In this regular update, we round-up FinTech-related regulatory developments for the week ending 14 January 2022.



IOSCO: Consultation report on operational resilience of trading venues and market intermediaries during Covid

The International Organization of Securities Commissions (IOSCO) has published a consultation report on the operational resilience of trading venues and market intermediaries during Covid-19. In the report, IOSCO describes the impact of Covid-19 and concludes that trading venues and market intermediaries largely proved to be operationally resilient, continuing to serve their clients and the broader economy. However, this period also highlighted opportunities to learn lessons on how to further improve the operational resilience of these entities. As such, IOSCO invites feedback by 14 March 2022. [13 Jan 2022]





PSR: New strategy

The Payment Systems Regulator (PSR) has published its new strategy, setting out its priorities and what it aims to achieve over the next five years. The strategy recognises areas where payments markets and systems are working effectively, but also highlights where more work is needed.

The PSR will publish its Annual Plan in March 2022; this will detail the regulator’s work plan for the year. [13 Jan 2022]

HoL: Report on CBDCs

The House of Lords (HoL) Economic Affairs Committee has published a report entitled ‘Central bank digital currencies: a solution in search of a problem?’. The report finds that the case for a UK central bank digital currency (CBDC) is not convincing. In particular, it notes that while a CBDC may provide some advantages, it could present significant challenges for financial stability and the protection of privacy. [13 Jan 2022]

PRA ‘Dear CEO’ letters set out supervisory priorities for 2022

The PRA has published template versions of its ‘Dear CEO’ letters sent to the CEOs of PRA-regulated insurance firmsUK deposit takers and international banks active in the UK setting out supervisory priorities for 2022.

All the letters highlight the following as common areas for supervisory focus: financial resilience; operational risk and resilience, including outsourcing; climate change; and diversity and inclusion (D&I). With regard to insurance firms, the PRA also highlights work on the review of Solvency II. For UK deposit takers and international banks, regulatory reporting and data quality are identified as particular areas of focus. [12 Jan 2022]



DCMS/OAI: Launch of AI Standards Hub

The Department for Digital, Culture, Media and Sport (DCMS) and Office for Artificial Intelligence (OAI) have announced that the Alan Turing Institute has been selected to lead the pilot of a new AI Standards Hub, with support from the British Standards Institute (BSI) and the National Physical Laboratory.  According to the press release, the new Hub will work to improve the governance of AI, complement pro-innovation regulation and unlock the economic potential of AI technologies to boost investment and employment.  The Hub is part of the National AI Strategy, which was launched in September 2021.

Alongside the AI Hub announcement, DCMS and OAI have also published a report of the research commissioned into the current and future use of AI by UK businesses. [12 Jan 2022]

PSR: Report on access and governance in interbank payment systems

The PSR has published a report on access and governance in interbank payment systems. The report show trends and developments in payment systems over 2019 and 2020. During this period:

  • the systems continued to sign up new payment service providers (PSPs);
  • new providers started providing indirect access to PSPs; and
  • payment system operators expanded their engagement programmes, meaning they are getting more input from the people and businesses that use the system. [11 Jan 2022]
Law Society: Report on blockchain

The Law Society has published the second edition of its report on blockchain, in collaboration with the Tech London Advocates (TLA) Blockchain Legal and Regulatory Group. The report covers a range of key issues for legal practitioners to be aware of when advising on matters related to distributed ledger technology (DLT). [11 Jan 2022]




EBA: Letter from EC on MCD and Call for Advice

The European Banking Authority (EBA) has published a letter from John Berrigan, Director-General of the Financial Stability, Financial Services and Capital Markets Union Directorate-General (DG FISMA) of the European Commission (EC), to José Manuel Campa, EBA Chair regarding the review of the Mortgage Credit Directive (MCD).

The letter covers a detailed call for advice to the EBA. Among the topics the EBA is asked to respond on are: tying and bundling; foreign currency loans; peer-to-peer lending platforms; robo-advice; the use of Big Data and artificial intelligence (AI) in creditworthiness assessments; and the lessons learned from Covid-19.

The EBA is asked to respond by 30 June 2022. [14 Jan 2022]




Hong Kong

HKMA issues discussion paper on crypto-assets and stablecoins 

The HKMA has issued a discussion paper on crypto-assets and stablecoins, inviting views from the industry and public on the relevant regulatory approach.  Members of the public and the industry are invited to submit their responses by 31 March 2022.

The consultation paper mentions that there are two key areas which the HKMA is prioritising:

  • Its regulatory approaches regarding the Authorised Institutions (AIs)’ interface with and provision of intermediary services to customers related to crypto-assets (the HKMA is working with the SFC and will soon provide AIs with detailed regulatory guidance); and
  • The adequacy of the existing regulatory framework in response to the challenges arising from the growing use of stablecoins and other types of crypto-assets in financial markets (this is the main focus of the consultation paper).

The consultation paper sets out the HKMA’s thinking on the regulatory approach for crypto-assets, particularly payment-related stablecoins.  The approach has considered, among other things, the international recommendations, the market and regulatory landscape locally and in other major jurisdictions, and the characteristics of payment-related stablecoins.

The HKMA considers that certain key functions in a typical stablecoin arrangement may not be captured by the virtual asset service provider regime under the Anti-money Laundering and Counter-Terrorist Financing Ordinance, expected to be enacted in 2022 (see our previous update).

The HKMA is considering expanding the scope of the Payment Systems and Stored Value Facilities Ordinance or introducing a new legislation to facilitate the implementation of the intended regulatory regime focusing on activities relating to payment-related stablecoins.  The questions in the consultation paper are primarily concerned about the scope of the regulatory regime to be implemented.

The Chief Executive of HKMA, Mr Eddie Yue, has published an inSight article regarding the HKMA’s thoughts around crypto-assets and stablecoins.  [12 Jan 2022]





MAS: Global CBDC Challenge 2021 Report

MAS has published its Global Central Bank Digital Currency (CBDC) Challenge 2021 Report.  The Global CBDC Challenge was organised by MAS, in partnership with the International Monetary Fund (IMF), World Bank, and others to seek innovative retail CBDC solutions to enhance payment efficiencies and promote financial inclusion. The report provides a summary of the challenge through its various phases and includes highlights of the solutions presented by the 15 finalists during the Singapore Fintech Festival 2021.  [7 Jan 2022]




OJK issues latest list of fintech lending companies 

The Indonesian Financial Services Authority (OJK) has published the most recent list of licensed peer-to-peer (fintech) lending companies (in Bahasa Indonesia). As of 3 January 2022, there were 103 companies holding OJK licences for fintech lending activities. Among the 103 licensed companies, 8 of them provide sharia fintech lending while the others undertake only conventional fintech lending business. Two of the licence holders (Asetku and Findaya) obtained their OJK licences in December 2021, after having been registered with OJK since 2018.

Fintech lending companies operating in Indonesia fall under OJK’s jurisdiction and are required to undertake a two-step licensing process: registration and licensing. They are first required to register with OJK. They must then apply for a licence within one year of their registration date. Failure to comply with this obligation will result in the cancellation of their registration status, and fintech lending companies whose registration has been cancelled by OJK will not be able to reapply to become registered (and ultimately, licensed) fintech lending companies in Indonesia.  [13 Jan 2022]




SECT: Circular to digital asset businesses on opening accounts for minors

The Securities and Exchange Commission, Thailand (SECT) has issued a circular to digital asset business operators which clarifies the standard guidelines for opening trading accounts for minors in accordance with the Civil and Commercial Code.  [9 Jan 2022]




SEC Charges ICO Issuer and Founder with Defrauding Investors

The Securities and Exchange Commission (SEC) has announced charges against an Australian citizen and two companies he founded for making materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities. According to the SEC’s complaint, the defendant claimed to have raised $40.7 million through his companies in an initial coin offering (ICO).

In this offering, the defendant told investors that the ICO proceeds would be used to develop a new technology that would enable one of his companies’ existing application-development software to run on a decentralized network of users’ own computers. Instead, the defendants began diverting more than $5.8 million in ICO proceeds to gold mining entities in South Africa – a use that was never disclosed to investors. The SEC also alleges that the defendants did not register their offers and sales of the tokens with the SEC and knowingly sold the tokens to “ICO pools” – groups of investors, including individuals in the US – without determining whether the underlying investors were accredited. The SEC’s complaint charges the defendants with violating the antifraud and registration provisions of the federal securities laws.

Without admitting or denying the allegations, the defendants have consented to judgments permanently enjoining them from violating these provisions and participating in future securities offerings, ordering undertakings to permanently disable the tokens and seek their removal from digital asset trading platforms, and prohibiting the individual defendant from serving as an officer or director of a public company, and ordering him to pay a $195,047 civil penalty. [6 Jan 2022]






Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.