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In this regular post, we round-up FinTech-related financial services regulatory developments for the week ending 17 May 2024.



BCBS: Report – Digitalisation of finance

The Basel Committee on Banking Supervision (BCBS) has published a report that considers the implications of the ongoing digitalisation of finance on banks and supervision. The report reviews the use of key innovative technologies across various aspects of the banking value chain, including application programming interfaces (APIs), artificial intelligence (AI) and machine learning, distributed ledger technology (DLT) and cloud computing. It also considers the role of new technologically enabled suppliers (eg big techs, fintechs and third-party service providers) and business models.

The BCBS comments that it will continue to monitor developments related to the digitalisation of finance. Where necessary, it will consider whether additional standards or guidance are needed to mitigate risks and vulnerabilities. [16 May 2024]

#Digitalisation #AI #DLT

BCBS: Governors and Heads of Supervision reiterate commitment to Basel III implementation and provide update on cryptoasset standard

The Bank for International Settlements (BIS) has published details of the meeting of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision (BCBS).

The GHOS took stock of the implementation status of the outstanding Basel III reforms and members unanimously reaffirmed their expectation of implementing all aspects of the Basel III framework in full, consistently and as soon as possible. The GHOS tasked the BCBS to continue to monitor and assess the full and consistent implementation of Basel III.

With respect to cryptoasset standard, the GHOS agreed to defer implementation of the BCBS' prudential standard for banks' cryptoasset exposures by one year to 1 January 2026. [14 May 2024]



FCA charges nine 'finfluencers' for promotion of unauthorised FX trading scheme

The FCA has announced that it has charged nine individuals in relation to an unauthorised foreign exchange (FX) trading scheme promoted on social media. The FCA alleges that, between 19 May 2018 and 13 April 2021, two individuals used an Instagram account to provide advice on buying and selling contracts for difference (CFDs) when they were not authorised to do so. Further, one of the individuals paid seven others to promote the Instagram account.

The defendants will appear before Westminster Magistrates' Court on 13 June 2024. [16 May 2024]


BoE reports on digital pound experiment

The Bank of England (BoE) has published a report on its digital pound experiment. The purpose of the experiment was to assess the technical feasibility of using existing point-of-sale (POS) hardware, as currently used in the UK, to initiate digital pound payments. This involved a proof-of-concept (PoC) that used Europay, Mastercard and Visa (EMV) standards to send payment instructions from smart cards to POS devices, and then to an application programming interface (API).

While the BoE did not build a digital pound infrastructure, and no real money payments were made, the experiment demonstrated that existing POS terminals could, in principle, be used without modification for online payments. However, some modification would be required for offline payments. [16 May 2024]

#DigitalPound #Payments

NAO report: Investigation into the Pensions Dashboards Programme

The National Audit Office (NAO) has published a report on the delivery of the Pensions Dashboards Programme (PDP). This follows a Parliamentary request in Summer 2023 for the NAO to consider investigating the delays in the delivery of the PDP.  The NAO found that 'capacity and capability issues, including a lack of digital skills and ineffective governance, have contributed to delays' to delivering the PDP.

The report covers:

  • the purpose of pensions dashboards and how the PDP was set up;
  • the progress the Department for Work & Pensions (DWP) and the Money and Pensions Service (MaPS) have made in delivering the PDP, and the problems with implementation; and
  • the progress the DWP and MaPS have made in resetting the PDP, and the main changes that have resulted from the process.

The report was not designed to assess the value for money of the PDP. [13 May 2024]



EP: Digital finance briefing – Overview and state of play

The European Parliament (EP) has published a briefing, which provides an overview and state of play of digital finance legislation. The briefing discusses the benefits and risks of digital finance, the ongoing review of the EU regulatory framework conducted by the European Central Bank (ECB) and European Supervisory Authorities (ESAs), and the adoption of new laws resulting from the European Commission's (EC's) digital finance strategy. The briefing covers the Markets in Cryptoassets Regulation (MiCAR) and the Digitial Operational Resilience Act (DORA), along with  open finance and the digital euro. [17 May 2024]

#DigitalFinance #MiCAR #DORA #Crypto

EIOPA Chair discusses outlook in regulation and supervision

The European Insurance and Occupational Pensions Authority (EIOPA) has published a speech by its Chair, Petra Hielkema, on potential supervisory challenges and risks in relation to life and health insurance. In this regard, Ms Hielkema touched on the impact of climate change and the implications of a demographic change in Europe in that its population is getting older and living longer. She also discussed fairness and equal access to insurance coverage with reference to health data and artificial intelligence (AI). [15 May 2024]

#Data #AI

ECB: Digital euro – stocktake and next steps

The European Central Bank (ECB) has published slides from a presentation on the digital euro by Piero Cipollone, Member of the Executive Board of the ECB. The slides include information on the rationale and key design choices of the digital euro and provide a project timeline. The main expected next steps include:

  • finalising the scheme rulebook;
  • selecting service providers;
  • learning through experimenting; and
  • diving deeper into technical aspects, including conducting further research into offline functions and developing a testing and rollout plan for the future. [13 May 2024]



ASIC publishes new information sheet on unsolicited contact with customers by unlicensed entities

ASIC has published a new information sheet (Information Sheet 282) relating to how financial services laws apply to unlicensed entities referring consumers to a third party for the provision of financial advice. The information sheet covers circumstances in which unsolicited contact is made to consumers (such as through unsolicited phone calls), and when such unsolicited contact could amount to unlicensed arranging or providing of financial product advice in contravention of the Corporations Act 2001 (Cth). It also discusses where online or social media may amount to unlicensed activity in contravention of the Corporations Act, including circumstances in which consumer contact is made after consumer details are provided online.

The information sheet provides ASIC’s view on the operation of the law, and forms part of what ASIC describes as broader work to minimise consumer harm arising from cold call superannuation switching advice. The information sheet also builds on a recent report, released on 9 May 2024, reviewing superannuation trustee practices in relation to harmful advice charges.  [15 May 2024]


Australian government hands down 2024-25 Budget

The Australian Treasurer has handed down the 2024-25 Budget, containing a raft of financial and non-financial measures. Measures announced in the Budget include:

  • a strengthening of anti-money laundering (AML) and counter-terrorism financing (CTF) laws (with as-yet unannounced detail);
  • funding for ASIC to investigate and take enforcement action against greenwashing;
  • the delivery of a sustainable finance framework (including green bonds, data improvements and development of international sustainable finance regulatory regimes); and
  • the modernisation of regulatory frameworks of new technology financial services, including through consultation on licensing and regulation of digital asset platforms and through the introduction of a regulatory framework for payment service providers (including digital wallets and electronic stored value providers).

Budget appropriation bills have been introduced to Parliament, with proposed substantive legislative and regulatory changes likely to be introduced in future legislation.


Hong Kong

HKMA announces expansion of cross-boundary e-CNY pilot in Hong Kong

The HKMA has issued an announcement regarding the expansion of the e-CNY pilot for cross-boundary payments. E-CNY is a legal tender in digital form issued by the People's Bank of China (PBoC). The expansion facilitates the set up and the use of e-CNY wallets by Hong Kong residents and enables top-up of e-CNY wallets through the Faster Payment System (FPS).  This marks the first linkage of a faster payment system with a central bank digital currency system globally, highlighting interoperability, a key area in the G20 Roadmap for enhancing cross-border payments.

Users can now set up e-CNY personal wallets in Hong Kong using their local mobile phone numbers. These wallets can be used for cross-boundary payments but not for person-to-person transfers. Users can top up their e-CNY wallets via the FPS through 17 retail banks in Hong Kong. The e-CNY can be used in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) and other Mainland pilot areas. Further details can be found in the user guide.

The HKMA has indicated it will continue to work with the PBoC to expand e-CNY applications, enrich wallet functionalities, and promote e-CNY acceptance by more retail merchants. It will explore upgrading the e-CNY wallet through real-name verification and enhancing interoperability in payments, including corporate use cases to facilitate cross-boundary trade settlement.  [17 May 2024]

#CBDC #Payments

SFC warns public of suspicious virtual asset-related product

The SFC has issued a warning regarding a suspicious investment product named "LENA Network" involving virtual asset-related staking, borrowing and lending arrangements and claiming to offer high returns to investors.

The product has not need authorised by the SFC for offering to the Hong Kong public. The SFC posted LENA Network on the Suspicious Investment Products Alert List on 13 May 2024.

The SFC has also warned investors of staking arrangements relating to virtual assets. Such arrangements could amount to unauthorised collective investment schemes and may be highly risky, their investors have no or very limited protection under the Securities and Futures Ordinance and may lose all their investments.  [13 May 2024]

#Crypto #VirtualAsset


SECT consults on amendments to rules on record keeping of digital asset business operators

The Securities and Exchange Commission Thailand (SECT) has published a consultation on proposed amendments to the regulations regarding record keeping of digital asset business operators to ensure that their information is accurate, complete and updated, enabling effective and timely monitoring and supervision.

Responses to the consultation are requested by 30 May 2024.  [15 May 2024]

#Crypto #DigitalAsset

SECT consults on capital requirements for securities companies and derivatives business operators offering digital asset services

SECT has published a consultation on draft regulations concerning capital requirements for securities companies and derivatives business operators who also engage in digital asset businesses. The draft amendments are aimed at: enhancing suitability and consistency with current market development; promoting timely adjustments to protect digital asset traders adequately; and ensuring that both digital asset operators involved in securities or derivatives activities and those exclusively focused on digital asset services comply with similar standards and rules.

Responses to the consultation are requested by 27 May 2024.  [10 May 2024]

#Crypto #DigitalAsset


RBI: Conference for Heads of Assurance Functions of NBFCs

The Reserve Bank of India (RBI) held a conference in Mumbai for the heads of assurance functions of select non-banking financial companies (NBFCs). This event, with the theme ‘Resilient Financial System – Role of Effective Assurance Functions’, is part of a series of supervisory engagements the RBI has been organising over the last year with its regulated entities.

In his speech at the conference, RBI Deputy Governor Swaminathan J. urged NBFCs to bolster governance and assurance functions and maintain constant vigil against potential risks and vulnerabilities. In this regard, he highlighted cybersecurity and operational risks, credit risks from rule-based credit models, and liquidity risks.  [15 May 2024]



CFTC issues order against crypto brokerage firm for illegally providing U.S. customers access to digital asset derivatives trading platforms

The Commodity Futures Trading Commission (CFTC) has issued an order simultaneously filing and settling charges against a crypto brokerage firm intermediary for failing to register with the CFTC as an FCM, as required. This marks the CFTC's first action against an unregistered FCM that inappropriately facilitated access to digital asset exchanges. The order finds that, from approximately October 2021 through at least March 27, 2023, the crypto brokerage solicited or accepted orders for digital asset derivatives from customers located in the U.S. The crypto brokerage firm is ordered to cease and desist from acting as an unregistered FCM. The order also requires the crypto brokerage to pay $1,179,008 in disgorgement and a $589,504 civil monetary penalty. [13 May 2024]

#DigitalAsset #Crypto



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Cat Dankos

Regulatory Consultant, London

Cat Dankos

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Cat Dankos

Regulatory Consultant, London

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Rashid Ahmed

FSR & CCI Professional Support Paralegal, London

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Vasuki Balasubramaniam

FSR & CCI Professional Support Paralegal, London

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