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Weekly Global Fintech Update

15 November 2021

15 November 2021

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.

You are welcome to share the round-up with colleagues who may like to subscribe.

CLIFFORD CHANCE PUBLICATIONS AND MATERIALS

Clifford Chance podcast – Talking Tech @ Singapore Fintech Festival 2021: Key highlights from Day 1

Lloyd v Google: how the Supreme Court judgment closed the door on Lloyd's £3.3 billion data claim

SPOTLIGHT

We are delighted to be able to share our new Tech Group report developed in conjunction with global communications and public policy advisory firm, Milltown Partners. Our Relationship with AI: Friend or Foe, A Global Study is based on an extensive YouGov research survey and reveals the attitudes to technology and artificial intelligence of more than 1000 tech policy professionals and influencers from around the world, based in the USA, UK, France, Germany.

The report explores overall attitudes to technology and AI, the perceived benefits and risks of AI, as well as respondents' support for different regulatory approaches to AI and their confidence in the likelihood of those approaches succeeding. Read on to find out more or watch our expert panel discuss highlights from the report.

 

 

GLOBAL LEGAL AND REGULATORY UPDATES
  • (10 Nov 2021) Speech by Bo Li, Deputy Manging Director of the International Monetary Fund (IMF), on the findings of the IMF's recent work on the digital economy and data, AI and machine learning, and cyber risk.
  • (9 Nov 2021) Basel Committee on Banking Supervision (BCBS) statement on its upcoming activity relating to cryptoassets, climate-related financial risks, the assessment of global systemically important banks, and disclosure standards. On cryptoassets, BCBS notes it has reviewed the comments it received to its consultation on the prudential treatment of banks' cryptoasset exposures and that it intends to consult further on a proposed approach by mid-2022.

Americas

US:  

  • (9 Nov 2021) Opinion piece written by Securities and Exchange Commission Commissioner Caroline Crenshaw on the opportunities and risks (particularly around transparency and pseudonymity) posed by decentralised finance (DeFi) and the current regulatory framework applicable to DeFi.
  • (6 Nov 2021) Infrastructure Investment and Jobs Act, which has been passed by the House of Representatives. The bill, if signed into law by the President, will introduce a bipartisan infrastructure investment framework, funded by, among other things, an increased taxation of crypto-related businesses. Under the bill, any broker that transfers cryptoassets will be required to file a return under a modified information reporting regime and any cryptoasset transaction worth over USD 10,000 must be reported to the Internal Revenue Service. | White House press release
  • (3 Nov 2021) Speech by Acting Comptroller of the Currency, Michael Hsu, on the growing digitalisation of banking. Among other things, Hsu highlights the potential risks if cryptocurrencies remain outside existing banking regulations, warning that the 'rebundling' of banking activities by fintechs poses significant risks to consumers and financial stability, in particular. Hsu also calls on all participants in the banking space to work to address these issues, including by removing disparities between the treatment of traditional banks and fintechs.

APAC

Hong Kong:

  • (5 Nov 2021) The Hong Kong Monetary Authority has announced the launch of an Anti-Money Laundering (AML) Regtech Lab, a collaborative platform designed to facilitate banks' sharing of experience with AML-related regtech solutions. | Press release
  • (4 Nov 2021) Hong Kong Institute for Monetary and Financial Research (HKIMR) report on AI and big data in the financial services industry. The report explores the findings of a survey commissioned by the HKIMR on market participants' views on AI and big data adoption and the demand for talent in major Asia-Pacific financial centres.
  • (3 Nov 2021) Financial Services and Treasury Bureau strategy for fostering fintech development in Hong Kong. The strategy includes: developing the Commercial Data Interchange (an initiative under which enterprises could authorise service providers such as payment systems, public bodies or utility companies to provide banks with data); establishing a group to coordinate the implementation of fintech initiatives ('CGFin') and to ensure policy and regulations proactively support the development of fintech in Hong Kong; and launching a fintech training programme for financial practitioners.

Indonesia:   

  • (9 Nov 2021) The Central Banks of Indonesia and the UAE have signed a fintech cooperation agreement, under which they commit to cooperate on payment systems and digital financial innovation, including undertaking joint initiatives to examine cross-border payment systems and encourage the development of the fintech sector in each jurisdiction. | Press release | See our table of fintech cooperation agreements for more information and a full list of international agreements.

Kazakhstan:

  • (10 Nov 2021) The Minister for Energy has stated that crypto-miners will not face restrictions or be disconnected from the national grid, provided they are 'lawful' and do not compromise the country's energy supply. The announcement comes after a statement from the Kazakh President last week in which he called on the Ministry to accelerate its work identifying unregistered crypto-miners and to support initiatives to regulate the sector. | Press release (in Kazakh)
  • (4 Nov 2021) A bill amending Kazakhstan's AML legislation has been adopted by the Senate. The bill includes provisions to bring cryptoasset service providers under the country's existing financial monitoring regime. The bill will need to be signed by the President before it enters into law. | Press release (in Kazakh)

Mongolia:    

  • (4 Nov 2021) Draft resolution (in Mongolian) to introduce the State Monetary Policy Guidelines for 2022. Among other things, the resolution contains provisions designed to implement the Financial Action Task Force's recommendations regarding virtual asset service providers. | Press release (in Mongolian)

The Philippines:

  • (8 Nov 2021) The Monetary Authority of Singapore and the Central Bank of the Philippines have signed a fintech cooperation agreement, under which they commit to developing infrastructure to link their real-time and QR payment systems to facilitate instant and low-cost cross-border payments. | Press release | See our table of fintech cooperation agreements for more information and a full list of international agreements.

Singapore:   

  • (11 Nov 2021) The Monetary Authority of Singapore (MAS), Singapore's Infocomm Media Development Authority (IMDA) and the Financial Services Regulatory Authority of the Abu Dhabi Global Market have announced the successful completion of a cross-border digital trade financing pilot. The pilot used IMDA's TradeTrust framework to facilitate the transfer of electronic records between jurisdictions that have adopted the United Nations Commission on International Trade Law's Model Law on Electronic Transferable Records. | Press release
  • (11 Nov 2021) MAS has announced the results of its Global CBDC Challenge, which focused on CBDC-based products and services that could increase payment efficiencies, improve financial inclusion and support the digitalisation of the economy. | Press release
  • (9 Nov 2021) MAS report, setting out its initial assessment of the economic case for a retail CBDC in Singapore and the potential implications for financial stability and monetary policy.
  • (9 Nov 2021) Speech by MAS Managing Director, Ravi Menon, on the future of money. Menon states that the case for a retail CBDC in Singapore is not urgent and that the main considerations are ultimately socio-economic (such as the implications of a cashless society) rather than ones of monetary policy.
  • (9 Nov 2021) MAS has announced three enhancements to its fintech regulatory sandbox: the expansion of its eligibility criteria; the streamlining of the application process so that applicants can apply for the sandbox and for a financial grant at the same time; and the automatic enrolment of applicants to MAS's Deal Fridays programme (a platform to connect sandbox companies with external investors). | Press release
  • (8 Nov 2021) MAS and the National AI Office (NAIO) have announced the launch of a national programme to increase AI adoption and capabilities in financial services. Under the programme MAS and the NAIO will provide funding, contribute government data, and assemble relevant experts to help enhance the ability of financial institutions to research, develop and deploy AI solutions. | Press release
  • (8 Nov 2021) MAS and the Central Bank of the Philippines have signed a fintech cooperation agreement, under which they commit to developing infrastructure to link their real-time and QR payment systems to facilitate instant and low-cost cross-border payments. | Press release | See our table of fintech cooperation agreements for more information and a full list of international agreements.

Thailand:      

  • (10 Nov 2021) The Securities Exchange Commission and the Department of Special Investigations have announced they are considering increasing the list of offences under the Law on Digital Assets and Derivatives, which is annexed to the Special Investigations Act. | Press release (in Thai)

Europe

EU:  

  • (11 Nov 2021) European Banking Authority (EBA) discussion paper on using machine learning in the context of internal ratings-based models to calculate regulatory capital requirements. Comments are due by 11 February 2021. | Press release
  • (10 Nov 2021) European Securities and Markets Authority final report on draft regulatory and implementing technical standards (RTS and ITS) under Regulation (EU) 2020/1503 on European crowdfunding service providers for business. The RTS and ITS cover issues including complaints handling, conflicts of interest, business continuity plans, entry knowledge tests, cooperation of national competent authorities, and reporting. | Press release
  • (9 Nov 2021) EBA final report on draft RTS setting out the information that crowdfunding service providers offering individual portfolio management of loans must provide to investors on credit risk assessment and the composition of the portfolio. | Press release
  • (9 Nov 2021) European Central Bank (ECB) presentation on the monetary policy implications and financial stability considerations of the EU's digital euro project. The slides list as one of the ECB's priorities an investigation into the possibility of granting a CBDC legal tender status.

France:          

  • (8 Nov 2021) Banque de France report on the wholesale CBDC experiments conducted during 2020. The experiments investigated different methods of using CBDCs and distributed ledger technology (DLT) for the exchange and settlement of financial assets in multi-currency and cross-border contexts. | Press release (in French)

Germany and Italy:  

  • (4 Nov 2021) Banca d'Italia and Deutsche Bundesbank have announced they have participated in a joint workshop to share experiences and discuss initiatives for the DLT-based settlement of central bank money. In particular, they discussed their recent experiment, which combined established means of settlement with a programmable trigger mechanism which would serve as a technical bridge between the DLT-based asset (such as a tokenised security) and existing payment systems. | Press release

Poland:         

  • (3 Nov 2021) Financial Supervision Authority communique (in Polish), setting out its position on the functioning of crowdfunding service providers in Poland, in light of the fact that it will not transpose the EU Crowdfunding Framework into national law by the deadline of 10 November 2021. Until the framework is transposed, operating crowdfunding service providers will be permitted to continue their activities, although these should be limited to promotional campaigns relating to public offerings, in accordance with the Act on Public Offerings.

Russia:  

  • (11 Nov 2021) The First Deputy Chairman of the Committee on Security and Anti-Corruption, Andrei Lugovoy, has announced plans to introduce a regulatory regime and tax laws for the crypto-mining industry. A working group has been established to develop the regulations. | Press release (in Russian)

UK:

  • (9 Nov 2021) HM Treasury (HMT) and the Bank of England (BoE) statement setting out the next steps in their exploration of a UK CBDC. In 2022, HMT and the BoE will consult on their proposed case for a UK CBDC, including the merits of developing an operational and technology model. Responses to this consultation will be used to inform a decision on whether the project will move to a 'development' phase, which will span several years. | Related statement from the Economic Secretary to the Treasury, John Glen
  • (5 Nov 2021) Competition and Markets Authority statement on its next steps following an independent investigation into the governance of the Open Banking Implementation Entity (an independent organisation set up in 2017 to implement open banking in the UK). | Press release

Middle East

UAE:

  • (11 Nov 2021) The Monetary Authority of Singapore (MAS), Singapore's Infocomm Media Development Authority (IMDA) and the Financial Services Regulatory Authority of the Abu Dhabi Global Market have announced the successful completion of a cross-border digital trade financing pilot. The pilot used IMDA's TradeTrust framework to facilitate the transfer of electronic records between jurisdictions that have adopted the United Nations Commission on International Trade Law's Model Law on Electronic Transferable Records. | Press release
  • (9 Nov 2021) The Central Banks of Indonesia and the UAE have signed a fintech cooperation agreement, under which they commit to cooperate on payment systems and digital financial innovation, including undertaking joint initiatives to examine cross-border payment systems and encourage the development of the fintech sector in each jurisdiction. | Press release | See our table of fintech cooperation agreements for more information and a full list of international agreements.

 

CLIFFORD CHANCE EVENTS

 

 

US Perspectives Series: Data claims – scaling the risk (15 November 2021):

Data claims stemming from cybersecurity breaches, ransomware attacks and data misuse are in the headlines nearly every day. As a result, those who hold personal data face not only regulatory and reputational risk, but increasingly, financial risk from civil litigation—a risk that grows exponentially as plaintiffs' counsel jockey amongst each other to bring class actions. Managing the risk requires advance planning and preparation, coordinating potential parallel enforcement actions and civil lawsuits both within and outside the US, and anticipating possible consequences and outcomes. Join Clifford Chance attorneys Anthony Candido, Celeste Koeleveld, Kate Scott and Minji Reem for a discussion of the types of claims you may face, the types of defences you may have, and the actions you should take to scale the global risk in the wake of a cyberbreach or data misuse claim. | To register, please see the event form.

Informa Connect's Payments International Conference (16-17 November 2021):

Clifford Chance is proud to be sponsoring Payments International, a two day conference with an exciting line-up of speakers from all areas of the payments ecosystem. Sessions will cover open banking, the future of payments, payments regulation and everything in between. Join Senior Associates Laura Douglas and Meera Ragha who will present on navigating cross-border payments, and Partners Kate Scott and Samantha Ward who will give their insights on current payments litigation trends and the compliance implications. | For more information, please see the event page.

Warsaw Perspectives Series: Central bank digital currencies 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. | For more information and to register, please see the event page