In this regular update, we round-up FinTech-related regulatory developments for the week ending 4 June 2021.

 

UK

FCA: TRR extended for cryptoasset businesses

The FCA has published a statement extending the end date of the temporary registration regime (TRR) for cryptoasset businesses from 9 July 2021 to 31 March 2022. The TRR allows existing cryptoasset firms that applied for registration before 16 December 2020, and whose applications are still being assessed, to continue trading. The FCA is extending the end date in order to have more time to assess applications. [3 Jun 2021]

#Cryptoassets
PRA makes correction to PS6/21 Operational Resilience relevant to Solvency II firms

The PRA has updated PS6/21 Operational Resilience: Impact tolerances for important business services. The update is relevant only to firms with annual gross written premiums in excess of £10 billion determined on the basis of the average annual amount assessed across a rolling period of three years, calculated by reference to the firm’s accounting reference date. There was a typographical error in paragraph 3.15 of PS 6/21 which has resulted in PS6/21 not reflecting accurately the wording of the Operational Resilience – Solvency II Part of the PRA Rulebook, effective from Wednesday 31 March 2022. The figure of £10 billion referred to in paragraph 3.15 should read £15 billion. [3 Jun 2021]

#OpRes
FCA: Insight on the future of RegTech

The FCA has published an Insight article on the future of RegTech. The publication considers the current landscape of RegTech in the UK, what firms look for when considering using RegTech, and the role of the regulator. [2 Jun 2021]

#RegTech 

 

EU

EBA consults on individual portfolio management of loans under the ECSP Regulation

The European Banking Authority (EBA) has published a consultation on draft regulatory technical standards (RTS) in relation to individual portfolio management of loans offered by crowdfunding service providers under Article 6(7) of the European Crowdfunding Service Providers (ECSP) Regulation. This consultation sets out the EBA’s proposal with respect to disclosures and policies required for crowdfunding service providers that offer individual portfolio management of loans.

Feedback is requested by 4 September 2021. There will be a public hearing on 20 July 2021. The EBA intends to submit the final draft RTS to the Commission in October 2021. [4 Jun 2021]

#Crowdfunding

#ECSPRegulation

ECB: Opinion on DORA

The European Central Bank (ECB) has published an opinion on the proposed regulation on digital operational resilience for the financial sector (DORA). In its opinion, the ECB welcomes the proposed regulation, which aims to enhance the cyber security and operational resilience of the financial sector. The ECB also makes a number of general and specific observations on the proposed regulation, and sets out its recommended amendments to the Commission’s draft. [4 Jun 2021]

#DORA

#OpRes

EBA Annual Report 2020

The EBA has published its Annual Report 2020 which provides a detailed account of the activities of the authority over 2020 and sets out areas of focus in 2021.

With regard to focus for 2021, the EBA identifies implementation of the mandates in the domain of anti-money laundering and countering the financing of terrorism (AML/CFT), becoming an integrated EU data hub, and fostering sound development of financial innovation and operational resilience among its strategic priorities. [3 Jun 2021]

#AML/CFT

#OpRes

EC: Digital Identity Proposal

The European Commission (EC) has issued a proposal for a Regulation establishing a framework for a European Digital Identity which will be available to all EU citizens, residents, and businesses in the EU. Citizens will be able to prove their identity and share electronic documents from their European Digital Identity wallets with the click of a button on their phone. They will be able to access online services with their national digital identification, which will be recognised throughout Europe. Very large platforms will be required to accept the use of European Digital Identity wallets upon request of the user, for example to prove their age. Use of the European Digital Identity wallet will always be at the choice of the user.

In parallel to the legislative process, the EC intends to work with Member States and the private sector on technical aspects of the European Digital Identity. [3 Jun 2021]

#DigitalID

 

India

RBI provides Guidance in relation to Customer Due Diligence for transactions in Virtual Currencies

The RBI has published guidance in relation to customer due diligence for transactions in Virtual Currencies (VC). The RBI notes that certain banks/ regulated entities have cautioned customers against dealing in VCs by making reference to a past RBI Circular (RBI Circular DBR.No.BP.BC.104/08.13.102/2017-18 dated 6 April 2018). The RBI explains that such references are not authorised as the relevant Circular was relevant to only one specific entity and was not a direction issued by the RBI for general application. As such, the RBI has invalidated the previous Circular in order to ensure it cannot be quoted and used improperly.

The RBI notes however, that banks and other entities addressed, may continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under the Prevention of Money Laundering Act 2002 (PMLA), in addition to ensuring compliance with relevant provisions under the Foreign Exchange Management Act (FEMA) for overseas remittances. [31 May 2021]

#VirtualCurrencies