Global Weekly Fintech Update
12 February 2021
12 February 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.
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CLIFFORD CHANCE PUBLICATIONS
Clifford Chance briefing – Updated German outsourcing requirements
Talking Tech video – Painting a picture of data centres
Talking Tech article – German court slashes GDPR fine in a clear rejection of turnover-focused German fine model
Talking Tech video – Tech trends 2021: predictions for Tech regulation in Europe
Talking Tech article – UK intellectual property law after Brexit: what you need to know
Earlier this month, the New York Department of Financial Services (DFS) issued a new Cyber Insurance Risk Framework to help insurers effectively price and manage cyber insurance risk. The DFS has cautioned insurers that failure to accurately price cyber risk can lead to compounded losses that threaten their stability and viability. The DFS has also expressed concern that insurers may create improper incentives for their clients, who may see paying for cybersecurity insurance as a substitute for an effective cybersecurity infrastructure.
GLOBAL LEGAL & REGULATORY UPDATES
- (11 Feb 2021) Global Legal Entity Identifier Foundation digital strategy for a verifiable legal entity identifier (vLEI) system. A vLEI is a secure, digitally verified version of a conventional LEI, which, once fully developed and implemented, is intended to enable instant and automated identity verification between counterparties across all sectors and jurisdictions. | Press release | Q&A
- (8 Feb 2021) Institute of International Finance consultation on draft principles for digital trust networks. Responses are due by 30 April 2021.
- (5 Feb 2021) Letter from the Central Bank of Nigeria announcing that regulated financial institutions are prohibited from providing services to cryptoasset exchanges and calling on them to close any accounts belonging to crypto exchanges or other businesses involved in the transaction of cryptocurrencies.
- (11 Feb 2021) The Bank of Canada has published reports it solicited from the University of Calgary, McGill University, the University of Toronto and York University on potential approaches to the design of a Canadian central bank digital currency (CBDC) | Press release
- (10 Feb 2021) Speech from the Deputy Governor of the Bank of Canada, Timothy Lane, on the acceleration of payments innovation following the COVID-19 pandemic. Among other things, Lane discusses the work the Bank is doing on the development of a Canadian CBDC.
- (9 Feb 2021) The Financial Market Commission has published its draft Fintech Law (in Spanish), which was submitted to the Ministry of Finance in November 2020. The proposed law seeks to provide a legal and regulatory framework for crowdfunding and other fintech activities related to the stock market. | Press release (in Spanish)
- (10 Feb 2021) Speech by Treasury Secretary, Janet Yellen, in which she voices her concern about the increase in cyberattacks and the use of cryptoassets for money laundering and terrorist financing purposes, triggered by the COVID-19 pandemic.
- (4 Feb 2021) A bill to support research on privacy enhancing technologies (PETs) and promote responsible data use (Senate Bill 224) was introduced to the Senate. The Bill would, among other things, require the National Science Foundation (NSF) to promote research into PETs and develop standards for their integration into public and private sector data use. Specifically, the Bill would require the NSF to support research into issues such as: technologies for the de-identification, pseudonymisation, anonymisation, or obfuscation of personal data in datasets while maintaining fairness, accuracy and efficiency; algorithms and other similar mathematical tools used to protect individual privacy when collecting, storing, sharing or aggregating data; and technologies that promote data minimisation principles in data collection, sharing and analytics.
- (4 Feb 2021) New York Department of Financial Services guidance for insurers on underwriting and responding to claims related to cybersecurity risks | Clifford Chance summary
- (7 Feb 2021) State Administration for Market Regulation antitrust guidelines (in Chinese) for the tech sector. The guidelines are intended to curb anti-competitive behaviour by large tech companies, such as prohibiting the use of exclusivity clauses, requirements that customers buy bundles rather than individual products and the different treatment of customers based on their spending behaviour.
- (4 Feb 2021) Hong Kong Monetary Authority presentation on the banking sector in 2020 and its priorities for 2021. Among other things, the slides highlight the strengthening of cyber resilience, the digitalisation of the customer on-boarding process, high-yield products and the code of banking practice, and the development of suptech proof-of-concepts as key supervisory priorities in 2021.
- (2 Feb 2021) Securities and Exchange Board of India (SEBI) circular on the revised framework for its innovation sandbox. In particular, the framework has been amended to provide access to the sandbox and its test data to a wider range of companies, including fintechs, start-ups and entities not regulated by SEBI. | Press release
Republic of Korea:
- (8 Feb 2021) Bank of Korea report (in Korean) on the legal issues posed by CBDCs and its recommendations for revisions to the law to allow a CBDC to function successfully in Korea.
- (1 Feb 2021) Response from the Chairman of the Monetary Authority of Singapore (MAS) to a parliamentary question on the work MAS is doing to monitor the extent and implications of consumer data monopolies, and on the protection of personal data in digital payments and the privacy implications of CBDCs.
- (10 Feb 2021) Speech by European Central Bank Executive Board Member, Fabio Panetta, on the impact of a digital euro on the financial system and its potential design and policy framework. Among other things, Panetta discusses the possibility of introducing a cap of EUR 3,000 on digital euro holdings.
- (9 Feb 2021) The Joint Committee of the European Supervisory Authorities letter to the EU co-legislators setting out some recommendations on the treatment of critical third party providers under the EU Commission's proposed regulation on digital operational resilience (DORA).
- (4 Feb 2021) Speech by the Chair of the European Securities and Markets Authority (ESMA), Steven Maijoor, on the acceleration of the use of digital tools across the economy and the consequences of this on the financial sector.
- (8 Feb 2021) Speech by Chairman of the Autorité des marchés financiers (AMF), Robert Ophèle, on regulatory considerations in an era of digital acceleration. In particular, Ophèle discusses the impact of data, algorithms, artificial intelligence, distributed ledger technology and social media on financial markets. He also suggests amendments to the EU Commission's proposed regulation on markets in cryptoassets (MiCA), including granting ESMA supervisory powers over cryptoasset service providers and initial coin offerings issuers and removing asset-referenced tokens from the European Banking Authority's regulatory perimeter.
- (5 Feb 2021) AMF updated guidance (in French) on the fees and contributions payable to it by various firms, including digital asset service providers, issuers and their shareholders | Press release (in French)
- (10 Feb 2021) Speech by Deutsche Bundesbank Executive Board Member, Burkhard Balz, on trends in innovative payments services and the response of central banks, including their work on CBDCs.
- (9 Feb 2021) Communique (in Spanish) from the Comisión Nacional del Mercado de Valores and the Bank of Spain on the particular risks posed by cryptocurrencies as an alternative investment.
- (10 Feb 2021) Speech by Governor of the Bank of England, Andrew Bailey, on the progress towards creating an open financial system.
- (5 Feb 2021) The Payment Systems Regulator has published the responses it received to its call for input on competition and innovation in the UK's new payments architecture for the clearing and settlement of interbank payments | Summary of responses
Clifford Chance Global Funds Week 2021 (22-26 February 2021):
Clifford Chance are delighted to invite you to our Global Funds Week 2021. The week-long series will feature multiple panel discussions and fireside chats with leaders in the asset management industry from across the globe. Topics include: tech and fintech developments impacting the funds sector in 2021; trends and predictions in ESG; diversity and inclusion in the fund management industry – taking stock, harnessing change and looking to the future; foreign investment restrictions across the globe; and what to expect on regulatory enforcement in 2021. | Please see the full list of speakers here. For Asia Pacific clients, please register using the APAC registration form. For all others, please register using the Global registration form.
UK and EU Trade Cooperation Agreement (25 February 2021):
Clifford Chance and the International Trade & Forfaiting Association (ITFA) invite you to an exploration of the new UK-EU Trade and Cooperation Agreement, the blueprint for future relations between the bloc and the United Kingdom. Economists and lawyers will draw out the costs and potential opportunities, and will consider how the agreement works with particular reference to trade finance and the role of fintech. | To register, please see the event registration form