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.

SPOTLIGHT

Global Developments in AI Regulation

AI holds incredible promise, but effective governance is crucial to ensure that its potential is realised safely. An evolving tapestry of laws across the world and significant international collaboration efforts are focused on managing AI risks.

In this extract from a recent Clifford Chance webinar, we explore how different jurisdictions including the US, EU, UK, China and Singapore are taking different approaches to AI regulation but ultimately want the same thing – responsible AI.

CLIFFORD CHANCE BRIEFINGS AND MATERIALS

• (5 July 2024) Clifford Chance briefing – Global developments in AI regulation
• (3 July 2024) Talking Tech article – Hong Kong Privacy Commissioner for Personal Data Issues Model Personal Data Protection Framework for AI

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (9 July 2024) Basel Committee on Banking Supervision (BCBS) consultation on proposed principles for the sound management of third-party risk. The BCBS notes that ongoing digitalisation in the banking sector and the rapid adoption of innovative approaches has resulted in an increased reliance on third parties beyond the scope of traditional outsourcing. As a result, it has drafted a set of twelve high-level principles, intended to provide guidance to banks and supervisors on the effective management and supervision of risks posed by third-party arrangements. Deadline for comments: 9 October 2024. | Press release
• (9 July 2024) The Bank for International Settlements (BIS) has launched Project Insight to explore how to better monitor developments in global value chains by combining structured and unstructured granular data and applying big data analytics tools.
• (8 July 2024) BIS working paper on digital payments, informality and economic growth | Webpage
• (5 July 2024) The BCBS has published proposed technical amendments to the Basel Framework for comment, which include a proposed technical amendment to the cryptoasset exposure standard regarding the curvature charge for Group 2a cryptoassets.  Deadline for comments: 19 August 2024.
• (3 July 2024) The BCBS has published the outcomes of its virtual meeting held on 2-3 July 2024, at which it discussed a range of policy and supervisory initiatives. Amongst other things, the BCBS discussed the feedback received to its December 2022 consultation on a proposed disclosure framework for banks' cryptoasset exposures and a set of targeted amendments to its cryptoasset prudential standard. The BCBS confirmed that it will go ahead with these two proposals and will publish final versions later in July 2024 with an implementation date of 1 January 2026. It also committed to continue monitoring the prudential implications of banks issuing tokenised deposits and stablecoins, and the effectiveness of the Basel Framework in addressing them. | Press release

APAC

South Korea:

• (7 July 2024) Financial  Supervisory Service (FSS) press release (in Korean) announcing the establishment of a new system for monitoring suspicious transactions in virtual assets, which will become operational when the Virtual Asset User Protection Act enters into force on 19 July 2024. | Guidelines (in Korean)
• (7 July 2024) FSS statement (in Korean) indicating that, as soon as the Virtual Asset User Protection Act has entered into force, the regulator will launch an unfair trade investigation system and implement strict sanctions when unfair trades that disrupt the order of the virtual asset market are detected.

Europe

EU:

• (5 July 2024) Speech by Dr Joachim Nagel, President of the Deutsche Bundesbank, on the digital euro and the protection of privacy
• (5 July 2024) European Banking Authority (EBA) statement on the application of the Markets in Cryptoasset Regulation (MiCA) for the attention of persons issuing to the public, offering to the public, or seeking admission to trading of asset-referenced tokens (ARTs) and e-money tokens (EMTs) and for consumers | EBA priorities for ART/EMT issuers supervision in 2024/2025 | Press release
• (4 July 2024) EBA final guidelines on the 'travel rule' under Regulation (EU) 2023/1113, which sets out the information that must accompany transfers of funds and certain cryptoassets for anti-money laundering and counter terrorist financing (AML/CTF) purposes. | Press release
• (4 July 2024) European Securities and Markets Authority (ESMA) final report setting out its second package of draft technical standards under MiCA. The package comprises six draft regulatory technical standards (RTS) and two draft implementing technical standards (ITS), which cover: sustainability indicators in relation to climate and other environment-related adverse impacts; trade transparency; record-keeping obligations for CASPs; machine readability of white papers and the register of white papers; and the public disclosure of inside information. Webpage | Press release

France:

• (31 May 2024) High Legal Committee of the Paris Financial Center (HCJP) report (in French) on the determination of the law applicable to assets registered in distributed ledgers

Italy:

• (9 July 2024) Speech by Fabio Panetta, Governor of the Bank of Italy, in which he discussed MiCA and its implementation in Italy

Luxembourg:             

• (5 July 2024) Commission de Surveillance du Secteur Financier (CSSF) communiqué on the EU Commission's public consultation on a draft implementing regulation laying down rules for the application of the Cybersecurity Directive (EU) 2022/2555 (NIS2 Directive) as regards technical and methodological requirements of cybersecurity risk management measures and further specification of the cases in which an incident is considered to be significant. 
• (2 July 2024) The law of 1 July 2024 (in French) amending certain financial sector laws with a view to implementing the Digital Operational Resilience Act (DORA) and the DORA Amending Directive has been published in the Luxembourg official journal (Mémorial A). Entry into force: 17 January 2025.

UK:

• (8 July 2024) Speech by James Benford, Executive Director for Data and Analytics Transformation and Chief Data Officer at the Bank of England (BoE), on its new data and analytics strategy | The Bank’s data and analytics strategy: a three-year roadmap
• (3 July 2024) Royal United Services Institute (RUSI) policy paper which examines whether virtual assets can be used to facilitate donations to Ukraine’s reconstruction efforts