Clifford Chance

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in December 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

• Hong Kong Monetary Authority launches Digital Bond Grant Scheme
• EU tech regulation and policy orientations: What lies ahead?
• Forecasting the impact of Trump's second administration on the tech sector

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

INTERNATIONAL

• (12 Dec 2024) The Financial Stability Board (FSB) has published two sets of final recommendations on aligning data frameworks related to cross-border payments and consistent regulation and supervision of bank and non-bank payment service providers (PSPs). | Press release
• (4 Dec 2024) FSB press release on its plenary meeting held in Hong Kong on 3 December 2024. Amongst other things, the plenary discussed the financial stability outlook, including recent developments in cryptoasset markets and global stablecoins; cross-border payments, including the need to further progress priority actions and implement measures to address ongoing legal, regulatory and supervisory challenges, such as the finalisation of FSB recommendations on data frameworks; and the FSB’s work programme for 2025, which will be published in early 2025.
• (3 Dec 2024) Bank for International Settlements (BIS) paper which analyses how retail central bank digital currencies (CBDCs) and fast payment systems (FPS) compare with each other and why some jurisdictions have opted for a retail CBDC, while others have chosen to introduce an FPS or both. | Webpage

AMERICAS

US:  

• (6 Dec 2024) Financial Stability Oversight Council (FSOC) 2024 Annual Report, which reviews developments in financial markets, identifies vulnerabilities and emerging threats to US financial stability, and makes recommendations to mitigate those vulnerabilities and threats. Amongst other things, the report reiterates the FSOC's prior recommendation that Congress pass legislation to create a comprehensive federal prudential framework for stablecoin issuers. The report also recommends that Congress pass legislation providing federal financial regulators with explicit rulemaking authority over the spot market for cryptoassets that are not securities. | Press release
• (5 Dec 2024) Commodity Futures Trading Commission (CFTC) staff advisory on the use of artificial intelligence in CFTC-regulated markets by registered entities and registrants. The advisory reminds CFTC-regulated entities of their obligations under the Commodity Exchange Act and the CFTC’s regulations as these entities begin to implement AI. | Press release | Statement of Chairman Rostin Behnam | Statement of Commissioner Kristin N. Johnson

APAC

Australia:             

• (4 Dec 2024) Australian Securities and Investments Commission (ASIC) consultation paper CP 381 Updates to INFO 225: Digital Assets: Financial Products and Services outlining proposals to update Information Sheet 225 Crypto Assets. To provide greater clarity about the current law, ASIC has proposed a range of updates to INFO 225, including adding 13 practical examples of how the current financial product definitions apply to digital assets and related products. Deadline for comments: 28 February 2025. | Press release

Hong Kong:

• (18 Dec 2024) Securities and Futures Commission (SFC) circular setting out a roadmap for virtual asset trading platforms (VATPs) on the licensing process and providing more guidance on the second-phase assessment. | Press release
• (13 Dec 2024) The Hong Kong Government has informed the Global Forum on Transparency and Exchange of Information for Tax Purposes of the Organisation for Economic Co-operation and Development (OECD) of Hong Kong's commitment to implementing the Cryptoasset Reporting Framework (CARF) for enhancing international tax transparency and combating cross-border tax evasion. Based on the latest timetable set by the Global Forum, the Government plans to commence the first automatic exchanges with relevant jurisdictions under CARF from 2028, based on the initial plan that the necessary local legislative amendments can be put in place by 2026. | Press release
• (6 Dec 2024) The Hong Kong Government has gazetted the Stablecoins Bill, which establishes a regulatory regime for issuers of fiat-referenced stablecoins (FRS) in Hong Kong. The Bill was introduced into the Legislative Council for its first reading on 18 December 2024. | Press release 

Singapore:             

• (5 Dec 2024) The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) have announced that two new payments solutions, the new electronic deferred payment (EDP) and EDP+ solutions, will be launched in mid-2025 to support the transition to e-payments for both corporate and retail cheque users. The MAS has also launched a consultation to provide details on the transition plan from cheques to e-payments, as well as proposed initiatives that focus on addressing the needs and concerns of corporates and individuals. Deadline for comments: 17 January 2025. | Press release

EUROPE

EU:  

• (18 Dec 2024) The EU Commission has adopted two sets of regulatory technical standards (RTS) under the Markets in Cryptoassets Regulation (MiCA) specifying the detailed content of information necessary to carry out the assessment of a proposed acquisition of a qualifying holding in: (i) an issuer of an asset-referenced token (ART); and (ii) a cryptoasset service provider (CASP).
• (18 Dec 2024) The European Banking Authority (EBA) has published its final guidelines on reporting requirements under MiCA to ensure that competent authorities receive sufficient comparable information to supervise the compliance of issuers with MiCA requirements and provide the EBA with the information necessary to conduct the significance assessment under MiCA. | Press release
• (17 Dec 2024) The European Securities and Markets Authority (ESMA) has published a statement on the transitional regime for CASPs under MiCA, which grants CASPs that offered services prior to 30 December 2024 additional time to comply with MiCA. The statement concerns the different transitional periods introduced by Member States exercising their discretion to disapply or reduce the duration of the regime, and includes a list of grandfathering periods CASPs should take into account if providing services in more than one Member State. | List of grandfathering periods decided by Member States under Article 143 of MiCA
• (17 Dec 2024) European Supervisory Authorities (ESAs) report summarising the key findings from their dry-run exercise for the collection of registers of information of contractual arrangements on the use of ICT third-party service providers by financial entities under the Digital Operational Resilience Act (DORA). | Press release
• (17 Dec 2024) ESMA has published the last package of final reports containing RTS and guidelines under MiCA. In particular, the package contains: RTS on market abuse that specify systems and procedures to prevent and detect market abuse in cryptoassets, the template for reporting suspected market abuse in cryptoassets, as well as coordination procedures between competent authorities for the detection and sanctioning of cross-border market abuse situations (ESMA75-453128700-1278); guidelines on reverse solicitation that confirm ESMA’s previous message that the reverse solicitation exemption should be understood as very narrowly framed and should be regarded as the exception and not be used to circumvent MiCA requirements (ESMA35-1872330276-1899); guidelines on cryptoasset transfer services that are intended to ensure investor protection for clients transferring cryptoassets by specifying the policies and procedures that CASPs should have in place and on suitability that specify how CASPs providing advice on cryptoassets or portfolio management of cryptoassets have to give suitable recommendations to their clients or make suitable investment decisions on their behalf. These rules are aligned with the MiFID2 requirements so that CASPs providing advice under both MiFID2 and MiCA would be subject to similar requirements (ESMA35-1872330276-1936); guidelines on qualification of cryptoassets as financial instruments that provide conditions and criteria for the qualification of cryptoassets as financial instruments. The guidelines aim to provide more clarity about the delineation between the respective scopes of application of MiCA and other sectoral regulatory frameworks such as MiFID2 (ESMA75453128700-1323); and  guidelines on the maintenance of systems and security access protocols that apply to offerors and persons seeking admission to trading who are not subject to the same operational resilience standards under MiCA and DORA as their CASP and issuer counterparts (ESMA75-223375936-6089).
• (17 Dec 2024) The EU Commission has adopted RTS under MiCA specifying the content, methodologies and presentation of information in respect of sustainability indicators in relation to adverse impacts on the climate and other environment‐related adverse impacts.
• (16 Dec 2024) The EU Commission has adopted RTS specifying the criteria for determining the composition of joint examination teams, and their designation, tasks and working arrangements under DORA.
• (16 Dec 2024) The EU Commission has adopted three sets of RTS under MiCA. The first set of RTS relates to the register of cryptoasset white papers, issuers of ARTs and e-money tokens (EMTs), and CASPs, and specifies the data elements for the classification of cryptoasset white papers. The second set specifies the minimum content of the governance arrangements on the remuneration policy of issuers of significant ARTs and EMTs. The third set specifies the procedure and timeframe for an issuer of ARTs or of EMTs to adjust the amount of its own funds.
• (13 Dec 2024) The EU Commission has adopted RTS specifying the adjustment of own funds requirements and minimum features of stress testing programmes of issuers of ARTs or of EMTs under MiCA. The RTS relate to the higher own funds requirements on issuers where there is a higher degree of a risk.
• (13 Dec 2024) ESMA warning on cryptoassets, which states that while cryptoassets are "on the rise" they remain "very risky".
• (12 Dec 2024) EBA report on tokenised deposits and their potential benefits and challenges. | Press release
• (10 Dec 2024) ESAs final report on joint guidelines on templates for explanations and opinions, and the standardised test for the classification of cryptoassets, under Article 97(1) of MiCA. The guidelines will be translated into the official EU languages and published on the ESAs’ websites. They will apply from three months after the publication of the translations. | Press release
• (6 Dec 2024) Letter from the EU Commission to the EBA on the overlap of provisions relating to EMTs under MiCA and the Payment Services Directive (PSD2) and asking the EBA to work in coordination with ESMA to assess whether to issue a no action letter with regard to the enforcement of authorisation requirements under PSD2 as regards EMT services provided by CASPs. The intention is to avoid the burden of CASPs requiring dual authorisation and being subject to requirements under both MiCA and PSD2 in relation to certain EMT services, such as where EMTs are used for investment or trading purposes. The Commission has also invited the EBA and ESMA to explore whether the authorisation process under PSD2 could be streamlined where dual authorisation would be required, and to recommend potential legislative changes that could be taken into account in the ongoing negotiations for a new Payment Services Directive (PSD3) and Payment Services Regulation (PSR). | EBA response
• (4 Dec 2024) ESAs statement on the application of DORA. The statement calls on financial entities and third-party providers to ensure they are prepared for DORA applying from 17 January 2025.
• (4 Dec 2024) The EU Council has adopted its negotiating mandate on the EU Commission's proposal for a regulation on a framework for financial data access (FIDA). The proposed FIDA framework, which forms part of the EU Commission's June 2023 financial data access and payments package, is intended to improve customer data sharing between financial institutions. The Council's position broadly supports the Commission's original proposal and its incremental implementation, while seeking to clarify the framework's scope by defining specific data sets, products and sectors, and the timeframe for when data sharing obligations will apply. The position also seeks to reinforce the rules governing third country financial information service providers (FISPs). The EU Parliament agreed its negotiating position in April 2024. The co-legislators will now enter trilogue negotiations in order to agree on a final version of the text. | Press release
• (4 Dec 2024) Joint EBA and ESMA guidelines on the assessment of the suitability of the members of the management body of issuers of asset-referenced tokens and of CASPs, which have been translated into the EU official languages and apply from 4 February 2025. | Webpage
• (4 Dec 2024) EBA consultation on draft RTS regarding the appointment of central contact points by CASPs. The RTS specify the criteria according to which CASPs should appoint a central contact point to ensure compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) obligations of the host Member State. This includes the circumstances in which appointing a central contact point is appropriate and the functions of those central contact points. As the same considerations apply to electronic money issuers (EMIs) and payment service providers (PSPs) as they do to CASPs, the EBA is proposing to retain the structure and approach set out in the RTS on appointing central contact points for EMIs and PSPs (Delegated Regulation (EU) 2018/1108) and extend the existing provisions to CASPs, as well as introducing new provisions for CASPs where necessary. Deadline for comments: 4 February 2025. | Webpage | Press release
• (3 Dec 2024) Commission Implementing Regulation (EU) 2024/2984 laying down implementing technical standards (ITS) on cryptoasset white papers under MiCA, which has been published in the Official Journal. Entry into force: 23 December 2024, with application from 23 December 2025.
• (2 Dec 2024) The European Central Bank (ECB) has published its second progress report on the preparation phase of a digital euro, which was launched on 1 November 2023 and is laying the foundations for the potential issuance of a digital euro. | Webpage | Letter from Piero Cipollone, Member of the ECB Executive Board | Press release
• (2 Dec 2024) Commission Implementing Regulation (EU) 2024/2956 laying down ITS on standard templates for the register of information under DORA, which has been published in the Official Journal. Entry into force: 22 December 2024.

France

• (17 Dec 2024) Autorité des marchés financiers (AMF) press release (in French) highlighting a number of judicial police operations carried out by the Paris inter-regional jurisdiction (JIRS) on 13 June 2024 and 17 December 2024, targeting several cryptoasset ATMs as part of an investigation into the illegal exercise of the activity of providing digital asset services and aggravated money laundering. The AMF has reiterated that service providers who carry out such an activity on French soil without being registered are acting illegally and are liable to a sentence of up to two years' imprisonment and a fine of EUR 30,000 under Articles L. 54-10-4 and L. 572-23 of the Monetary and Financial Code.
• (13 Dec 2024) Banque de France press release (in French) on innovations in its investment operations and two recent transactions in tokenised assets, which were both settled in CBDC tokens issued by the Banque de France on the DL3S blockchain.

Germany:          

• (17 Dec 2024) The German Federal Financial Supervisory Authority (BaFin) has published a detailed overview (in German) of the documentation requirements under DORA for companies in the financial sector. The overview is not binding and does not constitute an interpretation of the law but serves solely as guidance for better orientation.
• (6 Dec 2024) BaFin consultation (in German) on a draft ordinance amending the Investment Institutions Audit Report Ordinance (WpIPrüfbV) and the Crowdfunding Service Providers Audit Report Ordinance (SchwarmfdPV) in order to ensure that compliance with the requirements of DORA is adequately considered and reviewed as part of the annual audit of investment institutions under the Investment Institutions Act and of crowdfunding service providers under the Securities Trading Act and Regulation (EU) 2020/1503. Deadline for comments: 27 December 2024.

Luxembourg:

• (5 Dec 2024) CSSF communiqué on DORA, with reminders and advice on preparedness.

Poland: 

• (9 Dec 2024) The Ministry of Finance has published draft regulations (in Polish) on the operation of online currency exchange offices as part of the draft Act on the cryptoasset market. The draft regulations define non-cash Polish and foreign means of payment, as well as non-cash currency exchange. Only payment service providers keeping accounts for service recipients will be allowed to carry out this exchange, and entities that do not meet the criteria of this definition and conduct currency exchange activities on the internet will have three months to adapt their operations or to terminate the provision of these services. The consequences of violating the regulations stipulated in the draft will be fines of up to PLN 5 million or imprisonment of up to two years. 

UK:

• (16 Dec 2024) Financial Conduct Authority (FCA) discussion paper (DP24/4) on the development of its rules for cryptoasset admissions and disclosures (A&D) and cryptoasset market abuse (MARC). Deadline for comments: 14 March 2025. | Webpage
• (13 Dec 2024) The Bank of England (BoE), Prudential Regulation Authority (PRA) and FCA have launched parallel consultations on operational incident and third party reporting intended to support the operational resilience of the UK financial sector. Comments on all the consultation papers are due by 13 March 2025. The FCA intends to publish final rules in H2 2025, and the BoE and PRA propose an implementation date of no earlier than H2 2026. | BoE consultation | PRA consultation CP17/24 | FCA consultation CP24/28
• (13 Dec 2024) FCA portfolio letter for data reporting services providers (DRSPs), which outlines the FCA's latest supervisory priorities for DRSPs, including the key risks of harm it has identified in the portfolio. The letter also highlights what the FCA expects from DRSPs to mitigate these risks of harm.
• (13 Dec 2024) BoE staff working paper on the role of CBDC in an increasingly digital economy. | Webpage
• (12 Dec 2024) PRA data request to gather information on firms’ current and expected future cryptoasset exposures and firms’ application of the Basel framework for the prudential treatment of cryptoassets. Deadline for responses: 24 March 2025.
• (12 Dec 2024) HM Treasury (HMT) has launched an independent review of the Payment and Electronic Money Institution Insolvency Regulations 2021. The Payment and Electronic Money Institution Insolvency Regulations 2021 introduced a new Payment and Electronic Money Special Administration Regime (PESAR). | Terms of reference | Letter of appointment
• (2 Dec 2024) UK Finance blog post on 'DORA compliance and beyond: A roadmap for regulatory success in the financial sector'
• (2 Dec 2024) HM Treasury answer to written question (tabled in the House of Lords on 19 November 2024) on the Government's assessment of the impact of the increased value of cryptocurrency.