Clifford Chance

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.

Details of these and previous developments can also be found on our Fintech Topic Guide on the Clifford Chance Financial Markets Toolkit.

CLIFFORD CHANCE BRIEFINGS AND MATERIALS

• Talking Tech article – One more link in the chain: UK Jurisdiction Taskforce consultation on digital assets and English insolvency law

Spotlight: Looking ahead to 2024: The State of Fintech Legal

We’re delighted to have collaborated with the Crafty Counsel team on their latest report to look ahead to the coming year and consider what is at the forefront of minds for in-house legal teams working in the fintech sector. From insights on hot topics including payments and AI and the landscapes for fundraisings and international expansion, to the best way to develop a good culture and where the focus points are when it comes to developing fintech products or building partnerships within the Fintech ecosystem – we explore the challenges and opportunities arising for 2024.

Read the full report

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (12 Dec 2023) Bank for International Settlements (BIS) Consultative Group on Innovation and the Digital Economy (CGIDE) report on high-level technical requirements for a functional central bank digital currency (CBDC) architecture | Webpage
• (7 Dec 2023) The Basel Committee on Banking Supervision (BCBS) has agreed to consult on potential targeted revisions to its prudential standard for banks' exposures to cryptoassets related to the criteria for stablecoins to receive a preferential ‘Group 1b’ regulatory treatment. The Committee will also consult on various technical amendments to help promote a consistent understanding of the standard. The Committee has concluded that cryptoassets that use permissionless blockchains create risks that cannot be sufficiently mitigated at present and has therefore agreed to retain the existing treatment for such cryptoassets. The consultation paper will be published in December 2023. The Committee also reviewed the risks arising from banks providing cryptoasset custody services and emphasised the importance of full implementation of the principles for operational resilience and those for the sound management of operational risk. The Committee intends to continue to monitor the evolution of banks' cryptoasset custody activities and, taking account of market developments, will consider whether any additional work may be needed. | Press release
• (7 Dec 2023) International Association of Insurance Supervisors (IAIS) thematic review on the adoption of artificial intelligence and machine learning (AI/ML) in the insurance sector. | Press release

Americas

US:  

• (11 Dec 2023) Digital Asset Anti-Money Laundering Bill, which has been introduced by a bipartisan group of US Senators led by Senator Elizabeth Warren. The Bill is intended to mitigate the illicit finance risks posed by crypto by closing loopholes and bringing the digital asset ecosystem into greater compliance with anti-money laundering and countering the financing of terrorism (AMF/CFT) frameworks. | Press release

APAC

South Korea:

• (11 Dec 2023) The Financial Services Commission (FSC) has proposed rules setting out detailed requirements under the Act on the Protection of Virtual Asset Users, which is intended to protect virtual asset users and establish a sound order in virtual asset transactions, and is scheduled to take effect on 19 July 2024. Deadline for comments on the proposed rules: 22 January 2024 | Press release

Europe

EU:  

• (11 Dec 2023) The European Supervisory Authorities (ESAs) have published a report on innovation facilitators, i.e. innovation hubs and regulatory sandboxes, which identifies a number of benefits and challenges relating to the operation and design of such innovation facilitators and presents recommendations and considerations for national competent authorities (NCAs), the ESAs and the EU Commission to further enhance the role and efficiency of innovation facilitators in the financial sector. | Press release
• (9 Dec 2023) The EU Council and the EU Parliament have reached a provisional agreement on the proposal on harmonised rules on artificial intelligence (the Artificial Intelligence Act). | EU Council press release | EU Parliament press release | EU Commission press release | Statement by EU Commission President von der Leyen
• (8 Dec 2023) The ESAs have launched a public consultation on the second batch of policy mandates under the Digital Operational Resilience Act (DORA). The package is intended to ensure a consistent and harmonised legal framework in the areas of major ICT-related incident reporting, digital operational resilience testing, ICT third-party risk management and oversight over critical ICT third-party providers. It comprises: draft regulatory technical standards (RTS) to specify the elements which a financial entity needs to determine and assess when subcontracting ICT services supporting critical or important functions; joint guidelines on the estimation of aggregated annual costs and losses caused by major ICT-related incidents; draft RTS on the harmonisation of conditions enabling the conduct of the oversight activities; draft RTS on the content of the notification and reports for major incidents and significant cyber threats and determining the time limits for reporting major incidents and draft implementing technical standards (ITS) on the standard forms, templates and procedures for financial entities to report a major incident and to notify a significant cyber threat; draft joint guidelines on the oversight cooperation and information exchange between the ESAs and the competent authorities; and draft RTS specifying elements related to threat led penetration tests Deadline for comments: 4 March 2024. | Press release
• (7 Dec 2023) European Banking Authority (EBA) consultation paper on draft RTS setting out the requirements for policies and procedures on conflicts of interest for issuers of asset-referenced tokens (ARTs) under the Markets in Cryptoassets Regulation (MiCA). Deadline for comments: 7 March 2024 | Press release
• (5 Dec 2023) European Central Bank (ECB) Q&A document which answers questions received via the survey on Eurosystem plans for trials and experiments on new technologies for wholesale central bank money.

Netherlands:

• (1 Dec 2023) Netherlands Authority for the Financial Markets (AFM) publication on getting ready for the Digital Operational Resilience Act (DORA), which focuses on the management of ICT risk related to third-party service providers and is intended to help firms to analyse where they stand and any further steps they need to take to comply with DORA. | AFM webpage on DORA

UK:

• (12 Dec 2023) Courts and Tribunals Judiciary guidance on artificial intelligence (AI) for judicial office holders, which sets out key risks and issues associated with using AI and some suggestions for minimising them.
• (8 Dec 2023) National Audit Office report on how the Financial Conduct Authority (FCA) is adapting to changes in the financial services sector. | Press release | Webpage
• (7 Dec 2023) Bank of England (BoE), Prudential Regulation Authority (PRA) and FCA consultation paper (PRA CP26/23; FCA CP23/30) on operational resilience and proposed requirements and expectations for critical third parties (CTPs). Deadline for comments: 15 March 2024 | Press release | FCA webpage
• (6 Dec 2023) BoE Financial Stability Report – December 2023, which includes a special section on developments in cryptoasset markets.