Global Fintech & Payments Blog

Webcast: Tokenization and Distributed Business Models ― Recent Case Studies and Legal Insights

Posted in Blockchain

Latham fintech partners explore tokenization and distributed business models with guest speakers from Energy Web Foundation, ConsenSys, and The LAO.

Tokenization of assets, as well as the innovation of blockchain-based distributed business models, have the potential to unlock asset liquidity, create more efficient, trustless and transparent processes, and reshape systems and entire industries by minimizing or removing the role of intermediaries. What is the current state of projects leveraging these technologies, and what relevant legal issues are arising and should be top-of-mind?

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Going Live: Vicarious Learning for Blockchain Deployment With the World Economic Forum

Posted in Blockchain

Latham Fintech partner Jenny Cieplak discussed consortium governance on a panel hosted by WEF at the Consensus: Distributed Conference.

Jenny Cieplak, a member of Latham & Watkins’ Fintech Industry Group, recently discussed blockchain consortia governance issues as part of a panel hosted by the World Economic Forum (WEF) at the Consensus: Distributed conference. A replay of the panel discussion is available on the Consensus: Distributed website, and the segment focused on consortia governance starts at minute 59.

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Singapore: Payment Token Derivatives – to Offer or Not to Offer?

Posted in Blockchain, Cryptoassets, Payments

MAS confirms regulatory approach for derivative contracts on payment tokens.

By Farhana Sharmeen and Marc Jia Renn Tan

On 15 May 2020, the Monetary Authority of Singapore (the MAS) issued its response to feedback about its proposed regulatory approach for derivative contracts that reference payment tokens as underlying assets (Payment Token Derivatives), confirming that it will regulate Payment Token Derivatives offered to Singapore investors through approved exchanges. (See MAS’ current list of approved exchanges.) The MAS considers it crucial that it has effective oversight of products offered on approved exchanges due to the systemic importance of such trading facilities and the risk of contagion to the wider financial system. Continue Reading

FSB Launches Consultation on Global Stablecoins

Posted in Blockchain, Cryptoassets, Digital, Payments

The report encourages the G20 to consider a broad set of supervisory principles when evaluating global stablecoin arrangements.

By Todd Beauchamp, Stuart Davis, Christian F. McDermott, Yvette D. Valdez, Stephen P. Wink, Simon Hawkins, and Deric Behar

On April 14, 2020, the G20’s Financial Stability Board (FSB) published a consultation on the regulation, supervision, and oversight of privately issued global stablecoins (Addressing the Regulatory, Supervisory and Oversight Challenges Raised by “Global Stablecoin” Arrangements). The consultation includes 10 high-level recommendations that promote a multilateral approach to oversight defined by flexibility, consistency, coordination, and information-sharing between jurisdictions to keep apace of the changing nature of the risks posed by global stablecoins. While acknowledging the potential financial service benefits of global stablecoins, the FSB highlights some of the downstream impacts global stablecoins may have on national economies, across borders, and on the global financial system. Continue Reading

World Economic Forum Launches First-of-Its-Kind Blockchain Deployment Toolkit

Posted in Blockchain, Data Privacy, Cybersecurity, and AI

The resource aims to help businesses create more resilient supply chains and trusted data by responsibly deploying blockchain technology.

By Stuart Davis, Fiona Maclean, Andrew Moyle, Jenny Cieplak, Mitch Rabinowitz and Masha Smith

The World Economic Forum has launched a new, first-of-its-kind resource — Redesigning Trust: Blockchain Deployment Toolkit (Toolkit) — to help organizations responsibly develop and deploy blockchain technology based on their business needs. The resource aims to address the need for more resilience, trust, and efficiency in global supply chains.

The Toolkit reflects the ongoing efforts of numerous experts at the intersection of law and technology to document blockchain deployment best practices. It contains 14 modules addressing key topics, considerations, and challenges implicated in blockchain deployments. Latham lawyers both drafted and contributed to sections on Consortium Governance, Data Protection, Personal Data Handling, and Legal and Regulatory Compliance. Continue Reading

Telegram: Court Halts Grams Delivery

Posted in Blockchain, Cryptoassets, Investing in Fintech

SEC’s motion for a preliminary injunction is granted, prohibiting delivery of Telegram tokens to purchasers.

By Stephen P. Wink, Shaun MusukaCarolina Bernal and Deric Behar

On March 24, the Court in the Southern District of New York sided with the SEC and granted an injunction prohibiting Telegram Group Inc. and TON Issuer Inc. (together, Telegram) from delivering Telegram’s digital token, “Grams,” to 175 entities and high-net-worth individuals (Initial Purchasers).

As we previously discussed after the SEC filed its complaint, Telegram entered into agreements with the Initial Purchasers (Gram Interest Agreements), where, in exchange for US$1.7 billion from the Initial Purchasers, Telegram provided a promise to deliver Grams to the Initial Purchasers upon the launch of its blockchain (TON Blockchain).

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Competition and Innovation in the UK’s New Payments Architecture

Posted in Digital, Investing in Fintech, Payments

Call for input: market players need to engage with the process for the procurement of the NPA

By Stuart Davis, David Little, Christian McDermott, Brett Carr, and Nathan Wilkins

This Call for Input is part of the development of the Payment Systems Regulator’s (PSR) policy for the future regulation of the newly procured New Payments Architecture (NPA). The PSR is asking for stakeholders’ views about possible competition issues so that it can provide greater clarity about the nature of regulation that might be applied to the NPA. The deadline for input is 24 March 2020.

The NPA will be the payment industry’s new way of organising the clearing and settlement of most of the UK’s domestic interbank payments, including payments that currently use the Bacs and Faster Payments systems.

The PSR plans to set out its regulatory policy in a consultation, and then publish its final policy statement by the end of 2020 (coordinating with Pay.UK’s NPA central infrastructure services (CIS) procurement timetable).

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A CFTC Helping Hand: DSIO Offers to Review Digital Asset Products

Posted in Cryptoassets, Digital

Product innovation (including in pooled investment vehicles) is encouraged, but innovation must be consistent with the law.

By Yvette D. Valdez, Douglas K. Yatter, J. Ashley Weeks, and Deric Behar

The US Commodity Futures Trading Commission’s (CFTC’s) Division of Swap Dealer and Intermediary Oversight (DSIO) Director Joshua B. Sterling issued a statement on February 10, 2020, supporting responsible digital asset product innovation, including pooled investment vehicles seeking exposure to digital assets and digital asset derivatives. The statement included an offer to assist innovators with the evaluation of new digital asset products that may not be subject to existing National Futures Association (NFA) disclosure and document review requirements.

Operators of pools that trade futures and options, swaps, or leveraged transactions referencing commodities (including digital assets such as Bitcoin and stablecoins) are required to register as commodity pool operators (CPOs) and must comply with attendant disclosure, record-keeping, and reporting requirements (unless otherwise exempt). Regardless of whether CPOs are exempt from supervisory oversight by the CFTC, they remain subject to the anti-fraud provisions of the Commodity Exchange Act when they market and offer interests in commodity pools to investors, in addition to regulatory and enforcement authority by the US Securities and Exchange Commission. Continue Reading

EIOPA Issues Final Guidelines on Outsourcing

Posted in Digital

The final guidelines create new obligations for insurers that will impact cloud outsourcing arrangements.

By Fiona M. Maclean, Andrew C. Moyle, and Victoria Sander

On 6 February 2020, the European Insurance and Occupational Pensions Authority (EIOPA) published its final guidelines on outsourcing to cloud service providers (CSPs) (the Guidelines). The Guidelines have been finalised following public consultation on the draft guidelines launched on 1 July 2019, and closely follow the European Banking Authority’s (EBA’s) final guidelines on outsourcing arrangements, published early last year (the EBA Guidelines). (See What EBA’s Outsourcing Guidelines Mean for Financial Institutions.) Continue Reading

Mexico Issues First License Under New FinTech Law

Posted in Investing in Fintech

The landmark authorization signals the Mexican government will likely grant similar licenses to more FinTech companies in the coming months.

By Yvette Valdez, Roderick Branch, and Daniel Gallo Mainero*

Nearly two years after the Mexican government enacted its Financial Technology Institutions Law (FinTech Law), the Mexican National Banking and Securities Commission (CNBV) issued its first license on January 22, 2020. The license authorizes NVIO Pagos México, an affiliate of Bitso, a cryptocurrency market, to operate as a financial technology institution under the new law. This landmark authorization signals that the government will likely grant similar licenses to more FinTech companies in the coming months. At least 85 entities have filed license applications with the CNBV, creating more opportunities for investors to leverage the potential of Mexico’s FinTech market within a regulated environment.

Mexico became the first Latin American country to put specific and comprehensive regulation of the financial technology sector in place when it enacted its FinTech Law in March 2018, prompting a positive reaction among investors and FinTech companies with established business models. As with new regulation in any industry, however, certain participants — specifically the majority of FinTech startups — raised questions about how the government would approach implementation and enforcement. Continue Reading

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