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Category Archives: Digital

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The SEC Greenlights a Blockchain Settlement Service for Public Shares

The US agency has used a no-action letter to enable a sandbox-like approach to blockchain-based trade settlements. By Stephen P. Wink, Cameron R. Kates, Shaun Musuka, and Deric Behar In what may be the first regulator-approved application of blockchain technology for the settlement of US equities trades, the Division of Trading and Markets of the … Continue Reading

The SEC Continues Its Enforcement Streak Against Unregistered Token Offerings

As the agency pursues and prevents offerings of tokens it deems unregistered securities, further issues emerge. By John J. Sikora Jr., Stephen P. Wink, Douglas K. Yatter, Cameron R. Kates, Shaun Musuka, and Deric Behar The recent wave of US Securities and Exchange Commission (SEC) enforcement actions relating to initial coin offerings (ICOs) continues with … Continue Reading

Financial Institutions and the Cloud: How to Navigate an Evolving Regulatory Landscape

Insights from Latham’s flagship event: Managing the risk and promise of digitisation in financial services. By Fiona Maclean, Stuart Davis, and Alistair Wye In a bid to keep pace with rapid advances in cloud adoption across financial services, regulators have published a raft of new guidance in the past year. Most recently, the European Insurance … Continue Reading

Report on IT Failures in the UK Financial Services Sector

UK Treasury Committee report warns that the current level and frequency of disruption and consumer harm is unacceptable. By Carl Simon Fernandes, Nicola Higgs, Fiona M. Maclean, Christian F. McDermott, Rob Moulton, Andrew C. Moyle, Stuart Davis, and Charlotte Collins On 28 October 2019, the Treasury Committee published a report on IT failures in the financial services sector. The … Continue Reading

The G7 Draws a Line in the Sand for Global Stablecoins

Global monetary authorities and financial regulators have responded forcefully to the advent of privately developed global stablecoins. By Todd Beauchamp, David L. Concannon, Stephen P. Wink, Simon Hawkins, Stuart Davis, and Deric Behar A new report highlights the risks of global stablecoins and enumerates the legal, regulatory, and oversight hurdles a global stablecoin must clear … Continue Reading

Trends in Outsourcing Regulation and Supervision in Financial Services

Insights from Latham’s flagship event: Managing the risk and promise of digitisation in financial services Authors: Andrew Moyle, Nicola Higgs, Christian McDermott, and Kirsty Watkins. The financial services industry is leading the way in outsourcing, with contract values in excess of US$10.7 billion in 2018, causing regulators to focus more than ever on the associated … Continue Reading

Harbor Finds Calmer FINRA Waters Outside the Custody Storm

In line with its previous guidance, FINRA has granted broker-dealer (but not custodian) status to a digital asset platform. By Stephen P. Wink, Cameron R. Kates, Shaun Musuka, and Deric Behar In a follow-up to the July 2019 SEC and FINRA joint staff statement (Joint Statement) clarifying the regulators’ position on the custody of digital … Continue Reading

Readiness for PSD2: APIs Fall Short, but More Time for SCA

While the payments industry scrambles to meet new standards for APIs, the FCA grants an extension for SCA compliance. By Christian F. McDermott, Jagveen Tyndall, and Amy Smyth In an effort to evaluate the readiness of banks to comply with the revised EU Payment Services Directive (PSD2), Tink, a banking platform and data provider, has … Continue Reading

SCA: Storm Clouds Approaching?

Stripe-commissioned report projects that Europe’s online economy risks losing €57 billion when SCA goes into effect on 14 September. By Christian F. McDermott A recent report released by 451 Research and commissioned by Stripe, the online payment processing business, has found poor levels of readiness for the requirements of Strong Customer Authentication (SCA). The report … Continue Reading

European Central Bank Crypto-Assets Task Force Releases Paper on Cryptocurrencies

The paper discusses supervision and regulatory issues of cryptocurrencies, and finds that a central bank digital currency in the EU is not (yet) warranted. By Max von Cube In May, the European Central Bank’s Crypto-Assets Task Force published a paper on cryptocurrencies such as Bitcoin, Ether, and Ripple (referred to as narrowly defined “crypto-assets”). The … Continue Reading

To Charter or Not to Charter? Federal Judge Presses Pause on the OCC’s Plans

Federal court allows NYSDFS lawsuit against OCC FinTech charter to proceed, raising further questions about the charter’s viability. By Alan W. Avery, Todd Beauchamp, Loyal T. Horsley, Pia Naib, and Charles Weinstein In a May 2 order, US District Court Judge Victor Marrero rejected the Office of the Comptroller of the Currency’s (OCC’s) recent motion … Continue Reading

UK’s Proposed “Online Harms” Compliance and Enforcement Regime Will Target Platforms

UK publishes White Paper with hard-hitting regulatory proposals to tackle online harms. By Alain Traill, Stuart Davis, Andrew Moyle, Deborah Kirk and Gail Crawford On 8 April 2019, the Home Office and the Department for Culture, Media and Sport (DCMS) published an “Online Harms White Paper”, proposing a new compliance and enforcement regime intended to … Continue Reading

First Virtual Bank Licenses Granted in Hong Kong

The HKMA has issued three virtual banking licenses as part of its broader initiatives to develop the local banking industry. By Simon Hawkins and Kenneth Hui The Hong Kong Monetary Authority (HKMA) recently announced the issuance of the first virtual banking licenses to three entities. Virtual banks in Hong Kong are banks that primarily deliver … Continue Reading

From Geek to Chic: The Rapid Evolution of Payments and Cryptocurrencies and the Potential of Digital Central Banking

International perspectives on regulatory developments impacting innovation in financial services. Approximately 100 financial institutions and emerging companies recently convened in London for a forum on regulatory developments and other considerations that will impact innovation in financial services this year. The Latham-sponsored event — “From Geek to Chic: The Rapid Evolution of Payments and Cryptocurrencies and … Continue Reading

Of Robos and Regulators: The US Regulatory Landscape for Digital Advice

Industry leaders outline best practices for digital advice platforms at compliance seminar. By Stephen P. Wink and Naim Culhaci Robo-advisers, or digital advice platforms, have rapidly become a standard part of financial services offerings. Virtually every incumbent retail brokerage firm either has established or is planning to establish a digital advice platform, joining the pure … Continue Reading

What EBA’s Outsourcing Guidelines Mean for Financial Institutions

The guidelines create new obligations for financial, payment, and electronic money institutions that will impact cloud outsourcing and deployment of FinTech. By Fiona M. Maclean and Laura Holden On 25 February 2019, the European Banking Authority (EBA) published a final report on its draft guidelines on outsourcing arrangements (Guidelines). The report followed the EBA’s publication … Continue Reading

FCA to Create Global Financial Innovation Network

FCA teams up with other regulators to advance its idea of creating a global regulatory sandbox. By Stuart Davis, Gabriel Lakeman, Sam Maxson, Brett Carr and Charlotte Collins The FCA, along with several other financial services regulators, has launched a consultation on the operating framework for a Global Financial Innovation Network (GFIN). This is an … Continue Reading

FCA Speaks Out on the Ethics of Big Data

FCA Chair hints that new regulation addressing data ethics in the FinTech space may be on the horizon. By Nicola Higgs, Fiona Maclean and Terese Saplys Will societies of the future be ruled by algocracy, in which algorithms decide how humans are governed? Charles Randell, Chair of the Financial Conduct Authority (FCA) and Payment Systems … Continue Reading

FCA Supports Guidelines on the Open Banking Fall-Back Provisions Exemption

The FCA has outlined its approach to implementing key standards under the revised Payment Services Directive. By Christian McDermott, Stuart Davis, Brett Carr, and Charlotte Collins The FCA has published a statement on its website relating to the European Banking Authority’s (EBA’s) Opinion and draft Guidelines of 13 June 2018 on the Regulatory Technical Standards … Continue Reading

FCA Sets Expectations for Robo-Advisers

Many auto advisers and automated discretionary investment managers risk poor outcomes for customers by falling short of FCA expectations. By Nicola Higgs and Brett Carr The Financial Conduct Authority (FCA) has issued a statement outlining its expectations of firms providing automated online discretionary investment management (ODIM) services and retail investment auto advisers (auto advisors). The … Continue Reading

UK Government’s First FinTech Sector Strategy Launched at the International Fintech Conference

The Strategy emphasises the UK government’s continued push to create a world-leading FinTech sector. By Stuart Davis, Charlotte Collins and Sam Wong At the second International Fintech Conference held on 22 March 2018, Philip Hammond, Chancellor of the Exchequer, announced the launch of the UK’s first Fintech Sector Strategy. The Strategy includes the following key … Continue Reading

Global Ambitions for the FCA’s Sandbox

The FCA seeks industry feedback to capitalise on global regulatory sandbox trend. By Stuart Davis and Charlotte Collins The regulatory sandbox was pioneered by the Financial Conduct Authority (FCA) back in November 2015 — a “safe space” in which businesses can test innovative products, services, business models, and delivery mechanisms without immediately incurring all the … Continue Reading

FCA to Take a Closer Look at ICOs

By Stuart Davis and Charlotte Collins Following on from the Financial Conduct Authority’s (FCA’s) consumer warning on Initial Coin Offerings (ICOs) in September, the FCA has announced a deeper examination of this area in its Feedback Statement on Distributed Ledger Technology (DLT) and related press release. The FCA stated that it will consider whether regulatory … Continue Reading

UK Budgets for Fintech Growth

By Andrew Moyle and Stuart Davis The UK government’s 2017 Autumn Budget included some measures of particular interest for fintech firms, demonstrating the government’s continued commitment to making the UK a world-leading fintech hub. The government has provided only scant detail on these measures at present, but no doubt firms will be watching closely to … Continue Reading
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