In this regular update, we round-up FinTech-related financial services regulatory developments for the week ending 4 November 2022.


Recent updates from Herbert Smith Freehills include:



BIS and central banks of France, Singapore and Switzerland to explore cross-border CBDC trading and settlement using DeFi protocols 

The BIS Innovation Hub has launched a new project, Project Mariana, focusing on central bank digital currencies (CBDCs) and Decentralised Finance (DeFi) protocols as part of its 2022 work programme.

The project explores automated market makers (AMM) for the cross-border exchange of hypothetical Swiss franc, euro and Singapore dollar wholesale CBDCs. It will seek to examine the potential between financial institutions to settle foreign exchange trades in financial markets.

The project involves the Eurosystem, Singapore and Switzerland BIS Innovation Hub Centres together with the Bank of France, Monetary Authority of Singapore and Swiss National Bank. The aim is to deliver a proof of concept by mid-2023. [2 Nov 2022]

Wolfsberg Group: Comments on the EU AML/CFT Legislative Package 

The Wolfsberg Group has published a letter on the EU anti-money laundering and countering the financing of terrorism (AML/CFT) legislative package which it sent to key EU officials. In the letter, the Group welcomes the ambitious proposals to strengthen and harmonise the EU’s AML/CFT framework and regulatory oversight process and provides observations on a number of issues including: the harmonisation of supervisory practices and standards; enhanced information-sharing in line with the principles of the General Data Protection Regulation (GDPR); and measures to facilitate an effective risk-based approach.  The letter includes observations on the use of technology in managing AML/CFT risk.  [1 Nov 2022]





HoC DCMS Committee to hold inquiry into the future of the NFT market

The House of Commons (HoC) Department for Digital, Culture, Media & Sport (DCMS) Committee has announced that it will hold an inquiry into the operation, risks, and benefits of non-fungible tokens (NFTs) and the wider blockchain. MPs are expected to consider whether NFT investors, especially vulnerable speculators, are put at risk by the market. The inquiry may also look into the wider benefits that NFTs and the blockchain could provide the UK economy.

The Committee has released a call for evidence, and welcomes submissions by 6 January 2022. [4 Nov 2022]




ECB: Call for interest on programmable digital euro payments

The European Central Bank (ECB) has published a call for interest inviting experts from the payment industry to take part in technical talks, which will explore options for the provision of programmable payment services in digital euro. The talks are expected to take place in December 2022.

In addition, the European Economic and Social Committee (EESC) has published an opinion on the digital euro. The opinion considers the risks and benefits of introducing a digital euro. [3 Nov 2022]

ECB: Article on cold hard (digital) cash – the economics of CBDC

The European Central Bank (ECB) has published an article in which it outlines the economic forces that shape the rise of digital money and motivate the current debate on central bank digital currency (CBDC). It also looks at the implications for monetary policy and financial stability as well as discussing policy issues and challenges. The ECB highlights several areas where its understanding of digital money could be improved by further research. [31 Oct 2022] 




ASIC Annual Forum 2022

The Australian Securities and Investments Commission (ASIC) Annual Forum was held 3 – 4 November 2022. Below are some of the key takeaways in relation to fintech:

  • 2023 Enforcement Priorities

ASIC announced its Enforcement Priorities for 2023. This will include enforcement action on greenwashing, predatory lending, misconduct involving high risk products (including crypto assets), as well as continuing focus on disrupting investment scams.

  • Where to with crypto?ASIC will continue to use current laws and its expanded regulatory toolkit – including the design and distribution obligations regime – to protect investors from harm arising from crypto assets. ASIC’s regulatory strategy consists of ‘3 cornerstones’:
    1. the development of a regulatory framework and greater regulatory clarity for this class of products;
    2. continued enforcement action to deter harmful products; and
    3. collaboration with domestic and international peers.
  • AI and the data revolution

The key priority for ASIC is to invest in technology to enhance its digital capabilities. The steps being taken to improve analytics capabilities are highlighted in ASIC’s Data Strategy 2021-26. Per its 2023 Enforcement Priorities, ASIC will continue to focus on reducing the risk of harm to consumers from poor financial product design and governance as well as on enhancing cyber and operational resilience.

  • Cyber resilience and new boardroom directions

ASIC will undertake proactive supervisory actions to encourage active management of cyber and operational risks. The expectations are that financial services firms and markets will ensure their risk management frameworks adequately address cybersecurity risks and enhance cyber resilience. Measures taken should be proportionate to the nature, scale, and complexity of the organisation, as well as the sensitivity of the key assets held. This includes ongoing reassessment of cybersecurity risks and oversight of risk throughout the digital supply chain.






Hong Kong

Hong Kong Government and financial regulators announce virtual asset policy stance and upcoming reforms at Fintech Week 2022

The Government and financial regulators made important announcements at the Hong Kong Fintech Week on its policy stance and upcoming reforms on virtual assets.  Recognising that virtual assets are here to stay, proposals have been announced to recalibrate the existing legal and regulatory regimes, with a focus on enabling greater access by retail investors to virtual asset related products and services while mitigating attendant risk.

A lot of the detail can be found in the policy statement issued by the Financial Services and the Treasury Bureau on 31 October 2022, as well as the keynote speech by Ms Julia Leung of the SFC.  Hong Kong will continue to adopt the “same activity, same risks, same regulation” principle, and will put in place the necessary guardrails to ensure the continued innovation of VAs in a sustainable manner.

The following are five key takeaways from Fintech Week Day One:

  • The SFC has issued a circular setting out guidance on the authorisation requirements for virtual asset futures exchange-traded funds (see our update below);
  • The SFC is prepared to move away from its current approach of classifying all tokenised securities as “complex products” (see our previous update), and will issue further guidance on security token offerings, including a proposed modified security token regime;
  • The SFC will consult on the more detailed requirements for the new virtual asset service provider (VASP) regime, including whether the professional investor-only requirement should be relaxed.  This follows the introduction of the new licensing regime for VASPs via legislative amendments which are currently being considered by the Legislative Council (see our June 2022 briefing and our June 2021 briefing);
  • The HKMA will publish its consultation outcome following its discussion paper on crypto-assets and stablecoins (see our January 2022 briefing); and
  • The Government and regulators are engaging in a number of pilot projects in relation to virtual assets, including (i) issuance of non-fungible tokens for Hong Kong Fintech Week; (ii) Green bond tokenisation; and (iii) e-HKD. The HKMA has also announced a number of new initiatives to spur fintech development in Hong Kong, such as the use of an anti-money laundering suptech tool for mule account network analytics.

Insights have also been provided by Mr Paul Chan (Hong Kong Financial Secretary), Mr Christopher Hui (Secretary for Financial Services and the Treasury) and Mr Eddie Yue (Chief Executive of the HKMA).

Further details are provided in our 1 November 2022 briefing.  [31 Oct 2022] 





SFC issues circular on requirements for authorisation of VA Futures ETFs for public offering in Hong Kong

The SFC has issued a circular to set out the requirements for authorisation of exchange traded funds (ETFs) that contain exposure to virtual assets (VAs) primarily through futures contracts (VA Futures ETFs) for public offering in Hong Kong.

The SFC has stated that it is prepared to accept applications for authorisation of VA Futures ETFs as it has been observed that there are meaningful developments in the VA ecosystem recently, and some of its initial concerns over VA Futures ETFs have become increasingly manageable and can be adequately addressed with proper safeguards, disclosure and investor education.

In addition to meeting the applicable requirements in the Overarching Principles Section and the Code on Unit Trusts and Mutual Funds in the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products, the circular sets out additional requirements which should be met by VA Futures ETFs seeking SFC authorisation for public offering in Hong Kong.  They include requirements relating to:

  • Management companies – They should meet specified track record and experience requirements;
  • Eligible futures – Only VA futures traded on conventional regulated futures exchanges are allowed, subject to meeting requirements relating to liquidity and roll costs.  Initially, only Bitcoin futures and Ether futures traded on Chicago Mercantile Exchange are allowed;
  • Investment strategy – The management company is expected to adopt an active investment strategy to allow flexibility in portfolio composition, and meet net derivative exposure requirements;
  • Disclosure – The product key facts statement should contain upfront disclosure of the investment objective and key risks associated with investment in VA futures;
  • Distribution – As VA Futures ETFs are derivatives products and VA-related products, intermediaries are subject to the applicable requirements under the SFC’s main code of conduct and related guidelines, including the joint circular (with appendices) of January 2022, when providing services to clients;
  • Investor education – The management company should carry out extensive investor education before launching the VA Futures ETF in Hong Kong.

The SFC considers that investment products that invest directly in spot VAs may continue to present investor protection issues.  Such products are therefore not permitted in Hong Kong at this stage (but the SFC will keep this under review).

For further details, please refer to our briefing of 1 November 2022.  [31 Oct 2022]





MAS: award winners at Singapore FinTech Festival

MAS and the Singapore FinTech Association have announced the award winners of the Global FinTech Hackcelerator and the SFF Global FinTech Awards at the Singapore FinTech Festival. The winners, comprising financial institutions, FinTechs and solution providers, were recognised for innovative solutions that can help to accelerate the pace of digitalisation, innovation and sustainability in the financial industry.  [4 Nov 2022]

MAS expanded initiative to advance cross-border connectivity in wholesale CBDCs

MAS has announced the launch of Ubin+, an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using wholesale central bank digital currency (CBDC). Projects include:

  • exploring the exchange and settlement of Swiss franc, Euro and Singapore dollar wholesale CBDCs with an automated market maker arrangement (with Banque de France, Swiss National Bank, and the Bank for International Settlements Innovation Hub’s Eurosystem, Switzerland and Singapore Centres);
  • participation in SWIFT’s CBDC Sandbox to explore cross-border interoperability across digital currencies based on DLT and non-DLT payment systems;
  • possible mechanisms to maintain connectivity across CBDC and other heterogenous digital currency networks;
  • the use of smart contracts to optimise efficiency and reduce counterparty risks in the settlement of cross-border transactions. [3 Nov 2022]
MAS: Speeches at the Singapore FinTech Festival

At the Singapore FinTech Festival 2022, Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, and Deputy Chairman, MAS spoke about the 5 Es of technology (Enhance; Empower; Envision; Encourage and Engage) and how they will enable Singapore to harness the full potential of technology for the financial industry. Mr Ravi Menon, Managing Director of MAS discussed the five key outcomes MAS is aiming to achieve through its collaborative FinTech projects, namely: instant remittance; atomic  settlement (simultaneous exchange of two linked assets in real time); programmable money (embedding rules defining usage within the medium of exchange); tokenised assets; and trusted sustainability data  [2-3 Nov 2022] 

Financial planning for Singaporeans enhanced with insurance data on SGFinDex

MAS and the Smart Nation and Digital Government Group (SNDGG) have announced that individuals will now be able to digitally access and aggregate information on their life, accident and health insurance policies held across different participating insurers.  The inclusion of information on insurance policies to the Singapore Financial Data Exchange (SGFinDex) enables individuals to access this information through financial planning applications or websites of participating insurers, banks, as well as through MyMoneySense, a free government financial planning digital service. SGFinDex is the world’s first public digital infrastructure that enables individuals to securely access their financial information held across government agencies, banks, insurers, and the central securities depository. [2 Nov 2022] 



MAS: First industry pilot for digital asset and DeFi goes live

MAS has announced that the first industry pilot under MAS’ Project Guardian that explores potential decentralised finance (DeFi) applications in wholesale funding markets has completed its first live trades. Under the first industry pilot, DBS Bank, JP Morgan and SBI Digital Asset Holdings conducted foreign exchange and government bond transactions against liquidity pools comprising of tokenised Singapore Government Securities Bonds, Japanese Government Bonds, Japanese Yen (JPY) and Singapore Dollar (SGD). [2 Nov 2022] 



MAS and MOF launch process to digitalise banker’s guarantees and insurance bonds

The Ministry of Finance (MOF) and MAS have launched eGuarantee@Gov, a simple and secure digital process for businesses and individuals to provide a banker’s guarantee or insurance bond (collectively, “guarantee”) to government agencies within a day. Rather than having to apply for a paper guarantee from a financial institution (FI), and then collect and deliver the guarantee to the government agency to discharge their contractual or licensing obligations, businesses and individuals will instead be able apply for an eGuarantee from over 20 participating FIs through their websites or email for direct submission to 17 government agencies (refer to Annex). eGuarantee@Gov was jointly developed with the Association of Banks in Singapore (ABS) and in consultation with the General Insurance Association of Singapore (GIA). More participating FIs and agencies are expected by end 2023. [2 Nov 2022] 




MAS Report on potential uses of a purpose-bound digital Singapore dollar

MAS has released a report detailing potential uses of a purpose-bound digital Singapore dollar (SGD) and the supporting infrastructure required, marking the successful completion of Phase 1 of Project Orchid.  Project Orchid aims to build the technical capabilities and competencies necessary for MAS to issue a retail CBDC, should the need arise. [31 Oct 2022]





SCM unveils digital-related initiatives to bolster capital market

The SCM has announced new digital-related initiatives to spur the growth of the capital market and help support the country’s economic recovery by allowing MSMEs and Mid-Tier Companies (MTCs) better access to funding to grow their businesses. The SCM will open new applications for:

  • registration of new ECF and P2P market operators with Shariah solutions and value propositions;
  • registration of new P2P operators focusing on the offering of debt-based financing instruments by MTCs and other larger companies; and
  • registration of new Recognised Market Operators-Digital Asset Exchange (RMO-DAX) to facilitate regulated digital asset investments.

Interested parties are invited to engage with the SC on applications for the digital platforms – ECF, P2P and DAX – from 1 November 2022. The updated guidelines and forms will be made available from 15 November 2022.

The SC will establish a RM30 million Digital Innovation Fund (DIGID) to encourage digitalisation of the capital market and encourage smaller capital market players to adopt innovative digital solutions;  and the development of industry-wide solutions impacting capital raising and investment activities.  Interested parties are invited to submit their applications beginning 1 January 2023. Successful candidates will receive funding on a reimbursement basis after meeting agreed-upon milestone deliverables. The funding amount will cover up to 70% of approved qualifying expenses, capped at RM500,000 per project. [31 Oct 2022]



BNM: Further advancing e-payment adoption and financial inclusion

The BNM launched the e-Duit campaign and the official logo of the iTEKAD programme. The aim is to accelerate e-payment adoption with a 15% annual growth target over the next five years and increase e-payment transactions per capita from 221 to 400 by 2026.  Five new participating financial institutions support iTEKAD, a blended social finance programme to support low-income micro-entrepreneurs which provides business assets funded by social finance instruments (donations, social impact investment, zakat, and cash waqf), microfinancing, and structured training. [29 Oct 2022]




RBI: Operationalisation of CBDC-Wholesale (e₹-W) Pilot

The RBI has announced that the first pilot in the Digital Rupee – Wholesale segment (e₹-W) shall commence on 1 November 2022.  The use case for this pilot is the settlement of secondary market transactions in government securities.  The following nine banks will participate in the pilot: State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC.  The first pilot in the Digital Rupee – Retail segment (e₹-R) is planned for launch within a month in select locations in closed user groups comprising customers and merchants.  [31 Oct 2022]




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.




Karen Anderson
Karen Anderson
+44 20 7466 2404
Cat Dankos
Cat Dankos
Regulatory Consultant
+44 20 7466 7494
Mary O'Donnell
Mary O'Donnell
FSR and CCI Professional Support Paralegal
+44 20 7466 3493


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