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Global Fintech Update

08 November 2021

10 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.

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CLIFFORD CHANCE PUBLICATIONS AND MATERIALS

Quantum: emerging technologies and the rule of law

FTC tightens data security requirements under the GLBA Safeguards Rule

ASIC's cybersecurity test case in the clear

The impact of ESG on emerging DLT: shaping the development and use of new technologies

Data protection in the UAE: a year in review

Co-branding partnerships in the physical and digital worlds: a masterclass from Balenciaga and Fortnite

Spotlight: Exploring global attitudes to artificial intelligence (AI) and regulation – webinar next Tuesday!

On Tuesday 9 November our expert panel will discuss highlights from our report, 'Attitudes to AI and regulation', an extensive YouGov survey of more than 1,000 tech policy professionals, developed in collaboration with global advisory firm Milltown Partners. We will explore AI issues such as trust and bias, and challenge some of the commonly held misconceptions around attitudes to AI regulation and law. We will also share our predictions for AI in 2022. Join us to find out more. 

GLOBAL LEGAL AND REGULATORY UPDATES

International

  • (4 Nov 2021) Bank for International Settlements (BIS) working paper on the potential operational architectures for central bank digital currencies (CBDCs), and the economic, policy and privacy implications. | Press release
  • (29 Oct 2021) BIS report on the consequences of digital money, particularly stablecoins, on emerging market and developing economies (EMDEs). The report argues that stablecoins pose particular development, macroeconomic, and cross-border challenges to EMDEs that have not been tested at scale.
  • (28 Oct 2021) Financial Stability Board (FSB) letter to G20 leaders ahead of their summit in Rome. The letter reports on the lessons learnt from the COVID-19 pandemic and the current challenges facing the global financial system. These include rapid technological innovations both inside and outside the traditional financial sector, such the use and development of cryptoassets. | Press release
  • (28 Oct 2021) FSB report on lessons learnt from the pandemic from a financial stability perspective. The report focuses on the risks posed by outsourcing, cyber-attacks and remote working, and the FSB's planned initiatives to address them.

Africa

South Africa:

  • (29 Oct 2021) Government consultation on proposed amendments to the Pension Funds Act. The proposal prohibits South African pension funds from investing in cryptoassets, which are defined as any digital representation of value not issued by a central bank and capable of being traded, transferred or stored for the purpose of payment, investment or other similar activities. Responses are due by 12 November 2021.

Americas

US:  

  • (3 Nov 2021) Letter from Representatives Tom Emmer and Darren Soto to Securities and Exchange Commission (SEC) Chair, Gary Gensler, calling for the SEC to permit the trading of Bitcoin spot exchange-traded funds (ETFs), as well as derivatives-based Bitcoin ETFs, which started trading in the US in October.
  • (1 Nov 2021) Joint report on stablecoins, particularly 'payment stablecoins', from the President's Working Group on Financial Markets, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The report outlines the current state of the stablecoin landscape and identifies potential risks and regulatory gaps. The agencies call on Congress to act promptly to enact legislation to ensure that payment stablecoins and their arrangements are subject to a federal framework, including requiring stablecoin issuers to be insured depository institutions and to comply with restrictions on affiliation with commercial entities. | Press release

APAC

Australia:     

Hong Kong:

  • (4 Nov 2021) The Hong Kong Monetary Authority (HKMA) and the BIS Innovation Hub Hong Kong Centre have announced the successful completion of Project Genesis, an initiative to test two prototype digital platforms designed to enable green investments and help issuers and governments to meet their environmental and sustainability goals. Clifford Chance Partners Connie Heng, Mark Chan and Rocky Mui contributed to a report published as part of the project, which looks more broadly at how finance can drive the transition to a green and sustainable future. | Press release
  • (3 Nov 2021) Speech by the Deputy CEO of the Securities and Futures Commission (SFC), Julia Leung, on innovation in the financial industry. Leung notes that the SFC is reviewing the regulatory framework for virtual assets to see if it is still fit for purpose and makes particular reference to the regulatory treatment of cryptoasset ETFs.
  • (25 Oct 2021) HKMA circular setting out recommendations intended to promote the development of regtech talent in Hong Kong.

Kazakhstan:

  • (29 Oct 2021) President Kassym-Jomart Tokayev has met with the Minister of Energy to discuss the measures being taken to oversee the crypto-mining sector. The President called on the Ministry to accelerate its work identifying unregistered crypto-miners and to support initiatives to regulate the sector. | Press release (in Russian)

Singapore:   

  • (29 Oct 2021) The Monetary Authority of Singapore (MAS) has announced the finalists of the 2021 global fintech hackcelerator, which focused on using technology to support green finance. | Press release
  • (29 Oct 2021) MAS Cybersecurity Advisory Panel recommendations on how financial regulators and institutions can strengthen their cyber resilience in the areas of IT, supply chains, online banking and the use of digital currencies and distributed ledger technology. 

Europe

EU:  

  • (29 Oct 2021) EU Commission proposal for a delegated regulation under the Radio Equipment Directive, which would place obligations on EU manufacturers and third country manufacturers seeking to sell products on the EU market, to improve the cybersecurity of certain types of internet-enabled products. Manufacturers would be required to guarantee privacy and the protection of personal data, and minimise the risk of fraud if the product is used to make electronic payments. | Press release

France:          

  • (2 Nov 2021) Speech by the Governor of the Banque de France, François Villeroy de Galhau, on the work the bank is doing to support the fintech sector. Among other things, Villeroy de Galhau announces that France intends to adopt and publish a Fintech Charter by the end of 2021, which will establish an authorisation process for fintechs, overseen by the Autorité de contrôle prudentiel et de resolution.

Malta:           

  • (1 Nov 2021) Recording of a panel discussion with Malta Financial Services Authority (MFSA) CEO, Joseph Gavin. The discussion covers the developments in the virtual financial assets (VFAs) space since the launch of the MFSA's VFA framework in 2018, and the authority's current areas of focus (regulation, monitoring and capacity). | Press release

Russia:          

  • (28 Oct 2021) Bill (in Russian) which, if passed, would grant the main law enforcement agency of Russia, the Federal Security Service, additional powers to request information for anti-corruption purposes from 'operators of information systems on which digital financial assets are issued', along with credit organisations, tax authorities, and government bodies.

UK:

  • (4 Nov 2021) Speech by the Deputy Governor for Financial Stability at the Bank of England, Jon Cunliffe, on whether crypto-related finance poses a risk to financial stability. Cunliffe discusses the potential risks posed by unbacked cryptoassets, stablecoins and decentralised finance (DeFi) and calls for the crypto sector to be brought within the regulatory perimeter as a matter of urgency.
  • (2 Nov 2021) Speech by the Chief Data, Information and Intelligence Officer at the Financial Conduct Authority (FCA), Jessica Rusu, on the FCA's data strategy and ambitions. The speech focuses in particular on the FCA's response to emerging technologies and how it is using its resources to address the potential risks they pose.
  • (1 Nov 2021) Financial Services Regulatory Initiatives Forum regulatory initiatives grid, which sets out the planned timetable for key initiatives likely to impact the financial services industry over the next two years. Initiatives relevant to the fintech space include: an assessment of the opportunities and risks arising from open finance; a HM Treasury consultation on the broader regulatory approach to cryptoassets including stablecoins; and the work of the AI Public-Private Forum. | Press release
  • (29 Oct 2021) Intellectual Property Office consultation on how the copyright and patent system should deal with AI, including how it can protect inventions and creative works made by AI, and how it can make it easier to use copyrighted materials in AI development. Responses are due by 7 January 2022. | Press release
  • (29 Oct 2021) The Treasury Committee has published the responses from various UK Big Tech entities to its request for information on the policies they have in place to combat economic crime, prevent fraud and protect consumers: Amazon UK response; Facebook Inc. responseGoogle UK response & eBay UK response

CLIFFORD CHANCE EVENTS

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.