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Clifford Chance

Clifford Chance

Tech

Understanding the challenges tech presents for business

Tech presents new challenges for businesses - including regulation, growing competition from start-ups and ethical issues raised by artificial intelligence. It affects all aspects of the law.

Our experts provide joined-up advice on the impact of technology on antitrust and data; M&A and investments; intellectual property and litigation; AI and fintech; cyber and regulatory investigations.

Artificial Intelligence

The future of AI regulation in Europe and its global impact

The European Commission has introduced its proposal for the first-ever harmonised legal framework on artificial intelligence (AI), confirming the EU's role and ambition as a pioneer in the regulation of tech. We consider what this means for businesses, as well as how global regulators are responding. The AI Act, which was released on 21 April 2021, attempts to strike a difficult balance between two key objectives: promoting innovation and harnessing the benefits of AI, on the one hand; and addressing key risks and fears AI gives rise to, on the other. In so doing, it seeks to address some of the main concerns levelled at a general, horizontal framework, favouring a riskbased approach and taking account of specific sectoral issues. Read more about the future of AI regulation in Europe and its global impact.

Moving Forward on Explainable AI - New Guidance from the UK ICO and Turing Institute

Artificial intelligence is being extensively used across sectors and around the world, but without comprehensive legal frameworks and appropriate governance and compliance programmes in place, regulators are starting to fill the gap.

One area of focus for regulators and a problem for organisations has been the need for greater transparency and "explainability" for artificial intelligence (AI) systems. As a result, a range of academic, industry and government initiatives have sought to give practical context to new legal requirements and help organisations to counter accusations that AI systems are opaque or act as a "black box". The latest of these, is guidance from Project explAIn, a collaboration between the UK Information Commissioner's Office (ICO) and the Alan Turing Institute, published in May 2020 following an industry consultation. This aims to provide practical advice on explaining decisions made by AI systems, in a manner that meets legal requirements, as well as technical and governance best practice. Here we consider some of the existing legal requirements for explainability in the UK and explore the key takeaways from this guidance. Read more about Moving Forward on Explainable AI.

Data and Privacy

Data Litigation: A Toolkit for Defendants

The risks to businesses of civil claims arising out of data breaches have been underplayed. Data litigation is on the rise and the exposures are potentially significant. In this briefing, we explore the key defences to such claims and the arguments available - in light of the emerging case law - to challenge the large amounts being claimed by data subjects in damages. Read more about Data Litigation - A toolkit for defendants.

Data Collective Actions: The costs of losing control

Data breaches are an increasing focus for English litigation, and collective actions are on the rise as public concern grows about how our data is used. All companies – not just big tech firms – use data, and therefore risk being faced with these claims. Businesses with deep pockets are the most likely to be sued. In this briefing, the first in a series, we explore the potential claims that firms may face following a data breach. Read more about data collective actions - the costs of losing control.

Digital Assets

OFAC risk isn't virtual for Digital Currency Payment Processors

On February 18, 2021, the US Department of the Treasury's Office of Foreign Assets Control announced a settlement of apparent US sanctions violations by Atlanta, Georgia-based BitPay, Inc. involving its provision of digital currency payment processing services to purchasers of goods and services located in Crimea, Cuba, Iran, North Korea, Sudan and Syria.

The case highlights the sanctions risks for US companies that provide services in connection with digital currency payments and indicates sanctions compliance controls that may be appropriate to mitigate such risks. BitPay did not voluntarily self-disclose the apparent violations, but OFAC determined that they were not egregious and therefore assessed a base penalty of $2,255,000. OFAC then reduced the final penalty to $507,375 based on a number of mitigating factors including BitPay's cooperation with OFAC, remedial measures and compliance enhancements. Read more about OFAC Risk Isn't Virtual for Digital Currency Payment Processors.

Payments trends 2021: what will the new year mean for regulation and enforcement?

There has been a renewed focus on the payments sector and its regulation. COVID-19 and its impact on spending habits and the Wirecard scandal are two of the contributing factors. But what’s next? We explore five themes likely to drive regulatory change for payments, as well as shape the enforcement policies of global regulators over the next 12 months. Read more about Payments trends 2021: what will the new year mean for regulation and enforcement?

EU Digital Services Act and Digital Markets Act: What are the implications?

The debate about how to regulate and ensure “digital” competition and guarantee a fair market is a global one. Jurisdictions around the world are grappling with how to handle the new tech environment – which includes the tricky issue of how to regulate the tech giants. Europe has decided to be a pioneer in the regulation of digital platforms and marketplaces with a proposed digital package – the first major overhaul of EU rules for online players for two decades. Read more about EU Digital Services Act and Digital Markets Act: What are the implications?

FinCEN and DOJ signal increased scrutiny of cryptocurrencies

US authorities are closely scrutinizing the anti-money laundering (AML), terrorist financing, and sanctions compliance risks associated with the use of cryptocurrencies. While US authorities including the Financial Crimes Enforcement Network of the US Treasury (FinCEN) and the US Department of Justice (DOJ) have been tracking the rise in use (and potential for misuse) of cryptocurrencies for years, 2020 saw a flurry of new developments that indicate that cryptoassets are now center stage.

Recent guidance and enforcement actions against companies and private individuals make clear the need for US and non-US cryptocurrency sponsors, trading platforms and other intermediaries that facilitate cryptocurrency transactions involving US persons to adhere to applicable US legal and regulatory requirements, including registration. Read more about FinCEN and DOJ signal increased scrutiny of cryptocurrencies.

Security Token Offerings – the shape of regulation across Asia-Pacific

Security token offerings or STOs, the issuance of digital tokens using blockchain or distributed ledger technology, are increasingly being seen as an alternative to mainstream debt and equity fundraisings. An evolution of the (supposedly) unregulated initial coin offerings or ICOs, STOs are typically structured to sit within securities law frameworks. This means much greater certainty for both fundraisers and investors, resulting in enhanced liquidity. In this report we consider how STOs are structured and some of the benefits and challenges, and explore the evolving regulatory landscape for STOs across key financial centres in Asia-Pacific. Read more about Security Token Offerings – the shape of regulation across Asia-Pacific.

Security Token Offerings - a European perspective on regulation

Security token offerings, the issuance of digital tokens using blockchain or distributed ledger technology, are increasingly being seen as an alternative to mainstream debt and equity fundraisings. An evolution of the (supposedly) unregulated initial coin offerings or ICOs, security token offerings or STOs are typically structured to sit within securities law frameworks. This means much greater certainty for both fundraisers and investors, resulting in enhanced liquidity. In this report we consider how STOs are structured and some of the benefits and challenges, and explore the evolving regulatory landscape for STOs across Europe. Read more about Security Token Offerings - a European perspective on regulation.

Central Bank Digital Currencies and Stablecoins – how might they work in practice?

This report considers how adoption of a global stablecoin or a retail CBDC would look in practice, and explore the legal structures that might be employed. Read more about Central Bank Digital Currencies and Stablecoins – how might they work in practice?

Fintech

Chambers Global Practice Guide 2021: Fintech – UK: Law and Practice

We are delighted to have authored the UK Law and Practice chapter in the Chambers 2021 Global Practice Guide on Fintech. The chapter provides an invaluable introduction to the fintech market and its regulation in the UK for fintech start-ups and scale-ups, as well as more established firms. We consider a host of fintech business models and sectors, ranging from specific technologies such as blockchain and the use of artificial intelligence for robo-advice and algorithmic trading, to considering the outlook for funds, payments providers, online lenders, market places and exchanges. Originally published by Chambers and Partners. Read more about Fintech – UK: Law and Practice.

Fintech in 2021: Five Trends to Watch

The COVID-19 crisis has brought technology use to the fore in the financial sector and beyond, with businesses seeing two or three years’ expected progress compressed into two or three months last year. The pandemic's impact on fintech businesses and regulatory agendas is ongoing, coupled with pressure from both consumers and businesses to get tech regulation right. What does this mean for global fintech in 2021? From sustainable fintech and CBDC developments to greater scrutiny of data and increased antitrust enforcement, we predict five developments for key fintech areas including AI, data, payments and crypto. Read more about Fintech in 2021: Five Trends to Watch.

The EU's proposals for far-reaching regulation of the digital sector

The European Commission has announced far-reaching proposals for regulation of digital platforms and online intermediaries. The Digital Markets Act (DMA) will impose on digital platforms that are designated as “gatekeepers” a long list of obligations to refrain from practices that are considered to limit competition or to otherwise be unfair. In contrast, the Digital Services Act (DSA) focuses on regulating the way that providers of online intermediary services interact with their customers and users, and their obligations in respect of harmful or illegal content, in order to create “uniform rules for a safe predictable and trusted online environment”. In combination, the two pieces of proposed legislation will create Europe’s most dramatic and interventionist sector-specific regulatory regime in decades, and would require significant changes to the business practices of digital sector players such as Google, Facebook and Apple, but also potentially smaller competitors. While it is likely to be around two years or more before these proposals result in binding obligations, they are unlikely, in our view, to be significantly watered down during the legislative process. Read more about the EU's proposals for far-reaching regulation of the digital sector.

As DEFI Matures, US Financial Regulatory Questions Loom Large

This article explores what DeFi is, review the recent SEC and CFTC actions against Abra, explore some of the red flags that DeFi platforms should be aware of and discuss steps that platforms can take to avoid inadvertently violating US regulatory requirements. Read more about As DEFI Matures, US Financial Regulatory Questions Loom Large.

Proptech

Accelerating the Pace of Change - Commercial Real Estate Transaction Survey

Covid-19 created a tipping point for proptech, putting it front and centre in addressing the requirements of a commercial real estate industry that needed to continue working under lockdown. At the height of the first lockdown, Clifford Chance and Concrete VC surveyed the UK real estate industry to find out what the new normal for real estate transactions might look like.

The survey sought to understand which technologies and new approaches would increase in use and importance, and which would fade away. With over 80% of respondents either at C-Suite or senior level, and with over 40% representing large organisations, the results showed that proptech will play a critical role going forward but also identified which of the more traditional tools will remain at the heart of the industry. The survey also identified the key barriers to wider adoption of technology across the industry. Read more about Accelerating the Pace of Change - Commercial Real Estate Transaction Survey.

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