Global Weekly Fintech Update
01 February 2021
01 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 & MATERIALS
A new Luxembourg law modernising the existing legal framework for dematerialised securities and facilitating the use of distributed ledger technologies (DLT) entered into force on 26 January 2021. The law allows the use of secure electronic recording systems (including DLT) for dematerialised securities (whether at issuance or upon conversion from another form of security), following on from a change of law in March 2019 that recognised the holding and registration of book-entry securities on DLT securities accounts.
GLOBAL LEGAL AND REGULATORY UPDATES
- (27 Jan 2021) Bank for International Settlements (BIS) report on its third survey of the use of central bank digital currencies (CBDCs). Findings include that, on the whole, central banks are moving from the conceptual stage to practical experimentation and that a fifth of those surveyed believed it was possible they would issue a digital currency within the next three years.
- (27 Jan 2021) Speech from BIS General Manager, Agustín Carstens, on digital currencies and the future of the monetary system, in which he discusses, among other things, whether digital currencies should rely on a central or decentralised authority and whether verification should be based on identity or cryptography. Carstens argues that if digital currencies are needed they should be issued by central banks and that private stablecoins, even if heavily regulated, cannot serve as the basis for a sound monetary system.
- (27 Jan 2021) BIS working paper on permissioned distributed ledgers and the governance of money, which examines the economic opportunities and challenges of distributed ledger technology (DLT) when compared with a centrally managed payment system.
- (26 Jan 2021) International Capital Markets Authority (ICMA) article on fintech and sustainable bond markets, which outlines the environmental, social and governance-based opportunities and challenges encountered by stakeholders in debt capital markets, and considers how fintech could be used to address and support them. Alongside this article ICMA, has announced the launch of its new fintech and sustainable finance library, a maintained collection of literature relating to the potential use of fintech to further sustainability goals in the international debt capital markets. | Press release
- (26 Jan 2021) Organisation for Economic Cooperation and Development report on regulatory approaches to the tokenisation of assets.
- (25 Jan 2021) The World Economic Forum's Davos Conference included two sessions on digital currencies, which are available to watch online:
- Resetting digital currencies part 1 (speakers: Elizabeth Rossiello (AZA Finance), Hikmet Ersek (Western Union), Andrew Bailey (Bank of England), Her Majesty Queen Máxima of the Netherlands and Glenn Hutchins (Silver Lake Partners)); and
- Resetting digital currencies part 2 (speakers: Michael Casey (CoinDesk), Tharman Shanmugaratnam (Government of Singapore), Sara Pantuliano (Overseas Development Institute) and Zhu Min (National Institute of Financial Research)).
- (22 Jan 2021) BIS Innovation Hub annual work programme for 2021/22, which prioritises activity around suptech and regtech, next-generation financial market infrastructures, CBDCs, open finance, green finance and cybersecurity. Key projects include a proof of concept platform using multiple CBDCs for cross-border payments and a DLT prototype for the distribution of tokenised green bonds. | Press release
- (22 Jan 2021) Financial Stability Board summary of feedback received on its consultation on regulatory and supervisory issues relating to outsourcing and third-party relationships, including those using cloud services.
- (20 Jan 2021) The International Swaps and Derivatives Association (ISDA) has announced it has launched a digital version of its Master Agreement, a key pillar in its plan to standardise and digitise its legal documentation and definitions. The digital Master Agreement is available to members and non-members through the ISDA Create platform. | Press release | Statement from ISDA Chief Executive Office, Scott O'Malia
- (26 Jan 2021) The Financial Crimes Enforcement Network has announced it is extending the deadline for responses to its recent notice of proposed rulemaking, in which it set out proposals to require registered crypto-businesses to hold more customer information, particularly when transacting with self-hosted digital wallets. The consultation period, which was initially halted due to the change in administration, has now been reopened for another 60 days, with comments due by 29 March 2021. | Press release
- (20 Jan 2020) Australia Securities and Investment Commission report setting out the regtech initiatives it undertook during the 2019/20 financial year.
- (21 Jan 2021) Hong Kong Monetary Authority report on the use of regtech to address money laundering and terrorist financing risks in the banking sector. | Press release
- (1 Jan 2021) Reserve Bank of India report on the development of payment and settlement systems in India from 2010 to 2020. Among other things, the report notes that the Bank is exploring whether there is a need to introduce a digital version of the fiat currency.
- (25 Jan 2021) Central Bank of the Philippines guidelines on virtual asset service providers (VASPs), which have been updated to expand the scope of the Bank's licensing regime to cover a wider range of VASPs. The new scope mirrors the definition of VASPs given by the Financial Action Task Force and includes firms offering services related to the transfer, exchange or custody of virtual assets. | Press release
- (28 Jan 2021) European Insurance and Occupational Pensions Authority consultation on open insurance, including the potential requirements for an open insurance framework. Responses are due by 28 April 2021. | Press release
- (27 Jan 2021) Government data strategy (in German), which sets out the Government's plans and over 240 specific measures designed to increase innovative and responsible data provision. The strategy highlights four key fields of action, namely: making data infrastructures efficient and sustainable; increasing innovative and responsible data usage; increasing data literacy and establishing a data culture; and making Germany a leading force in user-generated data. | Press release (in German)
- (26 Jan 2021) The Law of 22 January 2021 (in French) on the use of DLT for securities issuances enters into force. The law amends the Law of 6 April 2013 on dematerialised securities and the Law of 5 April 1993 on the financial sector to expressly recognise the possibility of using secured electronic recording systems, including distributed electronic ledgers or databases, for dematerialised securities. | Clifford Chance summary
- (dated 16 Dec 2020, published 21 Jan 2021) Letter (in Russian) from the Ministry of Labour stipulating that federal and local government officials, including those working for the Bank of Russia, are prohibited from owning cryptocurrencies and must dispose of any existing holdings.
- (28 Jan 2021) Financial Conduct Authority (FCA) consultation on payment and e-money services, including proposals on new exemptions regarding strong customer authentication, the use of application programming interfaces and the increase of the contactless payments limit. Comments are due by 24 February 2021. | Consultation webpage
- (22 Jan 2020) Statement from the Information Commissioner's Office Deputy Commissioner, Simon McDougal, in which he announces that the investigation into real-time bidding in the adtech industry, which was paused due to the coronavirus pandemic, is now being resumed. The investigation will involve a series of audits over the coming months focusing on digital market platforms.
- (21 Jan 2021) Financial Markets Law Commission minutes for a meeting held on 10 December 2020. Among other things, the FMLC discussed the EU Commission's digital finance package and agreed to draw attention to any legal uncertainties arising from the legislation in the context of Brexit.
- (21 Jan 2021) FCA regulation round-up, which includes a summary of the FCA's recent Digital Sandbox pilot. The FCA intends to a host a series of open showcase sessions where participants will present the solutions they have developed.
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