In this regular update, we round-up FinTech-related regulatory developments for the week ending 22 April 2022.
BIS: Speech on CBDCs
The Bank for International Settlements (BIS) has published an op-ed on central bank digital currencies (CBDCs) by Mr Agustín Carstens, General Manager of the BIS, and H.M. Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development. The speech considers the benefits and risks of CBDCs, including how CBDCs may contribute to financial inclusion and how to mitigate data protection and cyber risks. [20 Apr 2022]
Public Bill Committee seeks views on Online Safety Bill
The House of Commons Public Bill Committee is seeking views on the Online Safety Bill. The first sitting of the Committee is expected to be on 24 May 2022, with the Committee scheduled to report by 30 June 2022, although it may conclude its considerations earlier. The Committee will not accept written evidence once it has concluded its considerations, so interested parties are advised to make submissions as soon as possible. [20 Apr 2022]
CMA: Retail banking market investigation – updated webpage
The Competition and Markets Authority (CMA) has updated its webpage on the retail banking market investigation to add a letter from the Open Banking Implementation Entity (OBIE) to the CMA, in which it gives an update on the roadmap progress report, and a letter from the CMA to the OBIE in response. [19 Apr 2022]
ESAs: Joint Committee Annual Report 2021
The European Supervisory Authorities (ESAs) have published the Joint Committee Annual Report 2021, which provides a detailed account of the joint work completed over the past year. A significant part of the work in 2021 focused on developing the regulatory and supervisory framework for sustainability-related disclosures. The other main areas of cross-sectoral focus included: joint risk assessment; enhancement of consumer protection; and development of the regulatory and supervisory frameworks for sustainable finance and securitisation. In addition, monitoring and contributing to the digital finance developments, supporting FinTech scale up through innovation hubs and sandboxes as well as cyber security completed the work programme. [19 Apr 2022]
APRA sets out initial risk management expectations and policy roadmap for crypto-assets
The Australian Prudential Regulation Authority (APRA) has released a letter setting out initial risk management expectations for all regulated entities that engage in activities associated with crypto-assets. APRA also issued a policy roadmap until 2025.
According to the letter, APRA expects that all regulated entities will:
APRA says it is developing a long-term prudential framework for crypto-assets and related activities in consultation with other regulators internationally.
Under its policy roadmap, APRA intends to:
AUSTRAC releases two new financial crime guides
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has released two new financial crime guides to help businesses stop ransomware attack payments and the criminal abuse of digital currencies. The guide to Detecting and stopping ransomware payments provides information and key indicators to help businesses identify and report if a payment could be related to ransomware attacks. The guide to Preventing the criminal abuse of digital currencies provides indicators to help businesses, including digital currency exchange providers, recognise and report criminal activity through digital currencies. [21 Apr 2022]
HKMA to launch fresh review of Code of Banking Practice amidst rapid growth of digital banking transactions
The Chief Executive of the HKMA, Mr Eddie Yue, has published an inSight article regarding the HKMA’s observations around the opportunities and challenges brought by the rapid growth of digital banking transactions.
The HKMA conducted its first survey on the use of banking services by bank customers via digital and non-digital channels in the second half of 2021. The survey revealed that:
The HKMA recognises that banking consumer protection and the development of fintech must keep pace with market advancement. In December 2021, the Hong Kong Association of Banks and the DTC Association published the revised Code of Banking Practice, with the HKMA’s endorsement, to ensure bank consumer protection would not be compromised with the increasingly advanced and convenient service channels provided by banks (see our previous update). At the same time, banking services should also be inclusive (ie, take into account the needs of different clientele) and adhere to the principle of treating customers fairly.
Looking ahead, the HKMA has launched a fresh round of review of the Code of Banking Practice with the industry, with reference to the global implementation of the High-Level Principles on Financial Consumer Protection (published by G20 and the Organisation for Economic Co-operation and Development) in the realm of digital banking services. The review aims at enhancing consumer protection in respect of digital banking services, covering areas such as information disclosure, customers’ finance management, and dispute handling.
The HKMA also aims to develop protection measures for some new service models, such as “buy now, pay later”. [19 Apr 2022]
Secretary for Financial Services and the Treasury publishes blog post on government’s initial thoughts regarding regulation of crowd-funding
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, has published a blog post to set out the government’s initial thoughts on regulating crowd-funding in Hong Kong.
Whilst specific crowd-funding activities may be subject to various laws and regulations, Hong Kong currently has no dedicated legislation for regulating crowd-funding. There are four major types of crowd-funding activities, namely, equity crowd-funding, peer-to-peer lending, donation-based crowd-funding and reward/pre-sale-based crowd-funding. Mr Hui considers that the government should place particular focus on preventing and combating unlawful crowd-funding activities that endanger national security.
The following are some of the risks of crowd-funding:
The initial questions posed by the government for formulating an appropriate regulatory regime for crowd-funding are:
The government intends to conduct a public consultation this year and will make reference to the crowd-funding regimes in other common law jurisdictions. [14 Apr 2022]
SGX speech to the IMAS Digital Summit 2022
The Singapore Exchange (SGX) has published the keynote delivered by Loh Boon Chye, CEO of SGX Group at the IMAS Digital Summit 2022. The SGX Group CEO identified four topics which recurred throughout recent discussions with global investors: crypto; cloud; carbon; and China. Mr Loh then proceeded to address each topic.
With regard to crypto, he noted that while SGX has not offered crypto futures like exchanges other jurisdictions, it has been monitoring this space closely to inform development of the right products that meet customer needs. Mr Loh also noted the potential for tokenisation to open up markets, increase liquidity, and improve settlement processes.
On carbon and climate, Mr Loh highlighted several initiatives, including the SGX’s partnership with MAS to develop an ESG portal which will facilitate investor access to comparable ESG data. [20 Apr 2022]
SEBI: Operational guidelines for security and covenant monitoring – DLT
The Securities and Exchange Board of India (SEBI) has issued a press released highlighting its operational guidelines for security and covenant monitoring using distributed ledger technology (DLT). The release sets out the various dates for issuers to record details in the DLT system. [18 Apr 2022]
Regular updates on sanctions and other developments that may impact businesses with interests or operations in Ukraine and/or Russia are available on our FSR and Corporate Crime Notes blog here