Follow us

In this regular post, we round-up FinTech-related financial services regulatory developments for the week ending 15 December 2023.

This is the last edition of the round-up for 2023; the next edition will cover developments through to the week ending 5 January 2024.  Best wishes for a happy holiday season and a peaceful and prosperous New Year from the FinTech Round-up Team!




IOSCO statement on online harm

The International Organization of Securities Commissions (IOSCO) has published a statement on online harm. The statement is intended to serve as:

  • a warning to retail investors about the serious perils of online harm;
  • a call to action to regulators to respond holistically and innovatively to online harm, including by working with players in the broader online harm ecosystem; and
  • an invitation to other relevant stakeholders, including legislators, law enforcement agencies, search engine operators, social media platforms and other intermediaries and facilitators to support global efforts to reduce online harm.  [15 Dec 2023]

#IOSCO #Onlineharm #Socialmedia

BCBS consults on cryptoasset standard amendments

The Basel Committee on Banking Supervision (BCBS) has published a consultation on proposed targeted adjustments to its standard on banks' exposures to cryptoassets. The proposed amendments to the cryptoasset standard cover:

  • a set of changes to the requirements that determine whether banks can include the stablecoins to which they are exposed in the 'Group 1b' category – these changes relate to the composition of the reserve assets of stablecoins and the use of statistical test by banks to assess the stability of the market value of stablecoins; and
  • various technical amendments to help promote a consistent understanding of the cryptoasset standard.

Responses to the consultation are requested by 28 March 2024. [14 Dec 2023]

#CryptoassetStandard #Stablecoins #BCBS

BIS: Report on CBDC architecture requirements

The Bank for International Settlements (BIS) has published a report by the Consultative Council for the Americas ( CCA) Consultative Group on Innovation and the Digital Economy (CGIDE) on high-level technical requirements for a functional central bank digital currency (CBDC) architecture.

The technical requirements that the report considers include interoperability, scalability, user-centric design, security and data privacy. It puts emphasis on the need for central banks to collaborate to address the challenges of CBDC design and to work towards a CBDC proof of concept (POC) that effectively addresses the technological priorities of CCA central banks. The proposed CBDC architecture based on these technical requirements aims to serve as a general reference for central banks conducting research on CBDC or developing their own initiatives. [13 Dec 2023]

#BIS #CBDCArchitecture #POC


FCA: Consumer awareness video on new crypto rules

The FCA has released a video explaining its new crypto rules to consumers. The video explains that the marketing of high-risk investments, like crypto, will contain prominent warnings about the risk of consumers losing their money and will not contain incentives to invest such as free gift offers or ‘refer a friend’ bonuses. The video warns consumers that marketing that is not compliant with these rules could mean that the company offering the investment is not FCA compliant or is operating illegally and that they could lose all of the money that they invest.

The video further urges consumers to understand the risks before they invest and encourages them to explore the 'InvestSmart' section of the FCA website. [13 Dec 2023]

#Crypo #Investments #Investmart


ESMA: DP on MiFID II investor protection topics linked to digitalisation

The European Securities and Markets Authority (ESMA) has published a discussion paper (DP) on the digitalisation of retail investment services and related investor protection considerations. The DP explores the evolving landscape of retail investments, including examining the recent surge in the adoption of digital tools and social media by firms and retail investors following the pandemic, and how technology impacts retail investor behaviour and decision-making.

ESMA's recommendations cover the following: layering and accessibility of information; digital marketing communications and practices; use of influencers; social features of investment apps; gamification; nudging techniques; and dark patterns.

Feedback is requested by 14 March 2024. Feedback to this DP will support ESMA’s convergence work and prepare it for potential mandates for technical advice/ standards in these areas. [14 Dec 2023]

#MiFID #DigitalMarketing #Influencers

ESAs: Update on the functioning of innovation facilitators

The European Supervisory Authorities (the ESAs - which are the European Securities and Markets Authority (ESMA), European Banking Authority (EBA) and European Insurance and Occupational Pensions Authority (EIOPA)) have published a report on innovation facilitators, a term encompassing innovation hubs and regulatory sandboxes. The report identifies a number of benefits and challenges relating to the operation and design of innovation facilitators. It also presents recommendations to national competent authorities (NCAs), the ESAs and the European Commission (EC) to further enhance the role and efficiency of innovation facilitators in the financial sector.

With regard to NCAs, the report recommends that they broaden the scope of innovations which are being captured, and that there should be effective collaboration among the NCAs. On the part of the ESAs, the report indicates that they will re-evaluate the procedural framework for cross-border testing established in 2021, and formalise the process to raise co-legislators’ attention to issues identified via innovation hubs or regulatory sandboxes. [11 Dec 2023]

#EIOPA #Innovationfacilitators


AUSTRAC announces 2024 regulatory priorities

AUSTRAC has announced its regulatory priorities for 2024 which includes an ongoing focus upon businesses understanding, mitigating and managing the money laundering and terrorism financing risks, particularly across sectors which AUSTRAC considers to be ‘high risk’ such as banking, gambling and remittance. AUSTRAC has indicated that it will increase its regulatory activities in additional sectors this year such as Digital Currency Exchanges (DCEs), payment platforms, Bullion and non-bank lenders and financiers as a result of rapid and significant growth in these sectors. [13 Dec 2023]

#AUSTRAC #DCEs #Paymentplatforms


FSOC Annual Report 2023

The Financial Stability Oversight Council (FSOC) has released its 2023 Annual Report.  The report reviews financial market developments, describes potential emerging threats to U.S. financial stability, identifies vulnerabilities in the financial system, and makes recommendations to mitigate those threats and vulnerabilities.  Overall, FSOC finds that the U.S. financial system remains resilient, and the U.S. banking system remains sound. FSOC's recommendations include the following:

  • Cybersecurity:  FSOC supports ongoing partnerships between state and federal agencies and private firms and recommends they continue to promote information sharing related to cyber risk and undertake additional work to mitigate cyber-related financial stability risks.  FSOC also supports the G7 Cyber Expert Group’s international efforts to help financial institutions better understand cybersecurity risks and improve the cyber resilience of the financial system.
  • Artificial Intelligence (AI):  For the first time, FSOC has identified the use of AI in financial services as a vulnerability in the financial system.  FSOC notes that existing requirements and guidance may apply to AI and recommends monitoring the rapid developments in AI to ensure that oversight structures account for emerging risks to the financial system while also facilitating efficiency and innovation.  FSOC recommends financial institutions, market participants, and regulatory and supervisory authorities deepen expertise and capacity to monitor AI innovation and usage and identify emerging risks.
  • Digital Assets: FSOC emphasizes the importance of agencies’ continuing to enforce existing rules and regulations applicable to the cryptoasset ecosystem.  It reiterates its recommendation that Congress pass legislation to provide for the regulation of stablecoins and of the spot market for cryptoassets that are not securities.  [14 Dec 2023]

#FSOC #Cybersecurity #AI #DigitalAssets




Cat Dankos photo

Cat Dankos

Regulatory Consultant, London

Cat Dankos

Key contacts

Cat Dankos photo

Cat Dankos

Regulatory Consultant, London

Cat Dankos
Cat Dankos