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: The Future of Digital Finance 2024 – next Tuesday!

From navigating the global regulatory landscape to the tokenization of assets and funds, what are the key challenges for digital assets globally? Join Clifford Chance and Global Blockchain Business Council (GBBC) at our Future of Digital Finance 2024 event in London and online next Tuesday 1 October.

You don't want to miss our line up of regulators and expert industry speakers including keynote addresses from Baroness Kay Swinburne, Jon Relleen Director of Infrastructure & Exchanges at the UK Financial Conduct Authority and Ali Moussavi, Head of the Payments Strategy Unit at the Bank of England and fireside chats with Peter Kerstens advisor to the European Commission on MiCA and Deepa Raja Carbon, Managing Director & Vice-Chair Virtual Assets Regulatory Authority (VARA) on developments in Dubai.

Register today to attend in person in London or via our global live stream

CLIFFORD CHANCE BRIEFINGS AND MATERIALS

• (23 Sep 2024) Clifford Chance briefing – Addressing the difficulties: ISDA approves an online Notices Hub for delivering notices

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (23 Sep 2024) International Monetary Fund (IMF) paper which encourages policymakers to consider central bank digital currency (CBDC) adoption early on, by arguing that successful CBDC adoption hinges not only on technical readiness and operational robustness, but also on strategic policy and design choices that target end-user and intermediary involvement from the outset. The paper introduces the REDI Framework, which outlines various regulatory strategies, education/communication initiatives, design/deployment choices, and incentive mechanisms to prepare for CBDC adoption.

Americas

Canada:

• (23 Sep 2024) The Bank of Canada has announced that, with its research on retail CBDC completed, and with other payments issues gaining prominence, it is scaling down its work on a Digital Canadian Dollar and shifting its focus to broader payments system research and policy development. | Press release

US:

•  (23 Sep 2024) Letter from a group of US Senators and Representatives to Securities and Exchange Commission (SEC) Chairman Gary Gensler, in which they call on him to rescind SEC Staff Accounting Bulletin 121 (SAB 121) on the accounting treatment of digital assets safeguarded by custodians, exchanges, and other platforms engaged in digital asset activities.
• (9 Sep 2024) Speech by SEC Chief Accountant Paul Munter, in which he reiterated that the applicability of SAB 121 is a facts and circumstances analysis, and that while an entity with safeguarding arrangements that align with the fact pattern described in SAB 121 should present a liability on its balance sheet to reflect its obligation to safeguard the cryptoassets held for others (with a corresponding asset), there are other fact patterns the SEC staff have encountered where entities have demonstrated how the specific risks and uncertainties involved in their fact patterns are different than those contemplated in SAB 121, and accordingly SAB 121 does not apply.

APAC

Australia:

• (18 Sep 2024) The Reserve Bank of Australia (RBA) and the Australian Treasury have released a joint report summarising research to date on CBDCs and how this has informed the RBA and Treasury’s current assessment of CBDC issues in Australia. The report concludes that a clear public interest case to issue a retail CBDC has yet to emerge in Australia. The report also sets out a three-year roadmap for future work on digital money in Australia. | Press release

Hong Kong:

• (23 Sep 2024) The Hong Kong Monetary Authority (HKMA) has commenced Phase 2 of the e-HKD Pilot Programme to delve deeper into innovative use cases for new forms of digital money, including e-HKD and tokenised deposits, that can potentially be used by individuals and corporates.  As Project e-HKD expands its coverage from e-HKD only to a more comprehensive exploration of the digital money ecosystem, the project has been renamed as Project e-HKD+. | Press release

Europe

EU:

• (25 Sep 2024) Commission Implementing Regulation (EU) 2024/2494 laying down implementing technical standards (ITS) for the application of the Markets In Cryptoassets Regulation (MiCA) with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities and the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA), which has been published in the Official Journal and will enter into force on 15 October 2024.
• (23 Sep 2024) European Central Bank (ECB) update on the Eurosystem’s work to explore how wholesale financial transactions recorded on distributed ledger technology (DLT) platforms could be settled in central bank money.

Germany:

• (19 Sep 2024) The German Federal Financial Supervisory Authority (BaFin) has updated the minimum contractual content requirements in its 'Guidance notes on the implementation of DORA for ICT risk management and ICT third-party risk management'. The update was occasioned by the publication of the final report on the draft regulatory technical standards (RTS) on the subcontracting of ICT services supporting critical or important functions under Article 30(5) of the Digital Operational Resilience Act (DORA). BaFin has translated its supervisory statement and all pertinent information into English to reach a maximum number of market participants. | Press release (in German)

UK:

• (25 Sep 2024) Financial Conduct Authority (FCA) consultation paper (CP24/20) on changes to the safeguarding regime for payments and e-money firms. The FCA is consulting on rules and guidance for both the interim and end state stages of the proposed safeguarding regime. The interim rules are intended to improve compliance with the existing safeguarding requirements set out in the Electronic Money Regulations (EMRs) and Payment Services Regulations (PSRs). The end state will replace the safeguarding requirements of the EMRs and PSRs with a ‘CASS’ style regime where relevant funds and assets are held on trust for consumers. Deadline for comments: 17 December 2024.  | Webpage | Press release
• (23 Sep 2024) Payment Systems Regulator (PSR) policy statement (PS24/6) and finalised guidance to support payment service providers (PSPs) in distinguishing between authorised push payment (APP) scams and civil disputes. | Webpage

EVENTS

• Save the date: The Future of Digital Finance 2024 (Hybrid – London/online, 1 October 2024): Join Clifford Chance and GBBC to network, discuss, and hear from those shaping the future of digital finance. We will be joined by a diverse line up of international regulators and industry leaders to navigate topics including the evolving global regulatory landscape for digital assets, MiCA three months on, interoperability, tokenization of funds and assets and the UK's evolving digital ambitions. Attend in person in London or tune in via our global live stream.  | To register, please see the event registration form
• Global Financial Markets Perspectives Series: Financing digital infrastructure – data centre ABS and funding trends for data centres and digital infrastructure (online, 15 October 2024): With the rise of AI, demand for data continues to grow exponentially raising questions as to how the rapid roll-out and development of data centres will be financed over the next five to 10 years. Our European lawyers across infrastructure finance, project finance, real estate finance and asset backed finance will discuss the innovative financing structures we see for data centres including Europe’s first public data centre ABS and share views on financing trends in the digital infrastructure sector. | To register, please see the event series registration form