Global Weekly Fintech Update
26th April 2021
27 April 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 AND MATERIALS
- DFS fines insurance company USD 3 million for unreported data breaches and false compliance certification
Our series of webinars continues this week with a session on central bank digital currencies (CBDCs) and the theory of money. COVID-19 and the resulting shift to digital payments, as well as the ongoing regulatory concern around proposed private global stablecoins such as Facebook's Diem, have accelerated the development of CBDCs. Tune in next Thursday 29 April at 1pm BST to hear our international panel discuss the different approaches being taken by central banks globally, what practical adoption of CBDCs may look like, the legal structures that might be employed, and the consequences for businesses.
To find out more and to register click here.
GLOBAL LEGAL AND REGULATORY UPDATES
- (16 Apr 2021) Basel Committee on Banking Supervision work programme 2021/22, which includes finalising a regulatory framework for governing banks' exposures to cryptoassets and work on the role of artificial intelligence (AI) and machine learning in banking and supervision | Press release
- (12 Apr 2021) Government Ordinance No. 4,617 on AI strategy (in Portuguese). The strategy is intended to encourage AI research, development and innovation in Brazil and to support the conscious and ethical use of it by public and private entities.
- (20 Apr 2021) Eliminate Barriers to Innovation Act 2021 passed by the House of Representatives. The Bill, which was introduced in March 2021 by Patrick McHenry, seeks to establish a working group comprising industry experts and representatives from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to evaluate the current legal and regulatory framework around digital assets. The Bill is also intended to clarify when the SEC has jurisdiction over a particular cryptoasset (i.e. when it is a security) and when the CFTC has jurisdiction (i.e. when it is a commodity).
- (15 Apr 2021) Hearing held by the House of Representatives' Subcommittee on Consumer Protection and Financial Institutions on trends in financial institution charters. The hearing included a discussion of the merits and deficiencies in the Office of the Comptroller of the Currency's fintech charter. | Memorandum | Video
- (19 Apr 2021) Speech by the Deputy Governor of the Reserve Bank of India, Rajeshwar Rao, on open banking initiatives in India.
- (Apr 2021) Competition Commission of India discussion paper on blockchain technology, published in collaboration with Ernst & Young. The paper is intended to open a discussion on blockchain technology and how it interacts with competition law in India.
Republic of Korea:
- (19 Apr 2021) The Office of Government Policy Coordination has announced an increased drive to address illegal activities relating to virtual currencies. From April to June 2021, government ministries will collaborate to closely monitor the withdrawal, transfer and collection of virtual money for signs of money laundering and tax evasion. | Press release (in Korean)
- (21 Apr 2021) EU Commission statement setting out a package of initiatives designed to foster the development of trustworthy AI. The package comprises:
- a proposal for a regulation on a European approach to AI;
- a coordinated plan on AI, which updates the 2018 plan and sets out key actions for the EU Commission and Member States to undertake to increase investment in, and adoption of, AI solutions and to align AI policy; and
- a proposal for a regulation on machinery to make the existing product safety rules more suitable for digital products and to ensure AI systems can be safely integrated into machinery.
- (22 Apr 2021) De Nederlandsche Bank (DNB) working paper on what triggers consumer adoption of CBDCs. The paper sets out DNB's findings from a review of citizens' satisfaction with the current payment system and their willingness to hold a digital euro current account. About half of the Dutch population would be interested in opening a current account for digital euros, provided their privacy is well-protected and the risk of theft and fraud of their assets is minimised. | Press release
- (21 Apr 2021) Norwegian Tax Administration statement (in Norwegian) reminding all taxpayers who owned or sold cryptoassets to enter it on their tax returns or risk paying additional tax.
- (15 Apr 2021) Statement (in Romanian) from the National Bank of Romania (BNR) on its position regarding virtual currencies. BNR emphasises that virtual currencies continue to be volatile, speculative and risky investments but that they do not, at present, represent a threat to Romania's financial stability. BNR also notes that credit institutions are not prohibited from offering services to virtual wallet and currency exchange service providers, although all existing risk management, anti-money laundering and counter terrorism financing requirements should be taken into account.
- (19-23 Apr 2021) Sessions from the UK Fintech Week 2021, which include talks and announcements from various policy-makers and regulators including:
- a speech by Sir David Ramsden, Deputy Governor for Markets and Banking at the Bank of England (BoE), on the BoE's role within the fintech landscape. The speech focuses in particular on payments, data strategy and the use of AI in finance;
- a speech by Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), on innovation in the service of consumers and the market, in which he discusses, among other things, the FCA's activities in response to the Kalifa fintech report;
- an announcement from the Chancellor of the Exchequer, Rishi Sunak, of a number of initiatives designed to support the competitiveness of the UK fintech sector. These initiatives follow the recommendations of the Kalifa fintech report and include: the introduction of a 'scale box', a regulatory sandbox designed to support firms focused on scaling innovative technology; consultations on changes to the UK prospectus regime designed to benefit high-growth potential companies, such as technology firms; and the creation of an industry-led Centre for Finance, Innovation and Technology, which will work with regional hubs to identify and address sector challenges;
- the launch by the Department for International Trade of a Fintech Export Academy, which will provide free advice to UK fintech firms on legal, regulatory, tax and accounting considerations when exporting their services and products overseas, as well as a Fintech Champions Scheme, which will work with industry leaders to help businesses scale-up and expand into global markets; and
- the launch by the BoE and HM Treasury of a CBDC Taskforce, responsible for coordinating UK authorities in the exploration of the objectives, use cases, and design features of a potential UK CBDC and for monitoring international CBDC developments. Alongside the Taskforce, the BoE has also launched the CBDC Engagement and Technology Forums, which will engage with stakeholders on CBDC initiatives, and a CBDC Unit, which will lead the BoE's internal exploration and external engagement on CBDCs. | Taskforce Terms of Reference
- (22 Apr 2021) UK Jurisdiction Taskforce rules for digital dispute resolution, which are intended to enable faster and more cost-effective resolutions to legal disputes that relate to innovative technology such as cryptoassets, smart contracts and blockchain applications | Press release
- (16 Apr 2021) Global City of London report on regtech in the UK, written in collaboration with RT Associates. The report provides an analysis of the UK regtech industry, with a focus on the key barriers to regtech adoption and their potential solutions, best practices used outside the UK to support the competitiveness of the industry, and the impact of COVID-19.
CLIFFORD CHANCE EVENTS
Perspectives series: CBDCs and the theory of money (29 April 2021):
The development of central bank digital currencies (CBDCs) – a digital representation of fiat money issued by a central bank – has been accelerated by COVID-19 and the resulting shift to digital payments, as well as the ongoing regulatory concern around proposed private global stablecoins such as Facebook’s Diem (formerly Libra). In this session, our international panel will consider the different approaches being taken by central banks globally, including the digital euro, renminbi and dollar, what practical adoption of CBDCs may look like and the legal structures that might be employed, and the consequences for businesses. | To register, please see the event registration form.
Warsaw Perspectives series: Three years of GDPR – what now? An attempt to assess and determine the perspective for the development of the European privacy protection system (12 May 2021):
The GDPR has become a part of our everyday lives. During this seminar, we will consider what has changed in personal data protection over the last three years, how the financial sector is affected by these changes, to what extent the regulatory authority should use its powers and what other changes are to be expected. | Please note this seminar will be delivered in Polish, for more information and to register, please contact the Warsaw Perspectives team
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The content above relating to the People's Republic of China (PRC) is based on our experience as international counsel representing clients in business activities in the PRC and should not be construed as constituting a legal opinion on the application of PRC law. As is the case for all international law firms with offices in the PRC, whilst we are authorised to provide information concerning the effect of the Chinese legal environment, we are not permitted to engage in Chinese legal affairs. Our employees who have PRC legal professional qualification certificates are currently not PRC practising lawyers.