Global crypto roundup July 2024

Monthly Crypto Round-up

July 2024

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in June 2024 along with our Clifford Chance crypto 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.

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CLIFFORD CHANCE PUBLICATIONS & MATERIALS

EVENT: Central Bank Digital Currencies with Clifford Chance and the IMF (online, 9 July 2024)

We are delighted to invite you to join us for a virtual event focused on the evolving legal questions around the development of central bank digital currencies (CBDCs) with the IMF and Clifford Chance. This insightful session will bring together leading global industry experts advising on CBDC design and implementation to discuss the crucial legal considerations and latest developments as more jurisdictions around the globe meaningfully explore the introduction of CBDCs. | Event programme | Register

CRR3/CRD6: new rules on crypto-asset exposures of EU banks (June 2024)

The new EU banking package (CRR3/CRD6) amending the Capital Requirements Regulation and Directive (CRR/CRD) includes a transitional regime for the risk-weighting of EU banks' exposures to crypto-assets that will apply until new legislation implements the Basel Committee's standard on crypto-assets, as well as new provisions on the reporting, disclosure, governance and supervisory review of crypto-asset exposures. CRR3 and CRD6 will enter into force on 9 July 2024. The transitional regime for the risk-weighting of crypto-asset exposures applies from entry into force but other requirements will apply later.

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

(18 Jun 2024) International Monetary Fund (IMF) blog post on how CBDCs can boost the Middle East's financial inclusion and payment efficiency
(14 Jun 2024) The Eurosystem and London Centres of the Bank for International Settlements (BIS) Innovation Hub, together with the Bank of England, have launched Project Meridian FX, to build on the findings of Project Meridian by focusing on foreign exchange (FX) transactions. The starting point is the concept of the synchronisation operator (SO) developed in the first Meridian project. Meridian FX will test the usability of the SO for different types of assets and technologies. The project is intended to provide insights on how operators of real-time gross settlement (RTGS) systems could enable interoperability with new payments technologies, such as distributed ledger technology (DLT). The project aims to report on its findings in Spring 2025. | Press release
(14 Jun 2024) BIS paper which presents the results of the 2023 BIS survey on CBDCs and crypto. The paper also provides insight into the use of stablecoins for payments and regulatory approaches to cryptoassets across the globe. | Webpage
(13 Jun 2024) The BIS and the Bank of Canada have launched the Toronto Innovation Centre, the first such centre to be established in the Americas and the seventh to be opened by the BIS in collaboration with partner central banks around the world. The centre will explore the development of new technologies, both in Canada and throughout Latin America and the Caribbean. | Press release
(11 Jun 2024) World Federation of Exchanges (WFE) paper entitled 'Demystifying tokenisation: dispelling myths, explaining the muted traction, and setting out the starting point for regulation'. | Press release
(5 Jun 2024) The BIS has announced that Project mBridge has reached the minimum viable product (MVP) stage and invited private sector participants to propose value-added solutions that can be connected to the mBridge MVP platform. The project is intended to explore a multi- CBDC platform shared among participating central banks and commercial banks, built on DLT to enable instant cross-border payments and settlement. | Press release
(4 Jun 2024) The BIS has launched Project Rialto to explore how instant cross-border payments could be improved using a modular FX component combined with settlement in wholesale central bank digital currencies (wCBDC). | Project webpage

Americas

Bolivia

(26 Jun 2024) Banco Central de Bolivia press release (in Spanish) announcing its decision to annul Board Resolution No. 144/2020 of 15 December 2020 in order to allow financial entities to conduct transactions with virtual assets.

(28 Jun 2024) The US Department of the Treasury and the Internal Revenue Service (IRS) have released final regulations on the Infrastructure Investment and Jobs Act (IIJA)’s reporting requirements for brokers of digital assets, which are intended to align these requirements with reporting requirements for traditional financial services, to help taxpayers file accurate returns and pay taxes owed under current law. The final regulations will require brokers to report gross proceeds on the sale of digital assets beginning in 2026 for all sales in 2025. Brokers will also be required to report information on the tax basis for certain digital assets beginning in 2027 for sales in 2026. | Press release

APAC

Hong Kong

(27 Jun 2024) The Hong Kong Monetary Authority (HKMA) and the Banque de France have entered into a memorandum of understanding (MoU) on collaboration relating to wholesale CBDC. Under the MoU, the Banque de France and the HKMA agree to strengthen communication and collaboration, as well as to lay the foundations for further efforts on tokenisation and new technologies. | Press release

Republic of Korea

(10 Jun 2024) The Financial Services Commission (FSC) has issued guidelines on non-fungible tokens (NFTs) to provide standards and examples on determining when NFTs should be considered as virtual assets. | Press release

EUROPE

(27 Jun 2024) European Banking Authority (EBA) and European Securities and Markets Authority (ESMA) final report on their joint guidelines under the Markets in Cryptoassets Regulation (MiCA) on the suitability assessment of members of the management body of issuers of asset-referenced tokens and of cryptoasset service providers, and on their joint guidelines on the suitability assessment of shareholders and members, whether direct or indirect, with qualifying holdings in issuers of asset-referenced tokens and in cryptoasset service providers. | Press release
(26 Jun 2024) ESMA Securities and Markets Stakeholder Group (SMSG) advice to ESMA on its third consultation paper on MiCA
(25 Jun 2024) The following three Delegated Regulations supplementing provisions relating to the use of ICT under the Digital Operational Resilience Act (DORA) have been published in the Official Journal: Commission Delegated Regulation (EU) 2024/1772 specifying the criteria for the classification of ICT-related incidents and cyber threats, setting out materiality thresholds and specifying the details of reports of major incidents; Commission Delegated Regulation (EU) 2024/1773 specifying the detailed content of the policy regarding contractual arrangements on the use of ICT services supporting critical or important functions provided by ICT third-party service providers; and Commission Delegated Regulation (EU) 2024/1774 specifying ICT risk management tools, methods, processes, and policies and the simplified ICT risk management framework. The Delegated Regulations will enter into force on 15 July 2024.
(24 Jun 2024) European Central Bank (ECB) first progress report on the digital euro preparation phase, which was launched on 1 November 2023 with the aim of laying the foundations for the potential issuance of a digital euro. The report outlines the progress made on key digital euro design aspects and the envisaged next steps for the project. | Press release
(19 Jun 2024) The EBA has published a package of technical standards and guidelines under MiCA on the topics of reporting, liquidity stress testing and supervisory colleges. The package completes the delivery of EBA technical standards under MiCA and comprises the EBA's final reports on: draft regulatory technical standards (RTS) on the use of asset-referenced tokens (ARTs) and electronic money tokens (EMTs) denominated in a non-EU currency as a means of exchange; draft implementing technical standards (ITS) on the reporting obligations of issuers of ARTs and EMTs denominated in a non-EU currency, and of cryptoasset service providers (CASPs); draft RTS on supervisory colleges; and guidelines on liquidity stress testing.
(19 Jun 2024) The banking package of amendments to the Capital Requirements Regulation and Directive (CRR3/CRD6) has been published in the Official Journal: Regulation (EU) 2024/1623 amending Regulation (EU) No 575/2013 as regards requirements for credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor; and Directive (EU) 2024/1619 amending Directive 2013/36/EU as regards supervisory powers, sanctions, third-country branches, and environmental, social and governance risks. The package includes a transitional regime for the risk-weighting of EU banks' exposures to cryptoassets that will apply until new legislation implements the Basel Committee's standard on cryptoassets, as well as new provisions on the reporting, disclosure, governance and supervisory review of cryptoasset exposures.
(19 Jun 2024) The anti-money laundering and counter terrorist financing (AML/CTF) legislative package has been published in the Official Journal, comprising: Regulation (EU) 2024/1624 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing; Directive (EU) 2024/1640 on the mechanisms to be put in place by Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directive(EU) 2019/1937, and amending and repealing Directive (EU) 2015/849; Regulation (EU) 2024/1620 establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010; and Directive (EU) 2024/1654 amending Directive (EU) 2019/1153 as regards access by competent authorities to centralised bank account registries through the interconnection system and technical measures to facilitate the use of transaction records.Amongst other things, the package expands the list of obliged entities to cover the majority of the crypto sector, and introduces specific enhanced due diligence measures for cross-border correspondent relationships for cryptoasset service providers.
(13 Jun 2024) The EBA has published a package of RTS and guidelines under MiCA on prudential matters, namely own funds, liquidity requirements, and recovery plans. The package comprises the EBA's final reports on: guidelines on recovery plans under MiCA; draft RTS to specify the minimum content of liquidity management policy; draft RTS to specify the highly liquid financial instruments in the reserve of assets; draft RTS further specifying the liquidity requirements; draft RTS on the procedure and timeframe to adjust own funds; and draft RTS on additional own funds requirements and stress testing.
(13 Jun 2024) ECB blog post on 'making the digital euro truly private'
(12 Jun 2024) ECB slides on the digitalisation of the Single Supervisory Mechanism (SSM)
(10 Jun 2024) EU Innovation Hub for Internal Security report on the use of encrypted communications in criminal investigations
(10 Jun 2024) ECB paper on digital innovation and banking regulation
(6 Jun 2024) The EBA published a package of regulatory products on governance and remuneration under the MiCA, comprising: guidelines on the minimum content of the governance arrangements for issuers of ARTs, which further specify the various governance provisions in MiCA and also clarify the tasks, responsibilities and organisation of the management body, and the organisational arrangements of issuers; final draft RTS on the minimum content of the governance arrangements on the remuneration policy, which set out a framework similar to the remuneration framework for investment firms and apply to issuers of significant ARTs and electronic money institutions issuing significant EMTs, and, where Member States require the application of Article 45(1) MiCA, to issuers of non-significant EMTs; and final draft RTS on conflicts of interest for issuers of ARTs, which require issuers of ARTs to implement and maintain effective policies and procedures to identify, prevent, manage and disclose conflicts of interest..

France

(27 Jun 2024) The Banque de France (BDF) and the Hong Kong Monetary Authority have entered into an MoU on collaboration relating to wholesale CBDC. Under the MoU, the BDF and the Hong Kong Monetary Authority agree to strengthen communication and collaboration, as well as to lay the foundations for further efforts on tokenisation and new technologies. | Press release

Luxembourg

(24 Jun 2024) Commission de Surveillance du Secteur Financier (CSSF) communiqué inviting financial entities covered by Article 60 of the MiCA that are considering providing cryptoasset services following the notification procedure to complete a questionnaire regarding their plans under MiCA by 26 July 2024.

Switzerland

((20 Jun 2024) The Swiss National Bank (SNB) has announced the continuation of the Helvetia Pilot focusing on tokenised securities settlement on SIX Digital Exchange (SDX) in Swiss franc digital central bank money for financial market participants. | SNB announcement | SDX press release.

(20 Jun 2024) The FCA, working with the Metropolitan Police Service, has conducted an operation to arrest two individuals suspected of running an illegal cryptoasset exchange. Since 10 January 2021, cryptoasset businesses providing certain cryptoasset services in the UK must be registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). | Press release
(6 Jun 2024) The Financial Markets Law Committee (FMLC) has published an updated version of its 2018 paper which examined governing law and related conflicts of law issues in the context of DLT systems. The revised report reconsiders these issues in light of the continued uncertainties around how conflict of law rules should be applied to DLT systems and digital assets, and provides recommendations on how these rules should develop. Clifford Chance Partner Sam Brown participated in the working group for the paper. | Press release