FinTech Global FS Regulatory Round-up – w/e 21 July 2023

Global

G20: Third meeting of FMCBG

The G20 has published details of the third meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG) held under the Indian Presidency during 17-18 July 2023 in Gujarat.

Topics covered included cryptoassets and sustainable finance. The Indian Presidency emphasised the need to consider macrofinancial implications of cryptoassets along with financial stability concerns. Additionally, a roundtable was organised to discuss and deliberate on some of the key questions pertaining to cryptoassets, in an open and candid manner. [19 Jul 2023]

#cryptoassets

FSB finalises global regulatory framework for cryptoasset activities, including stablecoins

The Financial Stability Board (FSB) has published its final recommendations for the regulation, supervision and oversight of cryptoasset activities and markets. The recommendations are based on the principle of 'same activity, same risk, same regulation'. They are presented in two sets:

• high-level recommendations for the regulation, supervision and oversight of crypto-asset activities and markets; and
• revised high-level recommendations for the regulation, supervision, and oversight of 'global stablecoin' arrangements.

The high level recommendations touch upon the key objectives that an effective regulatory and supervisory framework should achieve, but are high-level and flexible so that they can be incorporated into a wide variety of regulatory frameworks.

In terms of next steps, the FSB and International Monetary Fund (IMF) will deliver a joint report to the G20 in September 2023 which will inform a coordinated policy approach which takes into account the full range of risks posed by cryptoassets. The FSB will also continue to work with its peer standard setters, conducting follow-up work where necessary. An annex to the covering policy note accompanying the standards sets out a shared workplan. [17 Jul 2023]

#cryptoassets #stablecoins

UK

BoE Speech: All change for payments

In a speech at the UK Finance Summer Networking Event, Victoria Cleland, Executive Director for Banking, Payments and Innovation at the Bank of England (BoE) discussed the BoE's multi-year programme to renew the Real-Time Gross Settlement (RTGS) system to deliver benefits to industry across four key areas: increased resilience; greater access; wider interoperability; and improved user functionality. Ms Cleland noted the completion of the migration of CHAPS (the UK’s high-value payment system) to ISO 20022 (the global financial messaging standard) as a first step in this programme, and discussed the phased benefits of renewing RTGS.

With regard to future developments, she also commented on the forthcoming end-to-end data requirements for cross-border payments being developed under the auspices of the Committee on Payment and Market Infrastructures (CPMI), encouraging payments system participants to review the final publication and initiate the work required to meet this new higher standard by 2025 where possible, and by 2027 at the latest.   [21 Jul 2023]

#payments #RTGS

Lords written question and answer: Legislation on AI fraud

For HMT, Baroness Penn has responded to a question from Lord Taylor of Warwick regarding the government's plans to introduce legislation or regulatory guidelines to combat AI-driven fraud in the financial sector. In her response, Baroness Penn notes that the government is engaging with leading tech companies through its upcoming Online Fraud Charter to agree voluntary commitments from the sector to prevent fraud and keep their users and customers safe. This includes assessing the current and future risks and opportunities around AI.

She also highlighted the importance of a unified and co-ordinated response from all relevant parties and that the government will work with all partners to address the threat of fraud.  [21 Jul 2023]

#AIfraud #AI

FCA: Launch of permanent Digital Sandbox

The FCA has announced that, following two successful pilots, its Digital Sandbox will be made available permanently on 1 August 2023. The Digital Sandbox is a testing environment that supports firms at the early stage of product development by enabling experimentation through proof of concepts. The Digital Sandbox provides users with high-quality datasets and Application Programme Interfaces (APIs), robust data security protection, a collaborative platform, and an observation deck.

From 1 August 2023, firms can apply for the Digital Sandbox under a number of themes: banking; investment; lending; payments; insurance; pension; wholesale buy-side; wholesale sell-side; and cross-sectors. The FCA will publish information on how to apply on its Digital Sandbox webpage on 1 August 2023; the approval process will take up to four weeks. [20 Jul 2023]

#DigitalSandbox

TSC publishes government response on regulating crypto

The Treasury Select Committee (TSC) has published the government’s response to the TSC's May 2023 report on regulating cryptoassets.

In its report, the TSC had cited concerns with regulating unbacked cryptoassets as financial services on the basis that this would mistakenly lead consumers to believe this activity is safe and protected – the 'halo effect'. The TSC's headline recommendation was that the government should regulate unbacked cryptoasset trading as gambling.

In its response, HM Treasury (HMT) disagrees with the TSC's recommendation to regulate retail trading and investment activity in unbacked cryptoassets as gambling rather than as a financial services, contending that this would risk creating misalignment with international standards and approaches from other major jurisdictions. [20 Jul 2023]

#cryptoassets

Europe

EC updates feedback period on open finance and payment services initiatives

The EC has updated the deadline for comments on the following initiatives to 15 September 2023:

• Open finance framework – enabling data sharing and third party access in the financial sector;
• Payment services – revision of EU rules (new Regulation); and
• Payment services – revision of EU rules (Directive);

All feedback received will be summarised by the EC and presented to the European Parliament and Council with the aim of feeding into the legislative debate.  [21 Jul 2023]

#OpenFinance

Australia

ASIC cancels AFS licence of FTX Australia

The Australian Securities and Investments Commission (ASIC) has cancelled the Australian financial services (AFS) licence held by FTX Australia Pty Ltd (FTX Australia), effective from 14 July 2023, following ASIC’s previous suspension of FTX Australia’s AFS licence until 24 July 2023. FTX Australia is part of the FTX Group which is one of the largest crypto-asset businesses in the world.

The terms of the cancellation include provisions that, until the end of 12 July 2024:

• FTX Australia may provide limited financial services that relate to the termination of existing derivatives with clients; and
• the cancellation has no effect on requirements for FTX Australia to continue as a member of Australian Financial Complaints Authority, and to have arrangements for compensating retail clients. [19 Jul 2023]

#cryptoassets #FTX