2021 Global CBDC Challenge it held in partnership with various other national and international bodies. The report summarises the problem statements chosen for the challenge and sets out the solutions developed by its participants.

Thailand:      

• (12 Jan 2022) Revenue Department response (in Thai) to the Prime Minister Prayut Chan-o-cha's request (in Thai) for additional guidance around the tax applicable to profits made from investing in cryptoassets. The Revenue Department states it will issue guidance by the end of January 2022.
• (9 Jan 2022) The Securities and Exchange Commission has issued a reminder to digital asset service providers on their responsibilities when opening accounts for minors. The reminder sets out the relevant sections of the Civil and Commercial Code and calls on service providers to consider the legal capacity of investors before accounts are opened for them. | Press release (in Thai).

Europe

EU:  

• (13 Jan 2022) Speech by Supervisory Board Member of the European Central Bank, Pentti Hakkarainen, on what he views as the most important technological changes currently impacting the banking sector.

France:          

• (10 Jan 2022) Autorité de contrôle prudentiel et de résolution (ACPR) charter which is intended to provide clarity and guidance on the ACPR's process for assessing fintech authorisation requests. | Press release (in French)

Spain:            

• (7 Jan 2022) Tweet and open letter (in Spanish) from the Deputy for the Spanish Ciudadanos political party, María Muñoz, in which she states she has proposed a new bill to encourage and increase Bitcoin mining in Spain following the outages and crypto-mine shut-downs in Kazakhstan.

Switzerland:

• (13 Jan 2022) The Swiss National Bank (SNB) has announced the successful completion of the second phase of Project Helvetia, a joint initiative of SNB, the Bank for International Settlements (BIS) Innovation Hub Swiss Centre and SIX Swiss Exchange, which seeks to assess the feasibility of integrating tokenised assets and central bank money. The second phase involved integrating a wholesale CBDC into the existing back-office systems and processes of five commercial banks. | Press release

UK:

• (13 Jan 2022) House of Lords Economic Affairs Committee report setting out the findings from its inquiry on the potential for a UK retail CBDC and the impact it would have on the role of the Bank of England, monetary policy, and the UK financial sector. The Committee concludes that there is not currently a convincing case for a UK retail CBDC. | Press release
• (12 Jan 2022) Report from the Department for Digital, Culture, Media and Sport (DCMS) and the Office for Artificial Intelligence (AI), which sets out an assessment of the scale of AI activity in UK businesses and scenarios for growth over the next twenty years. | Executive summary
• (12 Jan 2022) The DCMS and Office for AI have announced the launch of a new pilot AI Standards Hub, which is intended to develop technical standards for AI. The Alan Turing Institute will lead the pilot, supported by the British Standards Institute and the National Physical Laboratory. | Press release
• (11 Jan 2022) Law Society (in collaboration with the Tech London Advocates' Blockchain Legal and Regulatory Group) second edition of its report on key issues legal practitioners should be aware of when advising on distributed ledger technologies​. Clifford Chance is a member of Tech London Advocates – Laura Douglas is co-lead of the Regulation of Crypto Working Group and contributed to this report. | Press release

Middle East

Bahrain:

• (6 Jan 2022) The Central Bank of Bahrain (CBB) has announced it has successfully completed a digital payments experiment, in collaboration with JPMorgan's blockchain and cryptocurrency unit Onyx, Manama-based international bank Bank ABC and Bahrain national aluminium smelter Aluminium Bahrain (Alba). The test enabled Bank ABC to settle real-time payments to Alba's counterparts in the US using JPM Coin, a blockchain-based payments system and stablecoin pegged to the US dollar. CBB supervised the trial. | Press release (in Arabic)

Clifford Chance events 

The rising US crypto enforcement tsunami – what to expect in 2022 (27 January 2022):

US federal and state regulators and enforcement agencies took aggressive action against US and non-US crypto platforms in 2021. From the USD 100 million penalty against a non-US crypto-exchange for US sanctions violations, to federal and state securities enforcement actions against DeFi and crypto-lending platforms, a wide range of US regulatory and enforcement agencies are aggressively enforcing US laws. US enforcement agencies have also made it clear that regulation and enforcement of crypto activities will be a top priority going into 2022. This seminar will involve a breakdown from our Clifford Chance experts of key regulatory issues and enforcement trends that we expect in 2022. | For more information and to register, please see the event page

Warsaw Perspectives Series: Legal, regulatory and product challenges in insurance in light of cybersecurity and new technologies (6 April 2022)

IT systems, artificial intelligence, machine learning and data analysis tools are all being increasingly used by companies in the insurance sector but are also potentially sources of significant risk. Insurance companies and distributors are exposed to the regulatory risk associated with the creation and distribution of insurance products, and their clients to cyber risk and the risk associated with technological service providers. During this seminar, Clifford Chance Counsel Marta Bieniada will discuss how to take advantage of the benefits of technology in a way that is effective and safe for both clients and the firms offering the innovative services. Please note this seminar will be held in Polish. | For more information and to register, please see the event page.