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 MATERIAL

Spotlight: FCA proposals for revisions to the safeguarding regime for payments firms

The UK Financial Conduct Authority (FCA) is consulting on a package of near- and long-term changes to the safeguarding regime for UK payments institutions, e-money institutions and credit unions that issue e-money. The consultation closes on 17 December 2024. The FCA's planned changes aim to ensure greater protection of customer funds and their quicker return if firms fail. The FCA will introduce significantly stronger compliance obligations for payments firms, culminating in a new safeguarding regime based on the CASS model. In this briefing we outline the proposals and give our thoughts on some of the potential impacts.

OTHER CONTENT

• (7 Oct 2024) Clifford Chance briefing – Survey of Cybersecurity Disclosures in Annual Reports on Form 20-F Filed by Selected Well-Known Seasoned Issuers
• (7 Oct 2024) Clifford Chance briefing – FCA proposals for revisions to the safeguarding regime for payments firms
• (2 Oct 2024) Talking Tech Article - Strategic licence negotiations: how to navigate vendor pressures and protect your interests

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (8 Oct 2024) United Nations Office on Drugs and Crime (UNDOC) report on transnational organised crime and the convergence of cyber-enabled fraud, underground banking and technological innovation in Southeast Asia. Amongst other things, the report recommends strengthened licensing regimes and enforcement frameworks for money service businesses and virtual asset service providers (VASPs), and making it a criminal offence for a business to be engaged in related activities without a license, including cryptocurrency exchanges.
• (4 Oct 2024) Bank for International Settlements (BIS) paper on quantum computing and the financial system | Webpage

Americas

Brazil:

• (3 Oct 2024) Presentation slides used by Governor Roberto Campos Neto setting out the Banco Central do Brasil's innovation agenda

US:

• (8 Oct 2024) The cryptocurrency exchange Crypto.com has filed a complaint seeking declaratory and injunctive relief to prevent the Securities and Exchange Commission (SEC) from, as the complaint argues, unlawfully expanding its jurisdiction to cover secondary-market sales of certain network tokens sold on the Crypto.com platform. The complaint contends that network tokens are not themselves securities under the Securities Act of 1933 or the Securities Exchange Act of 1934 and that the SEC has exceeded its statutory authority by inventing the term 'cryptoasset security' to unlawfully expand its jurisdiction over the digital asset industry.

APAC

Singapore:

• (4 Oct 2024) Monetary Authority of Singapore (MAS) consultation seeking comments on its proposed regulatory approach, regulations, notices and guidelines for digital token service providers (DTSPs) issued under the Financial Services and Markets Act 2022. Deadline for comments: 4 November 2024.

Taiwan:

• (1 Oct 2024) The Financial Supervisory Commission (FSC) has published the draft Money Laundering Prevention and Registration Measures for Enterprises or Personnel Providing Virtual Asset Services and the revised draft Measures for Preventing Money Laundering and Combating Terrorism Financing by Virtual Currency Platforms and Trading Business Enterprises | Press release (in Chinese).

Europe

EU:

• (8 Oct 2024) EU Commission Digital finance newsletter on the EU Data Hub, which focuses on the technology used for data sharing between supervisors and fintechs.
• (7 Oct 2024) European Central Bank (ECB) working paper on stablecoins, money market funds and monetary policy.
• (7 Oct 2024) Speech by Piero Cipollone, Member of the Executive Board of the ECB, in which he discussed digital technology in the context of the Capital Markets Union and advocated the creation of an integrated European capital market for digital assets.
• (30 Sep 2024) The EU Commission’s European Blockchain Sandbox Initiative (EBSI) has announced that 41 authorities and regulators from 22 countries in the EU and the European Economic Area (EEA) have joined EBSI for its second cohort. Participants include representatives from: Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Malta, the Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, and Spain.

UK:

• (8 Oct 2024) The UK Government has launched the Regulatory Innovation Office, which is being set up to speed up public access to new technologies by reducing the burden for businesses hoping to bring new products and services to the market. | Press release
• (8 Oct 2024) UK Finance blog post on the EU Digital Operational Resilience Act (DORA).
• (7 Dec 2024) Financial Conduct Authority (FCA) Dear CEO Letters to banks and building societies and to payment and e-money institutions setting out its expectations on authorised push payments (app) fraud reimbursement.
• (4 Oct 2024) UK Finance blog post on whether digital currencies and cryptocurrencies pose a higher risk of money laundering.
• (3 Oct 2024) HM Treasury has published the final draft of the Payment Services (Amendment) Regulations, which are intended to support efforts to tackle authorised push payment (APP) fraud. In particular, the draft statutory instrument (SI) amends the Payment Services Regulations 2017 (SI 2017/752) to allow a payer's payment service provider (PSP) with reasonable grounds to suspect fraud or dishonesty to delay executing payment transactions by an additional 72 hours for the purpose of establishing whether the payment order should be executed. The draft SI also sets out how and when a PSP exercising the ability to delay should notify the payer, as well as a PSP's liability to its payment service user for any charges and interest as a consequence of the delay. | Webpage | Press release
• (2 Oct 2024) Payment Systems Regulator (PSR) policy statement (PS24/7) on the Faster Payments APP scams reimbursement requirement. PS24/7 sets out the full policy on the reimbursement requirement, including the maximum level that PSPs will have to reimburse victims of Faster Payments APP scams of GBP 85,000 per claim from 7 October 2024. | Webpage
• (2 Oct 2024) Speech by Bank of England (BoE) Executive Director of Financial Market Infrastructure Sasha Mills, in which she discussed how recent innovations in digital assets and payments pose both opportunities and risks to the BoE in meeting its monetary and financial stability objectives. She highlighted the BoE’s recent work on innovation, including the discussion paper on its approach to innovation in money and payments, the launch of the Digital Securities Sandbox, and experiments on wholesale payments.

Middle East

UAE:

• (4 Oct 2024) The United Arab Emirates has exempted transactions in virtual assets from value-added tax (VAT) by adding them to the definition of financial services in the Executive Regulation of the Federal Decree-Law No. 8 of 2017 on Value Added Tax (in Arabic | unofficial English translation)

EVENTS

• 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
  
• Global Financial Markets Perspectives Series: AI Series: Data and cyber considerations for AI (online, 14 November 2024): Organisations developing, deploying or using AI systems and tools must navigate privacy, data protection and cybersecurity requirements alongside AI-specific regulations. These parallel, and at times overlapping, frameworks and rules raise new challenges but also enable fresh opportunities for organisations. Our global panel will share practical and market insights at the intersection of these developments, including in the context of governance and compliance programmes, risk management and contractual negotiations. | To register, please see the event series registration form