FinTech Global Regulatory Round-up – w/e 29 October 2021

FSB: Letter to G20 Leaders ahead of the Rome Summit and report on Covid-19 lessons learned

The Financial Stability Board (FSB) has published a letter from its Chair, Randal K Quarles, to G20 Leaders ahead of their Summit in Rome. The letter notes signs of the global economy recovering from the impact of Covid-19 and related containment measures. However, Mr Quarles remarks that the global financial system confronts significant structural challenges. These include rapid technological innovations, such as the various forms of cryptoassets.

Accompanying the letter is a report on lessons learned from Covid-19 from a financial stability perspective. The report updates the assessment provided in the July interim report and outlines actions taken by the FSB and other standard-setting bodies. It also sets out areas of ongoing work and future development. [28 Oct 2021]

#Cryptoassets

FATF: Updated Guidance for a Risk-Based Approach to Virtual Assets and VASPs

The Financial Action Task Force (FATF) has published updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs). The 2021 Guidance includes updates focusing on the following six key areas:

• clarification of the definitions of virtual assets and VASPs;
• guidance on how the FATF Standards apply to stablecoins;
• additional guidance on the risks and the tools available to countries to address the money laundering and terrorist financing (ML/TF) risks for peer-to-peer transactions;
• updated guidance on the licensing and registration of VASPs;
• additional guidance for the public and private sectors on the implementation of the 'travel rule'; and
• principles of information-sharing and co-operation amongst VASP Supervisors. [28 Oct 2021]

#VASPs

FSB: Annual report 2021

The FSB has published its Annual Report for 2021. The report sets out the FSB’s work to promote global financial stability. The report highlights the following priority areas of work:

• coordinating the financial policy response to Covid-19;
• strengthening resilience of non-bank financial intermediation;
• responding to the challenges of technological innovation;
• enhancing cross-border payments and financial benchmarks; and
• addressing financial risks from climate change. [27 Oct 2021]

#Payments

FCA Regulation round-up: October 2021

The FCA has published the October 2021 edition of its Regulation Round-up. In relation to FinTech, the Round-up highlighted the FCA's Sustainability TechSprint Demonstration Day which aims to support the development of new solutions and proofs of concept to some of the challenges faced by regulators in the area of environmental, social, and governance (ESG) data and disclosure. [28 Oct 2021]

ESMA: Statement on investment recommendations via social media

The European Securities and Markets Authority (ESMA) has published a statement on making investment recommendations via social media. The statement sets out the definition of investment recommendations, how to post them on social media platforms and the consequences of breaching the EU Market Abuse Regulation (MAR). [28 Oct 2021]

EBA: Consultation on amending RTS on SCA&CSC under PSD2

The European Banking Authority (EBA) has launched a public consultation on the amendment of its Regulatory Technical Standards (RTS) on strong customer authentication and secure communication (SCA&CSC) under the Payment Services Directive (PSD2) with regard to 90-day exemption from SCA for account access. The proposed amendment aims at addressing a number of issues in the application of the exemption by some account servicing payment service providers (ASPSPs) which have resulted in a negative impact on the services offered by account information service providers (AISPs).

Responses to the consultation are requested by 25 November 2021. [28 Oct 2021]

#SCA&CSC 

ASIC releases guidance on crypto-asset related investment products

Australian Securities and Investments Commission (ASIC) has released guidance for product issuers and market operators on how they can meet their regulatory obligations in relation to crypto-asset exchange traded products (ETPs) and other investment products. This guidance is set out in Information Sheet 225 Crypto-assets (INFO 225) and Information Sheet 230 Exchange traded products: Admission guidelines (INFO 230).

INFO 225 and INFO 230 cover good practices for market operators in how they admit and supervise these products, and good practices for product issuers in how they establish and operate these products. Other key matters include:

• admission and monitoring standards;
• custody of crypto-assets;
• pricing methodologies;
• disclosure; and
• risk management.

Notably, responsible entities that intend to hold underlying assets that comprise crypto-assets will need to hold an authorisation in relation to crypto-assets. ASIC has introduced a new ‘crypto-asset’ category in the licensing application for responsible entities. [29 Oct 2021]

HKMA announces initiatives to promote development of regtech talent in Hong Kong as part of two-year regtech roadmap

The Hong Kong Monetary Authority (HKMA) has released a circular to share the findings of a recent report commissioned by the HKMA, containing a series of recommendations to promote the development of regtech talent in Hong Kong.

According to the HKMA’s White Paper of November 2020, “Transforming Risk Management and Compliance: Harnessing the Power of Regtech”, the shortage of regtech talent was a significant barrier to regtech adoption in the Hong Kong banking sector.  To address this, the HKMA’s two-year regtech roadmap announced in November 2020 (see our previous update) proposed to establish a regtech skills framework and to assess current skills gaps in the market.

The consultant commissioned by the HKMA to assist in regtech promotion has developed a regtech skills matrix comprising 38 skills fundamental to regtech adoption. The skills are separated into four domains – soft skills, compliance skills, business skills and technology/data skills.

A skills assessment (utilising the regtech skills matrix) has been conducted among 158 authorised institutions and 34 regtech providers to identify the skills gaps.  Using the assessment results, the consultant has provided a series of recommendations which the HKMA will take forward (in collaboration with the industry and relevant professional bodies):

• Incorporating a regtech-related training curriculum within the Enhanced Competency Framework (ECF) on fintech which is being developed by the HKMA and is targeted for launch by the end of 2021 (the ECF on fintech will include a set of competency standards and training curriculum that apply to regtech practitioners, covering all the skills identified in the regtech skills matrix);

• Developing regtech training courses based on the regtech-related training curriculum;

• Establishing an accreditation system to recognise eligible regtech learning programmes;

• Ensuring ongoing leadership commitment to drive further adoption of regtech and skills development; and

• Leveraging existing regtech communities of interest to encourage greater collaboration among participants in the regtech ecosystem.

Authorised institutions are encouraged to adopt the ECF on fintech as part of their overall efforts in supporting their employees' ongoing professional development and nurturing the regtech talent pool. [25 Oct 2021]

MAS CSAP proposes ways to strength security in IT supply chains, online banking and blockchains 

At its fifth annual meeting, held virtually on 26 and 27 October 2021, the Monetary Authority of Singapore (MAS) Cyber Security Advisory Panel (CSAP) supported the adoption of 'zero-trust' security principles and architecture to tackle advanced cyber threats and IT supply chain attacks. In addition, the panel also discussed cyber risks and mitigating actions in emerging technologies like blockchains and digital currencies. [29 Oct 2021]

#CyberRisk

#DigitalCurrencies

MAS: Finalists for 2021 Global FinTech Hackcelerator and FinTech Awards

MAS has announced the finalists for the Global FinTech Hackcelerator, as well as the Singapore FinTech Festival (SFF) Global FinTech Awards. The Awards are among the highlights of SFF 2021, which will take place from 8 to 12 November 2021. [29 Oct 2021]

CFPB Orders Tech Giants to Turn Over Information on their Payment System Plans

The Consumer Financial Protection Bureau (CFPB) has issued a series of orders to collect information on the business practices of large technology companies operating payments systems in the US. The information will help the CFPB better understand how these firms use personal payments data and manage data access to users so the Bureau can ensure adequate consumer protection.

The orders are issued pursuant to Section 1022(c)(4) of the Consumer Financial Protection Act. The CFPB has the statutory authority to order participants in the payments market to turn over information to help it monitor for risks to consumers and to publish aggregated findings that are in the public interest. The CFPB’s work is one of many efforts within the Federal Reserve System to make payments safer, faster, and more competitive. [21 Oct 2021]