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

• Spotlight: D'Aloia v persons unknown: crypto trusts, unjust enrichment and the challenges of tracing on the blockchain.The English courts have dealt with a steady stream of cases arising from crypto frauds and it has been through these cases that the law on digital assets has developed. However, many of the well-known decisions in this area to date have been provisional, often without the benefit of the court hearing from both parties. A recent High Court judgment following a trial of claims against a crypto exchange is therefore timely.
• (8 Oct 2024) Clifford Chance briefing – Anti-money laundering: Global developments and their impact on business

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (16 Oct 2024) The Bank for International Settlements (BIS) has launched Project Aperta to explore how to reduce frictions and costs in global finance by enabling seamless cross-border data portability. The project aims to connect the domestic open finance infrastructures of different jurisdictions. The initial use case to be explored is in trade finance for small and medium-sized enterprises (SMEs).
• (15 Oct 2024) The BIS' Committee on Payments and Market Infrastructures (CPMI) has published two reports to the G20 on the interlinking and interoperability of payment systems to enhance cross-border payments. The report on the interlinking of fast payment systems is intended to support private and public stakeholders when deciding on the governance and oversight of these arrangements, while the report on greater harmonisation of the use of application programming interfaces (APIs) includes a set of recommendations accompanied by a list of potential actions that stakeholders may consider as practical and concrete implementation measures. | Press release
• (15 Oct 2024) International Monetary Fund (IMF) blog post on how artificial intelligence (AI)-driven trading could lead to faster and more efficient markets, but also higher trading volumes and greater volatility in times of stress.
• (9 Oct 2024) International Organization of Securities Commissions (IOSCO) report on investor education surrounding cryptoassets, which summarises the results of a survey on retail investor behaviour, demographics, and experiences with cryptoassets.
• (9 Oct 2024) The Basel Committee on Banking Supervision (BCBS) consultation on proposed principles for the sound management of third-party risk has now closed. Published responses to date include those from: European Association of Co-operative Banks (EACB) | Global Financial Markets Association (GFMA) supported by Clifford Chance | Institute of Internal Auditors (IIA) | Institute of International Finance (IIF) | Japanese Bankers Association (JBA)

APAC

Hong Kong:

• (14 Oct 2024) The Hong Kong Monetary Authority (HKMA) has published the conclusions of its August 2024 public consultation on the proposal to rename 'virtual banks' as 'digital banks'. Based on the feedback received, the HKMA considers that it is appropriate to rename 'virtual banks' as 'digital banks' to put more emphasis on the business models and financial technologies adopted by virtual banks rather than their form of presence. | Press release

Singapore:

• (8 Oct 2024) The Monetary Authority of Singapore (MAS) has revised its set of frequently asked questions (FAQs) on the definition of accredited investor and the opt-in process. The FAQs follow the MAS' final tranche of responses, published in November 2023, to feedback received on its October 2022 consultation on proposed regulatory measures for digital payment token (DPT) services. The FAQs have been revised mainly to clarify provisions regarding the treatment of DPT holdings for determining accredited investor eligibility under the Securities and Futures Act.

Europe

EU:

• (15 Oct 2024) The European Securities and Markets Authority (ESMA) has issued an opinion on the EU Commission’s rejection of the draft regulatory technical standards (RTS) under the Markets in Cryptoassets Regulation (MiCA) on the information to be included in a notification by certain financial entities of their intention to provide cryptoasset services and on the information to be included in an application for authorisation as cryptoasset service provider. In the opinion, ESMA acknowledges the legal limitations raised by the Commission but emphasises the importance of the policy objectives behind the initial proposal. | Press release
• (15 Oct 2024) The European Supervisory Authorities (ESAs) have issued an opinion on the EU Commission’s rejection of the draft implementing technical standards (ITS) on the registers of information under the Digital Operational Resilience Act (DORA). In the opinion, the ESAs raise concerns over the impact and practicalities of the Commission's proposed changes to the draft ITS in relation to financial entities’ contractual arrangements with ICT third-party service providers, suggest additional changes to the draft ITS, and call for their swift adoption by the Commission. | Press release
• (10 Oct 2024) The EU Commission has adopted a Delegated Regulation setting out RTS on the information to be exchanged between competent authorities under MiCA.
• (9 Oct 2024) European Banking Authority (EBA) final guidelines on the orderly redemption of asset-referenced tokens (ARTs) or e-money tokens (EMTs) in the event that the issuer fails to fulfil its obligations under MiCA. | Press release
• (2 Oct 2024) ESMA Q&A on the status of entities providing cryptoasset services as part of the grandfathering regime under MiCA.

Luxembourg:

• (9 Oct 2024) The Commission de Surveillance du Secteur Financier (CSSF) has published the results of DORA readiness survey it conducted in September 2024. | Press release

UK:

• (15 Oct 2024) The Financial Services Regulatory Initiatives Forum has published an interim update of the Regulatory Initiatives Grid, which sets out known regulatory initiatives impacting firms from October 2024 to March 2025, including on operational resilience, payments and cryptoassets. The publication of the eighth edition of the Grid has been delayed due to the general election.
• (11 Oct 2024) Bank of England (BoE) Bank Overground blog post on how increasing business use of AI will affect UK labour demand
• (10 Oct 2024) Technology Working Group report on AI, which explores existing and future use cases for AI within the UK’s asset management sector, as well as the barriers firms have or are anticipated to encounter in adopting AI. | HM Treasury press release | Investment Association press release
• (9 Oct 2024) Financial Conduct Authority (FCA) webpage on its Market Abuse Surveillance TechSprint, which explored how advanced solutions leveraging AI and machine learning (ML) could help detect evolving forms of market abuse.
• (9 Oct 2024) FCA webpage on its Financial Inclusion TechSprint, which explored how technology could be used to ensure that all UK citizens can access basic financial tools and services.
• (9 Oct 2024) Information Commissioner's Office (ICO) blog post on preparing for the quantum-enabled future
• (9 Oct 2024) Speech by the Master of the Rolls, Sir Geoffrey Vos, in which he considered how the EU AI Act, the Council of Europe's AI Treaty and the General Data Protection Regulation (GDPR) are likely to affect the adoption and development of AI processes in general and automated decision making in particular.

EVENTS

• 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