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The following posts provide a snapshot of the principal U.S., European and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • UK Conduct Regulator Warns E-Money Firms on Misleading Customers
    05/18/2021

    The U.K. Financial Conduct Authority has written to the CEOs of electronic money firms asking them to ensure that their customers are aware of how their money is protected. According to the FCA, many e-money firms (some of which are start-ups and FinTechs) compare their services to traditional bank accounts and portray in their financial promotions their services as an alternative to a bank account, but do not adequately disclose the differences in protections between e-money accounts and bank accounts. In particular, e-money firms do not make it clear enough that Financial Services Compensation Scheme protection does not apply to e-money accounts. The warning follows the FCA's publication in summer last year of a letter to CEOs and guidelines on safeguarding which set out the FCA's expectations of e-money firms in light of the increased use of e-money accounts during the pandemic.

    Read more.
  • UK Law Commission Consults on Digital Assets and Electronic Trade Documents
    04/30/2021

    The U.K. Law Commission has launched two consultations, one on digital assets and the other on electronic trade documents. Responses to the consultations can be submitted until July 30, 2021.

    Digital Assets

    The Law Commission has issued a Call for Evidence on digital assets following a request from the government for recommendations for reforms to U.K. laws that will ensure that the laws can accommodate both cryptoassets and other digital assets. The Call for Evidence will be followed by a consultation at the end of 2021 with proposals for law reforms.

    The existing laws of England and Wales do not provide legal certainty as to the legal status of digital assets. Providing certainty would encourage the use of the laws of England and Wales and jurisdiction in digital asset transactions. The Call for Evidence requests feedback about, and evidence of, the ways in which digital assets are being used, treated and dealt with by market participants. It also seeks views on the potential consequences of digital assets being "possessable."

    Read more.
  • UK Chancellor Responds to Kalifa Review of UK FinTech
    04/26/2021

    The Chancellor of the Exchequer Rishi Sunak has published a written statement on the U.K. Government's response to the Kalifa Review of U.K. FinTech. The Kalifa Review made a series of recommendations to ensure the U.K.'s competitiveness in fintech globally. HM Treasury welcomed the Review at the time. The Chancellor's statement describes the following actions that the U.K. Government has committed to in response.

    Read more.
    TOPIC: FinTech
  • UK Government Announces Boost to UK FinTech and Financial Services
    04/19/2021

    The U.K. Government has announced plans to boost the U.K.'s fintech and financial services sectors. Chancellor of the Exchequer Rishi Sunak outlined the plans at U.K. FinTech Week, describing the government's vision for a greener and more technologically advanced financial services sector. The Government's announcement builds on the recommendations in the recent Kalifa Review of U.K. Fintech and Lord Hill's Review of the U.K. Listing Regime.

    Read more.
    TOPICS: FinTechSecurities
  • Bank of England and HM Treasury Announce Central Bank Digital Currency Taskforce
    04/19/2021

    The Bank of England and HM Treasury have announced a joint central bank digital currency Taskforce. The Taskforce will be chaired by Jon Cunliffe, Deputy Governor for Financial Stability at the Bank of England and Katharine Braddick, Director General of Financial Services at HM Treasury, with other U.K. authorities involved as and when required.
     
    The Taskforce's primary function is to oversee investigations into a possible U.K. CBDC. At present, the U.K. has not yet decided whether to issue a CBDC.

    Read more.
    TOPIC: FinTech
  • Kalifa Review of UK Fintech Published
    02/26/2021

    HM Treasury has published the highly-anticipated Independent Strategic Review of U.K. Fintech, led by Ron Kalifa OBE. The aim of the recommendations is to, among others, ensure the U.K.'s competitiveness, attract investments for individual fintechs and raise the U.K.'s status as a global hub. The Kalifa Review makes recommendations in five key areas: (i) policy and regulation; (ii) skills and talent; (iii) investment; (iv) international attractiveness and competitiveness; and (v) national connectivity. The delivery of these recommendations is to be led by the Centre for Finance, Innovation and Technology, which is mandated by the Government but led by the private sector. This post focuses on the policy and regulation discussion.

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  • Bank of England Publishes Plan for UK Financial Sector Data Collection
    02/23/2021

    The Bank of England has published a plan to transform its ability to collect data from the financial services sector over the next decade. Three key principles of the plan are: (i) defining and adopting common data standards that are consistent across the financial sector; (ii) modernizing reporting instructions to improve how they are written and implemented; and (iii) integrating reporting to facilitate a more efficient approach to data collection. The Transformation Plan was prompted by Huw Van Steenis' 2019 report on the "Future of Finance", which highlighted the importance of data standards and protocols and the value of harnessing data. The BoE published a response to the "Future of Finance" report, in which it undertook to deliver a world-class data strategy.

    Read more.
  • EU Launches Review of the Financial Collateral Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Financial Collateral Directive. The Commission is also consulting on the Settlement Finality Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The FCD establishes a harmonized EU framework for the use of financial collateral to secure transactions. It provides for close-out netting provisions to be enforceable under their terms and ring-fences the operation of financial collateral arrangements should one of the parties become insolvent, creating protections from the usual insolvency laws of a Member State. The FCD consultation does not cover the re-use of financial collateral given under a security financial collateral arrangement by a collateral taker as this issue has recently been addressed in the Securities Financing Transactions Regulation. The consultation focuses on issues relating to the recognition of close-out netting provisions and its impact on SFD systems.

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  • EU Launches Review of the Settlement Finality Directive
    02/12/2021

    The European Commission has launched a targeted consultation related to post-trade services, which considers the EU Settlement Finality Directive. The Commission is also consulting on the Financial Collateral Directive, combining the review of these two Directives since they are closely related. The consultations close on May 7, 2021. The SFD establishes various insolvency carve-outs for designated market infrastructure systems and provides for finality of transactions within such systems. Under the protections currently afforded by the SFD, transfer orders which enter into designated systems within certain deadlines are guaranteed to be finally settled and cannot be unwound at the behest of insolvency officials, regardless of whether the sending participant has become insolvent or transfer orders have been revoked in the meantime. The SFD essentially excludes "insolvency claw-back" rules, such as those for transactions at an undervalue or trading by insolvent or near-insolvent entities, from applying to holdings in designated systems and modifies the timing of "moratorium" rules which prevent transactions by insolvents. This also gives certainty as regards holdings in central securities depositories and as to the finality of transactions in some clearing and payment systems. Under the SFD, each EU Member State automatically recognizes systems that have been designated by other Member States. However, there is no EU regime for third country systems, a lacuna which has already been fixed by the U.K. in its SFD laws after Brexit.

    Read more.
  • European Supervisory Authorities Publish Joint Response on Proposed EU Digital Operational Resilience Act
    02/09/2021

    The European Supervisory Authorities (the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority) have published a letter to the European Parliament, the Council of the European Union and the European Commission, setting out responses to the proposed EU Digital Operational Resilience Act, a new piece of EU regulation on digital operational resilience for the financial sector. The European Commission first published the draft DORA in September 2020. It forms part of the European Commission's digital finance strategy, which aims to embrace digital finance for the benefit of consumers and businesses while ensuring digital transformation is soundly regulated. The DORA is particularly focused on combatting risks arising from information and communication technologies in order to protect operational resilience and the performance of the financial system.

    Read more.
    TOPIC: FinTech
  • European Commission Calls for Advice on Digital Finance from European Supervisory Authorities
    02/02/2021

    The European Commission has published a call for advice on digital finance and related issues from the three European Supervisory Authorities (the European Securities and Markets Authority, the European Insurance and Occupational Pensions Authority and the European Banking Authority). The call for advice is in line with the Commission's 2020 digital finance strategy, which set out the Commission's intention to review existing financial services frameworks to protect consumers and the integrity of EU financial sectors.

    Read more.
    TOPIC: FinTech
  • UK Government Proposes Extending Regulatory Perimeter to Capture Stablecoins
    01/07/2021

    HM Treasury has opened a consultation on the proposed U.K. approach to crypto-assets and stablecoins, in particular a proposal to bring stablecoins into the U.K. regulatory perimeter. Responses to the consultation may be submitted until March 21, 2021. The government will consider the responses to the consultation and publish a response with further details on how the approach would be implemented in law. If the policy approach is followed, the regulators would consult further on rules for firms.

    Read more.
  • International Report on Educating Retail Investors about Crypto-Assets
    12/22/2020

    The International Organization of Securities Commissions has published a report on how regulators can inform retail investors about the risks and characteristics of crypto-assets. The report sets out the potential risks to retail investors, such as lack of market liquidity, volatility, partial or total loss of the invested amount, insufficient information disclosure and fraud. It then goes on to provide guidance on how regulators can develop educational content on crypto-assets and inform the public about unauthorized firms, the various communication channels available to inform the public and how partnerships might be forged to develop and distribute educational content.

    View IOSCO's report on investor education of crypto-assets
  • UK Financial Conduct Authority Establishes Temporary AML Registration Regime for Crypto-Asset Businesses
    12/16/2020

    The U.K. Financial Conduct Authority has established a temporary registration regime for crypto-asset businesses that were operating in the U.K. prior to January 10, 2020. The regime will allow crypto-asset firms to continue providing services in the U.K., notwithstanding that they have not yet been registered with the FCA.

    Read more.
  • Global Financial Innovation Network Invites Applications for First Cross-Border Testing
    10/29/2020

    The U.K. Financial Conduct Authority has announced that it will be one of the 23 regulators participating in the cross-border testing initiative launched by the Global Financial Innovation Network. The other regulators involved are Abu Dhabi Global Market (ADGM), Australian Securities & Investments Commission (ASIC), Alberta Securities Commission (ASC), Astana Financial Services Authority (AFSA), Autorité des marchés financiers (AMF), Bank of Lithuania (LB), Bermuda Monetary Authority (BMA), British Columbia Securities Commission (BCSC), Capital Markets Authority (CMA, Kenya), Central Bank of Bahrain (CBB), Central Bank of United Arab Emirates (CB UAE), Consumer Financial Protection Bureau (CFPB), Ontario Securities Commission (OSC), Dubai Financial Services Authority (DFSA), Financial Services Commission Taiwan (FSC Taiwan), Guernsey Financial Services Commission (GFSC), Hong Kong Insurance Authority (HKIA), Hong Kong Monetary Authority (HKMA), Hong Kong Securities and Futures Commission (HKSFC), Jersey Financial Services Commission (JFSC), Magyar Nemzeti Bank (Central Bank of Hungary), Monetary Authority of Singapore (MAS).

    The GFIN was launched at the start of 2019 and is a network of organizations committed to supporting financial innovation in the interests of consumers. One of GFIN's priorities is facilitating cross-border trials of emerging technologies across global jurisdictions (a global sandbox). GFIN has opened applications from firms to test innovative financial products, services or business models across more than one country or jurisdiction, and applications should be submitted by December 31, 2020.

    View the GFIN cross-border testing site.

    View the FCA's announcement.
    TOPIC: FinTech
  • ISDA Publishes Papers on Legal Issues for Smart Contracts and Distributed Ledger Technology
    10/21/2020

    The International Swaps and Derivatives Association, in conjunction with certain law firms, has published a series of papers analyzing key legal issues for smart contracts and distributed ledger technology across four jurisdictions: France, Ireland, Japan and New York. These are in addition to the papers covering England and Wales and Singapore, which ISDA published in January 2020.

    Read more.
    TOPIC: FinTech
  • Financial Stability Board Publishes Final Recommendations on Global Stablecoins
    10/13/2020

    Following its consultation earlier this year, the Financial Stability Board has published a final report on the regulation, supervision and oversight of global stablecoin arrangements. In the report, the FSB discusses the characteristics of GSCs, the risks posed by GSCs, existing approaches to regulating and supervising GSCs and issues with cross-border supervision of GSCs. Alongside the report, the FSB has published a summary of the responses to its consultation.

    Read more.
  • Bank for International Settlements Report on Central Bank Digital Currencies
    10/09/2020

    The Bank for International Settlements, together with seven central banks (Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank, Bank of England and Board of Governors Federal Reserve System) has released a report on the principles and core features of central bank digital currencies. The central banks concerned do not give any opinions on whether they intend to issue CBDCs. Instead, the report sets out three key principles for a hypothetical CBDC, namely: (i) that it should do no harm to central banks' public policy objectives or interfere with financial stability; (ii) that it should complement existing forms of central bank money; and (iii) that it should promote innovation and efficiency, to deter users from adopting other, less safe instruments or currencies.

    Read more.
    TOPIC: FinTech
  • UK Conduct Regulator Bans Sale to Retail Clients of Derivatives Referencing Crypto-Assets from January 2021
    10/06/2020

    The U.K. Financial Conduct Authority has published a Policy Statement and final rules prohibiting the sale, marketing and distribution to retail clients of derivatives and exchange traded notes referencing certain types of unregulated, transferable crypto-assets by firms acting in, or from, the U.K. The ban will apply from January 6, 2021.

    The prohibition will apply to the marketing, distributing or selling of crypto derivatives in, or from, the U.K. to retail clients by MiFID investment firms, MiFID optional exemption firms, U.K. branches of third-country investment firms and to EEA MiFID investment firms that currently passport into the U.K. and which will continue operating after the Brexit transitional period ends on January 1, 2021.

    Read more.
  • EU Report on the Potential for a Digital Euro
    10/02/2020

    The European Central Bank has published a report by the Eurosystem High-Level Task Force on a digital euro. The digital euro would be a form of central bank digital currency. No decision has been taken yet to issue a digital euro. The report sets out the reasons for having a digital euro, the potential impact of a digital euro, legal considerations, functional design possibilities and technical and operational approaches to digital euro services. A consultation on the potential launch of a digital euro is expected in October 2020.

    The Bank of England issued a discussion paper in March 2020 on the opportunities, challenges and design of a potential U.K. CBDC. The ECB and the BoE are two of the central banks that are investigating the potential of CBDCs. Other central banks include the Bank of Canada, the Bank of Japan, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements.

    View the ECB's report on a digital euro.
  • European Commission Sets Out EU Digital Finance Strategy
    09/24/2020

    The European Commission has published a Communication on its EU digital finance strategy for the coming years. The global economy has been transformed by digital innovation, and this includes financial services. The Commission's strategic objective is to embrace digital finance for the benefit of consumers and businesses while ensuring digital transformation is soundly regulated. To achieve this objective, the Commission sets out four priorities for the digital transformation of the EU financial sector over the next four years and the actions it will take to achieve them.

    Read more.
    TOPICS: COVID-19FinTech
  • European Commission Proposal for Pilot Distributed Ledger Technology Regime Regulation
    09/24/2020

    The European Commission has published a proposal for a new EU Regulation on a pilot regime for distributed ledger technology. The pilot regime is intended to promote legal certainty, to support innovation, to preserve market integrity and to ensure financial stability for the use of DLT in crypto-asset and e-money token markets. The Commission has simultaneously published a proposed Regulation on markets in crypto-assets and e-money tokens. The proposed Regulations follow the Commission's consultation on an EU framework for crypto-assets, which closed in January 2020.

    Read more.
  • European Commission Proposal for Crypto-asset Regulation
    09/24/2020

    The European Commission has published a proposal for a new EU Regulation on crypto-assets. The proposed Regulation is intended to improve legal certainty in the regulatory treatment of crypto-assets, to support the development of crypto-assets, to preserve consumer protection and market integrity in crypto-asset markets and to ensure financial stability. The Commission has simultaneously published a Regulation on a pilot regime for distributed ledger technology. The proposed Regulations follow the Commission's consultation on an EU framework for crypto-assets, which closed in January 2020.

    Read more.
  • UK Law Commission Announces Projects on Accommodating Smart Contracts and Digital Assets into English Law
    09/21/2020

    The U.K. Law Commission has announced two new projects designed to ensure that English law is able to accommodate smart contracts and digital assets.

    Smart contracts are automated contracts such as distributed ledgers which are produced without human intervention. The Law Commission plans to investigate various questions arising from the use of smart contracts, including: (i) in what circumstances will contracts written in code be legally binding; (ii) how should smart contracts be interpreted by the courts; and (iii) what are the legal consequences of the code not performing as intended? The Law Commission is seeking input from the business and technology sectors and intends to publish a call for evidence in late 2020.

    Read more.
    TOPIC: FinTech
  • European Banking Authority Seeks to Promote RegTech Use
    08/12/2020

    The European Banking Authority has opened a consultation on RegTech and supporting the use of RegTech across the EU. Responses may be submitted until September 30, 2020. The EBA intends to report on the use of RegTech in the first half of 2021. The survey is focused on financial institutions and ICT third party providers. The EBA is seeking to understand the extent and impact of RegTech for regulatory, compliance and reporting requirements of regulated firms. In particular, the EBA is looking at mapping and understanding existing RegTech solutions, identifying barriers and risks relating to the use of RegTech and analyzing how to facilitate the application of RegTech across the EU. The consultation covers ongoing monitoring of business relationships and transactions for anti-money laundering obligations, creditworthiness assessments, compliance with security standards, including information security, cybersecurity and payment services and supervisory reporting.

    View the EBA's survey.
  • UK Proposals to Extend Regulatory Perimeter to Capture Promotion of Unregulated Crypto-Assets
    07/20/2020

    HM Treasury has released proposals to amend the U.K.’s financial promotion rules to subject unregulated crypto-assets to the financial promotions regime. The Government proposals aim to enhance consumer protection, ensure market integrity and fight against financial crime. Responses to the consultation can be submitted until October 25, 2020. The Government is separately consulting on limiting the ability of authorized firms to approve financial promotions of unauthorized without consent from the Financial Conduct Authority.

    Read more.
  • UK Establishes Independent FinTech Strategic Review
    07/20/2020

    The U.K. Economic Secretary to the Treasury, John Glen, has announced the establishment of the independent FinTech Strategic Review, which was first referenced in the 2020 Budget. The Review, which will be led by Ron Kalifa OBE, former CEO of Worldpay, aims to identify priority areas for industry, policy makers and regulators to investigate to facilitate the ongoing success of the U.K. fintech sector.

    Read more.
    TOPIC: FinTech
  • Financial Action Task Force Publishes 12-Month Review on Revised FATF Standards for Virtual Assets
    07/07/2020

    The FATF has published the results of its 12-month review into the revised FATF standards published in June 2019, designed to help tackle money laundering and terrorist financing risks connected with virtual assets and virtual asset service providers. The FATF's revised standards introduced a new Interpretive Note to Recommendation 15 on New Technologies, which clarified how countries should apply the FATF standards to virtual assets and VASPs, as well as updated guidance on a risk-based approach for virtual assets and VASPs. When the revisions were published, the FATF undertook to conduct a 12-month review of the changes.

    Read more.
  • International Organization of Securities Commissions Proposes Artificial Intelligence Requirements for Market Intermediaries and Asset Managers
    06/25/2020

    The International Organization of Securities Commissions has issued a consultation on proposed guidance on the use of artificial intelligence and machine learning by market intermediaries and asset managers. The draft guidance is intended to assist IOSCO member jurisdictions to develop appropriate regulatory frameworks to mitigate the risks arising from the increased use of AI and ML by financial institutions. Comments on the draft Guidance can be submitted until October 26, 2020.

    Read more.
  • European Commission Publishes Adjusted 2020 Work Program
    05/27/2020

    The European Commission has published an adjusted 2020 Work Program to reflect the unexpected challenges arising from COVID-19. The Commission still intends to deliver on the commitments made under its original Work Program, published in January 2020, but has adjusted the timing of certain actions necessary to achieve its objectives. An update on the delivery and expected timing of the objectives under the adjusted Work Program are set out in an amended version of Annex 1 on the Commission’s website.

    Read more.
  • UK Conduct Regulator Announces New Digital Sandbox in Response to COVID-19
    05/04/2020

    The U.K. Financial Conduct Authority has announced a new digital sandbox pilot program, which will provide regulatory support for innovative firms whose business plan addresses issues arising from the coronavirus pandemic. The FCA intends to open the sandbox for applications in summer and, in the meantime, welcomes any expressions of interest from interested innovative firms. The FCA had been planning a digital sandbox before the pandemic, but is fast-tracking the process in light of the challenges facing firms and how the sandbox might assist them.

    View the FCA's announcement.
    TOPICS: COVID-19FinTech
  • Financial Stability Board Consults on Cyber Incident Responses
    04/20/2020

    The Financial Stability Board has launched a consultation on its proposed guidance on Effective Practices for Cyber Incident Response and Recovery. The consultation seeks input on a toolkit of cyber incident responses compiled by the FSB based on effective actions taken by organizations across the world. The consultation paper opens with a series of specific questions for respondents to consider, before setting out the draft toolkit of responses on which feedback should be given. Responses should be submitted by July 20, 2020.

    Read more.
  • Financial Stability Board Consults on Global Stablecoins
    04/14/2020

    The Financial Stability Board has launched a consultation on global stablecoin arrangements. The consultation is in response to the G20 mandating the FSB to analyze potential regulatory issues posed by global stablecoins and to advise on multilateral responses. Responses to the consultation should be submitted by July 15, 2020. The FSB's final report is expected to be published in October 2020.

    Read more.
  • European Commission Consults on Retail Payments Strategy for the EU
    04/03/2020

    The European Commission has launched a consultation on a retail payments strategy for the EU. The Commission's final strategy will be published in Q3 2020 alongside the new digital finance strategy, on which the Commission launched a consultation on the same day. The consultation closes on June 26, 2020.

    The Commission states that the RPS will be a key to reinforcing the international role of the euro, strengthening Europe's influence and enhancing its economic autonomy. In addition, the Commission notes that safe and efficient payment systems and services will assist the EU in tackling emergencies, such as the coronavirus outbreak.

    Read more.
  • European Commission Consults on a New Digital Finance Strategy for the EU
    04/03/2020

    The European Commission has launched a consultation on a new digital finance strategy and FinTech action plan for Europe. The Commission states that although it is prioritizing fighting the coronavirus pandemic, it has decided not to delay this work because the digital finance can help to tackle issues arising as a result of the coronavirus pandemic. The Commission's final strategy, due to be published in Q3 2020, will set out the focus FinTech policy areas for the next five years. The consultation closes on June 26, 2020.

    Read more.
  • International Organization of Securities Commissions Publishes Report on Global Stablecoins
    03/23/2020

    The International Organization of Securities Commissions has published a report analyzing the regulatory issues arising from the use of global stablecoins and setting out how the existing IOSCO principles would apply to a global stablecoin, depending on its structure. IOSCO states that global stablecoins, depending on how they are set up, share features with regulated securities and other regulated financial instruments and services. Using a hypothetical global stablecoin case, the report analyzes how the IOSCO Principles and Standards would apply and also considers some of the broader implications. The report also includes an analysis, jointly conducted by IOSCO and the Committee on Payment and Market Infrastructures, of the applicability of the CPMI-IOSCO Principles for Financial Market Infrastructures. The conclusion is that the PFMI will apply to global stablecoin arrangements involving the performance of systemically important payment system functions or other FMI functions.

    View IOSCO's report on global stablecoin initiatives.
  • UK Joint Money Laundering Steering Group Consults on Crypto-Asset Exchange and Custodian Wallet Provider Guidance
    03/18/2020

    The U.K. Joint Money Laundering Steering Group has launched a consultation on its proposed new Guidance on how the U.K. Money Laundering Regulations apply to crypto-asset exchange providers and custodian wallet providers. The proposed Guidance will form a new Sector 22 section in Part II of the existing JMLSG Guidance. Comments on the proposed Guidance should be submitted by May 18, 2020.

    Read more.
  • UK Bank of England Opens Discussion on Central Bank Digital Currency Options
    03/12/2020

    The Bank of England has published a Discussion Paper on central bank digital currency opportunities, challenges and design. The BoE is one of several banks exploring introducing a CBDC. The Discussion Paper describes a platform model of CBDC that demonstrates the issues raised by the concept of a CBDC, highlighting both the risks and opportunities. The BoE stresses that the model does not represent any decision by the BoE on the design of a CBDC and is merely intended to aid the overall discussion. Indeed, the BoE emphasizes that no decision has been made on whether to introduce a CBDC and that it would need to ensure that the benefits outweigh any risks. If a CBDC were to be introduced in the U.K. it would be denominated in pounds sterling and would exist alongside cash and commercial bank deposits.

    Read more.
  • Guidance Published on Digital Identification Technologies for Anti-Money Laundering Purposes
    03/06/2020

    The Financial Action Task Force has published Guidance on how digital identification technologies can be used to conduct some aspects of customer due diligence for anti-money laundering purposes. The FATF presents a risk-based approach to the use of digital ID software, relying on a set of open source, consensus-driven assurance frameworks and technical standards for digital ID systems. In addition, the FATF sets out a series of recommendations for relevant authorities, regulated entities (meaning financial institutions, virtual asset service providers and designated non-financial businesses and professions) and digital ID services providers. The Guidance is non-binding, however, it clarifies the FATF's standards.

    View the FATF's Guidance on digital ID.
  • European Commission Launches Strategy for Data and Artificial Intelligence
    02/19/2020

    The European Commission has published a set of documents presenting its strategies for data and Artificial Intelligence. The main document is a Communication to the European Parliament, the European Council and relevant committees, entitled "A European strategy for data." The Communication describes the policy measures put forward by the European Commission for an EU data economy that aims to increase the use of, and demand for, data and data-enabled products and services in the EU over the next five years. The Commission argues for an attractive policy environment that provides for access to data, the flow of data across the EU, protection of personal data protection rights and an open yet assertive approach to international data flows that is based on European values. 

    Read more.
    TOPIC: FinTech
  • European Systemic Risk Board to Evaluate Systemic Cyber-security Risk
    02/19/2020

    The European Systemic Risk Board has published a report on cyber-security risk, which it has identified as a source of systemic risk to the global financial system. The report notes that the increased digitalization and interconnectedness of the global financial system makes it heavily reliant on ICT infrastructure and vulnerable to cyber attacks. The report provides an overview of key regulatory and industry initiatives aimed at combatting cyber risk, which include: (i) the 2019 International Organization of Securities Commissions’ Cyber Task Force report on cyber regulation; (ii) the European Banking Authority’s Guidelines on management of information and communication technology and security risks; and (iii) the European Securities and Markets Authority’s 2020-2022 Strategic Orientation, which establishes the dangers of cyber threats as an area of focus for ESMA and the other European Supervisory Authorities.

    Read more.
  • Financial Stability Board Highlights Vulnerabilities in Global Financial System
    02/18/2020

    The Financial Stability Board has written to G20 Finance Ministers and Central Bank Governors outlining the key focus areas for the FSB’s work ahead of the next G20 summit in Saudi Arabia in November 2020. The communication builds on certain areas highlighted as priorities in the FSB’s 2020 Work Program, published in December 2019.

    Read more.
  • International Organization of Securities Commissions Reports on Risks and Regulatory Considerations for Crypto-Asset Trading Platforms
    02/12/2020

    Following its consultation last year, the International Organization of Securities Commissions has published a report on the key issues and risks related to trading of crypto-assets on crypto-asset trading platforms (referred to as CTPs). The report aims to assist IOSCO member jurisdictions to assess the issues and risks relating to CTPs and sets out key considerations to be taken into account, including related toolkits for regulators. The considerations are: (i) access to CTPs; (ii) safeguarding assets; (iii) conflicts of interest; (iv) operations of CTPs; (v) market integrity; (vi) price discovery; and (vii) technology. IOSCO states that where a regulator has determined that a crypto-asset is a security, the provisions on securities trading and regulation apply.

    Read more.
    TOPICS: FinTechSecurities
  • International Organization of Securities Commissions Priorities for 2020
    01/30/2020

    The International Organization of Securities Commissions has published its annual work program, setting out its priorities for 2020. IOSCO will continue to focus on the five areas identified by its Board in 2019 as well as one new issue. The areas of focus are:
    • Crypto-assets: following its consultation last year, in February 2020, IOSCO will publish a final report on issues, risks and regulatory considerations relating to crypto-asset trading platforms. IOSCO will also publish the outcome of its review of the regulatory risks relating to investment funds exposures to crypto-assets. Finally, a report will be issued in early 2020 on issues relating to Global Stablecoins.
    Read more.
  • European Commission Publishes 2020 Work Programme
    01/29/2020

    The European Commission has published its 2020 Work Programme, setting out the EU’s strategic priorities for the next 12 months.

    Read more.
  • UK Regulators Take Steps to Establish Financial Services AI Public Private Forum
    01/23/2020

    The Bank of England and the U.K. Financial Conduct Authority are establishing the Financial Services AI Public Private Forum that Governor Mark Carney announced in June 2019. The regulators are calling for expressions of interest to join the forum from a range of sectors, including, but not limited to: (i) asset and investment management; (ii) banking; (iii) financial market infrastructure; (iv) fintech; (v) insurance; (vi) non-governmental organizations; and (vii) technology service providers.

    The purpose of the forum is to:
    • share information and understand the practical challenges of using AI and machine learning in financial services, including obstacles to implementation and potential risks and trade-offs;
    • establish the potential areas where principles, guidance, regulation or good practice might assist in the safe adoption of AI and machine learning; and
    • assess whether ongoing industry input would be useful and what form that could take, such as through industry codes of conduct or an industry standard board.

    View the FCA's announcement.

    View the BoE's webpage.

    View the terms of reference.
    TOPIC: FinTech
  • Group of Central Banks to Collaborate on Potential of Central Bank Digital Currencies
    01/21/2020

    The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank, the Swiss National Bank and the Bank for International Settlements have announced that they have created a group to share experience as they assess the potential cases for central bank digital currency. The group will assess CBDC use cases, economic, functional and technical design choices, including cross-border interoperability and the sharing of knowledge on emerging technologies.

    View the announcement.
  • UK Court Confirms Bitcoin Status as Property for Certain Proprietary Claims
    01/17/2020

    A U.K. court has granted an interim proprietary injunction over Bitcoin held in an account of a cryptocurrency exchange after it had been transferred there as part of a cyber attack on a Canadian insurance company. The judgment in AA v Persons Unknown & Ors, Re Bitcoin [2019] EWHC 3556 (Comm) was given on December 13, 2019, and following the lifting of reporting restrictions, was released for publication on January 17, 2020. In coming to its decision, the High Court adopted the analysis as to the proprietary status of crypto assets set out in the recent legal statement by the UK Jurisdiction Taskforce. Although each case will depend on the relevant facts and issues, the decision confirms that crypto assets are a form of property capable of being the subject of a proprietary injunction.

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  • Global Financial Innovation Network Announces Plans to Improve the Framework for Cross-Border Testing of Innovative Firms
    01/16/2020

    The Global Financial Innovation Network has published a report on lessons learned during the cross-border testing of innovative firms and their products. The GFIN was launched at the start of 2019 and is a network of organizations committed to supporting financial innovation in the interests of consumers. One of GFIN's priorities is to facilitate cross-border trials of emerging technologies across global jurisdictions (a global sandbox). The GFIN began a pilot with eight firms in April 2019, which aimed to develop testing plans for their cross-border trials. However, as none of the firms developed a testing plan that satisfied each jurisdiction's requirements, the GFIN could not progress things further. The GFIN has since met to consider how to take things forward and will further develop the framework of cross-border testing.

    The report describes the accomplishments and the challenges that arose during the pilot and sets out the proposed next steps and solutions to improve cross-border testing for the next phase. The solutions include establishing a central website for GFIN and creating a single application form for applicants, both of which should make it easier for prospective firms to find relevant information and submit an application. In the first half of 2020, the GFIN will open applications for the first formal cohort of participants.

    View the report.
    TOPIC: FinTech
  • European Banking Authority Publishes Report on Big Data and Advanced Analytics
    01/13/2020

    The European Banking Authority has published a report on big data and advanced analytics in the banking sector. The report sets out the findings of the EBA's review of big data and analytics and presents key pillars and elements of trust for the development, implementation and adoption of BD&AA by banks.

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