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Weekly Global Fintech Update

19 July 2021

19 July 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. Watch the video here to hear more.

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 briefing – Colorado joins California and Virginia with a comprehensive Data Privacy Law

Clifford Chance podcast – KI: Künstliche Intelligenz im Gesundheitswesen, wohin geht die Reise?/AI: Artificial intelligence in healthcare, where is it going? (in German)

 

Luxembourg Blockchain Association (LëtzBlock) report - Smart Contracts - A Luxembourg Perspective. Clifford Chance is a member of the LëtzBlock Smart Contract Working Group and contributed to this report, giving an overview of the key legal opportunities and challenges posed by smart contracts.

SPOTLIGHT: 

Safeguarding the use of AI in the Insurance sector

The European Insurance and Occupational Pensions Authority (EIOPA) recently published a report on governance principles for ethical and trustworthy artificial intelligence (AI) in the insurance sector. The report sets out six key principles that have been developed by EIOPA's Consultative Expert Group on Digital Ethics in Insurance. In this article we give an overview of those governance principles, as well as the non-binding guidance for insurance firms on how to implement them in practice throughout the AI system's lifecycle

GLOBAL LEGAL AND REGULATORY UPDATES
International
  • (13 Jul 2021) Bank for International Settlements (BIS) working paper on the impact that fintech and the digitalisation of financial services has had on market structure and public policy. | Press release
  • (12 Jul 2021) G20 Finance Ministers and Central Bank Governors communique​ on their upcoming areas of focus. Among other things, the group reaffirms its commitment to implementing and strengthening global standards on virtual assets regulation and supervision within its jurisdictions.
  • (9 Jul 2021) Joint report from the BIS Committee on Payments and Market Infrastructures, BIS Innovation Hub, International Monetary Fund and World Bank on the use of central bank digital currencies (CBDCs) for cross-border payments. The report provides an overview of the international aspects of current CBDC projects and analyses the opportunities and risks posed by two cross-border CBDC scenarios. | Press release

Africa

Egypt:            

  • (4 Jul 2021) The National Council for Artificial Intelligence (AI) has announced the launch of a new website dedicated to initiatives in the AI space in Egypt. The website contains the national AI strategy and details of relevant events, developments and projects. | Press release Website​ (in Arabic)

Americas

Canada:       

US:  

  • (15 Jul 2021) The White House has announced a package of resources and initiatives designed to prevent and mitigate the impact of ransomware attacks | Press release
    These include:
    • a new website, StopRansomware.gov, which is designed to be a one-stop resource for coordinated, federal support for public and private sector organisations trying to reduce the risk of attacks;
    • a meeting led by the Department of Treasury's Financial Crimes Enforcement Network (FinCEN) with representatives from financial institutions, other key industry stakeholders and federal government agencies to discuss ongoing concerns regarding ransomware; and
    • a bounty programme led by the Department of State, offering up to USD 10,000,000 for information leading to the identification or location of any person engaged in state-sponsored, malicious cyber activities.
  • (15 Jul 2021) The Securities Clarity Act has been introduced to Congress by Representatives Tom Emmer, Darren Soto and Ro Khanna. The bill, which was previously introduced in September 2020 but stalled after being referred to the House Committee on Financial Services, aims to provide a clear definition of assets, such as digital tokens and other emerging technologies, under existing securities law. | Press release
  • (14 Jul 2021) House of Representatives Committee on Financial Services hearin​​g on monetary policy and the state of the economy, in which Federal Reserve Board Chairman, Jerome Powell, discusses the regulation of stablecoins such as Tether | Memorandum | Video

APAC

China:            

  • (28 Jun 2021) The Shenzhen Special Economic Zone AI Industry Promotion Regulations have been submitted to the Municipal People's Congress Standing Committee for deliberation. The proposed regulations are intended to shorten the approval chain and cycle for AI products to enter the market, establish a risk management system for new technologies, support pilot trials of low-risk AI products and services, and establish an AI ethics committee. | Press release (in Chinese)

Hong Kong:

Kyrgyzstan:

  • (5 Jul 2021) Bill on the exchange of cryptoassets (in Russian) submitted to the Supreme Council for public discussion. The bill introduces legal definitions for digital financial assets, which include cryptoassets and tokens, and crypto-mining. It also establishes a legal framework for the activities of crypto-exchanges within the Kyrgyz Republic.

Republic of Korea:    

  • (8 Jul 2021) Financial Services Commission guidelines​ (in Korean) which set out minimum standards for control mechanisms, data protection, transparency and consumer rights required for the use of AI in financial services. | Press release​

Singapore:   

  • (12 Jul 2021) The Monetary Authority of Singapore has announced the launch of a global challenge (the inaugural Global Veritas Challenge), which seeks solutions to a series of problem statements based on validating the fairness, ethics, accountability and transparency of AI products for banks to use in their: product marketing; risk, compliance and fraud monitoring; loan origination and know-your-customer; and credit scoring and profiling. | Press release

Europe

EU:  

  • (14 Jul 2021) The European Central Bank (ECB) has announced the launch of the investigative phase of its Eurosystem digital euro project. The phase, which will run for two years, will build on the preliminary work already conducted by the ECB by investigating and addressing key issues regarding the design and distribution of the digital euro, identifying the priority use cases, working with policymakers on any required changes to the EU legislative framework, assessing the impact on the market, and designing a business model for supervised intermediaries. As part of the project, the ECB is also establishing a new digital euro market advisory group, which will provide the Eurosystem with market expertise and feedback on the design, distribution and uses of the digital euro. | Press release | Market advisory group call for expressions of interest | Launch letter from the ECB executive board.
  • (14 Jul 2021) European Financial Reporting Advisory Group discussion paper on the current gaps in accounting requirements for holders and issuers of cryptoassets. Responses are due by 31 July 2021. | Press release
  • (13 Jul 2021) The EU Parliament Economic and Monetary Affairs (ECON) Committee has adopted its draft report on the proposal for a regulation to establish a pilot regime for market infrastructures based on distributed ledger technology. The proposal is part of the EU Commission's digital finance strategy published in September 2020. | Press release
  • (13 Jul 2021) EU Parliament briefing​ on initial coin offerings, covering the process, advantages and challenges, and the current regulatory landscape.
  • (9 Jul 2021) Letter sent from the Chair of the European Securities and Markets Authority (ESMA), Anneli Tuominen, to the EU Commission, expressing ESMA's concerns regarding Regulation (EU) 1503/2020 on European crowdfunding service providers for business, which is due to apply from 10 November 2021. ESMA calls for certain clarifications regarding the scope and application of the Regulation and requests that the Commission considers delaying its date of application to allow for a more orderly and harmonised implementation.

France:          

  • (13 Jul 2021) Autorité des marchés financiers (AMF) statement (in French) on its response to the EU Commission's consultation on proposals regarding supervisory convergence. AMF calls on the Commission to give ESMA responsibility for the monitoring and supervision of a greater number of entities, such as those conducting activities of significant or systemic importance, or that were previously unregulated. These entities would include those offering cryptoasset services, as well as clearing houses and bourse operators.
  • (12 Jul 2021) Speech by Deputy Governor of the Banque de France,​ Denis Beau, on the treatment of new technologies, such as CBDCs, within monetary policy frameworks.

Italy:              

  • (15 Jul 2021) Statement (in Italian) from the Commissione Nazionale per le Società e la Borsa (Consob) on Binance, in which it joins the regulatory authorities of the Cayman Islands, Japan, Poland, Thailand and the UK in warning consumers that the cryptocurrency exchange is not authorised to conduct business in its jurisdiction.
  • (13 Jul 2021) Consob notice​ (in Italian) announcing its intention to comply with ESMA's guidelines on outsourcing to cloud service providers. The guidelines will apply from 31 July 2021 to all outsourcing agreements to cloud service providers entered into or renewed from that date. 

UK:

  • (15 Jul 2021) Speech from the Chief Executive of the Financial Conduct Authority (FCA), Nikhil Rathi, on the FCA's upcoming business plan. Among other things, Rathi mentions there will be a greater scrutiny of applicants' financials and business models, particularly those operating in high-risk sectors, such as cryptoasset firms. The FCA also intends to launch a GBP 11,000,000 marketing campaign designed to warn consumers of the risks of cryptoassets. | FCA Business Plan 2021/22
  • (13 Jul 2021) Bank of England (BoE) report on financial stability, which highlights risks around cryptoassets and cloud service providers (CSPs). The BoE notes that cryptoasset exposure is largely limited to retail investors and therefore there is not currently a risk of systemic threat. The BoE is of the view that the risks associated with CSPs, however, do require additional policy measures and it calls on the FCA and HM Treasury for engagement on how best to mitigate them. | Launch speech
  • (9 Jul 2021) BoE working paper​ on the impact of machine learning and big data on credit markets.
  • (4 Jul 2021) FCA insight article on quantum information technology and potential use cases and challenges within the financial services sector.
Clifford Chance Events

FTAHK X Clifford Chance – The Journey of Building a Successful Digital Bank (27 July 2021):
Are you interested in the development of digital banks and their transformation of the current banking system? Clifford Chance, in collaboration with the FinTech Association of Hong Kong (FTAHK), is bringing together senior executives of leading digital banks, Mox Bank and ZA Bank, to share their insights. The speakers will discuss the process and challenges of establishing a successful digital bank, as well as the impact their businesses are having on consumers' approach to banking services. | For more information and to register, please see the event page

Additional Information

This publication does not necessarily deal with every important topic nor cover every aspect of the topics with which it deals. It is not designed to provide legal or other advice. Clifford Chance is not responsible for third party content. Please note that English language translations may not be available for some content.

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.