In this regular update, we round-up FinTech-related financial services regulatory developments for the week ending 12 August 2022.

 

ICYMI

Recent updates from Herbert Smith Freehills include:

 

UK

BoE: Fourth meeting of the CBDC Engagement Forum – minutes

The Bank of England (BoE) has published the minutes from the fourth meeting of the Central Bank Digital Currency (CBDC) Engagement Forum. The forum discussed CBDC Payment Interface Providers business models and key G7 Public Policy Principals for retail CBDCs to support decision makers. [12 Aug 2022]

#CBDCs
FCA: Updated webpages – change of control and cryptoassets

The FCA has updated the following webpages:

  • change in control requirements – the update states that an FCA registered cryptoasset firm (i.e. a cryptoasset exchange provider and/or custodian wallet provider) is subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) and is not subject to the Financial Services and Markets Act 2000 (FSMA) regime, though the Money Laundering, Terrorist Financing and Transfer of Funds (Amendment) (No.2) Regulations 2022 bring elements of the FSMA change in control provisions within the scope of the MLRs.
  • change in control notification forms – the forms below have been added:

o   Cryptoasset Partnership Change in Controller Form,

o   Cryptoasset Individual Change in Controller Form,

o   Cryptoasset Trust Change in Controller Form,

o   Cryptoasset Corporate Change in Controller Form;

  • cryptoassets AML / CTF regime –  a new section on ‘change in control for registered cryptoasset firms’ has been added; and
  • control thresholds or bands – the update states that a single threshold of 25% or more applies to FCA registered cryptoasset firms. [11 Aug 2022]
#Cryptoassets

#ChangeOfControl

BoE: Blog on cryptoassets – the metaverse and systemic risk 

The Bank of England (BoE) has published a post on cryptoassets, the metaverse and systemic risk to its ‘Bank Underground’ blog. The blog post considers what metaverse is, which is essentially ‘an immersive next generation of the internet, where people can interact to socialise, learn, play and work in a persistent computer-generated environment‘; the role of crypto assets; and the impact for financial stability if a sizeable open-metaverse materialised. [9 Aug 2022]

#Cryptoassets

#Metaverse

UKJT: Consultation on the issuance and transfer of digital securities under English private law 

The UK Jurisdiction Taskforce (UKJT) has published a consultation on the issuance and transfer of digital securities under English private law. The consultation considers the ways in which English law can support the issue and transfer of equity or debt securities on blockchain and distributed ledger technology (DLT) systems.

Feedback is requested by 23 September 2022. [9 Aug 2022]

#DigitalSecurities

#DLT

 

EU

ESMA: Joint ESAs Consumer Protection Day – Draft Programme

The European Securities and Markets Authority (ESMA) has published the draft programme for the joint European Supervisory Authorities (ESAs) Consumer Protection Day. The topics covered on the day will include: sustainable finance; access to finance for consumers in an inclusive way; and the opportunities and challenges related to the access and sharing of data in financial services. [9 Aug 2022]

#Consumers
#Data

 

Australia

ASIC releases research about investment behaviour

The Australian Securities and Investments Commission (ASIC) has released Report 735 Retail investor research (REP 735) summarising the motivations, attitudes and behaviours of retail investors following the onset of Covid-19 in March 2020. In November 2021, ASIC surveyed 1,053 retail investors who traded in securities, derivatives or cryptocurrencies. The report found that retail activity has remained elevated compared to levels prior to the pandemic. The following observations based on the data collected were made:

  • 44% of investors held cryptocurrency, making it the second most common product type held;
  • 25% of investors holding cryptocurrency only held cryptocurrency in their investment portfolio;
  • 20% of investors holding cryptocurrency considered their investment to be “risk-taking”;
  • 34% of investors sourced their trading information from Google; and
  • 41% of investors sourced their trading information from social media and networking platforms.

As stated by ASIC Chair Joe Longo, “the research builds on our understanding of retail investors and helps us consider where our regulatory efforts are warranted”.  ASIC is committed to better understanding and maintaining regulatory pace with these developments.  [11 Aug 2022]

#Cryptocurrencies
APRA publishes updated plan for 2022-23 to protect the community today and prepare the Australian financial system for tomorrow

APRA has published its latest corporate plan (Corporate Plan) for 2022-23, with the aim of reinforcing, over the next four years, the financial soundness of the banking, insurance and superannuation industries. The Corporate Plan’s focus is on “protecting the community today” and ensuring the Australian financial system is “prepared for tomorrow”. To achieve these objectives, APRA intends to deliver its existing strategic priorities while keeping an eye on changes in its operating environment, including geopolitical tensions, inflationary pressures and rising interest rates, and the impact of new technologies. For APRA, retaining financial and operational strength puts banks, insurers and superannuation trustees in the best position to support their customers through periods of volatility and disruption. [8 Aug 2022]

#Technology

#Innovation

 

Hong Kong

HKMA and InvestHK announce addition of CBDC track to Global Fast Track 2022 

The HKMA and Invest Hong Kong (InvestHK) have jointly announced the addition of the central bank digital currency (CBDC) track to the Global Fast Track 2022, a programme with a business matching portal, pitching competition, and mentoring sessions which connect global fintech companies with a diverse range of Asian corporate, investor and service champions to explore potential business partnerships and investments.

The CBDC track invites banks, fintech and tech firms to submit innovative solutions in eight focus areas, including retail CBDC (rCBDC) adoption, wholesale CBDC (wCBDC) adoption, programmable money, interoperability, privacy, cybersecurity, foreign exchange and liquidity management, and offline payments.  Application is open until mid-September 2022.  Shortlisted applicants will enter a pitching session and compete for three awards, namely the Best Use Case Award, Best Technology Award and Best Ecosystem Award.  Qualified candidates may have the opportunity to work on research projects and pilots with the HKMA to foster future growth of the CBDC ecosystem.

Hong Kong has been leading in international collaborations and research on CBDC, with its work on wCBDC being well recognised by the market as one of the most mature of its kind globally.  The HKMA has been actively guiding the exploration of both wCBDC and rCBDC.  Through the addition of the CBDC track, it is committed to facilitating the sector’s growth, promoting industry engagement, and leveraging new technologies to enhance the financial system.  [10 Aug 2022]

#CBDCs

 

Singapore

MAS announces return of Singapore FinTech Festival as in-person event

The Monetary Authority of Singapore (MAS) and Elevandi have announced the return of the Singapore FinTech Festival (SFF) as an in-person event to be held from 2 to 4 November 2022, with industry events and the annual Innovation Lab Crawl being held on 31 October and 1 November. The theme of SFF 2022 will be ‘Building Resilient Business Models amid Volatility and Change’.

Elevandi is a not-for-profit entity set up by the MAS to connect people and businesses, ideas and insights in the FinTech sector in Singapore and globally.  [8 Aug 2022]

#FinTech

 

Philippines

BSP recalibrates approach to licensing of VASPs

The Bangko Sentral Ng Pilipinas (BSP) has announced the recalibration of its approach to licensing virtual asset service providers (VASPs). The regular application window for new VASP licenses will be closed for a period of three years; new VASP licenses will only be granted to existing BSP supervised financial institutions (BSFIs).

Applications received by the BSP from non-BSFIs that have completed/passed Stage 2 of the licensing process on or before 31 August 2022 will be processed and assessed for completeness and sufficiency of documentation based on Stage 3 requirements. Applications with incomplete requirements as of 31 August 2022 will be returned and considered closed. The BSP will no longer entertain nor accept new applications beginning 01 September 2022.  [11 Aug 2022]

#VASPs

 

Ukraine-related sanctions information

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.

 


Disclaimer

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.