Global Fintech & Payments Blog

UK Government Proposes to Strengthen Protections Around Promotion of Financial Products and Cryptoassets

Posted in Cryptoassets

HM Treasury is planning significant changes to the financial promotion regime, including expanding its scope to certain cryptoassets, and amending the approval process for promotions of unauthorised firms.

By Stuart Davis, Sam Maxson, and Anna Lewis-Martinez

On 20 July 2020, HM Treasury published two consultation papers on a regulatory framework for approval of financial promotions and cryptoasset promotions. The consultations propose to establish a regulatory “gateway” that a firm must pass through before it is able to approve the financial promotions of unauthorised firms, and to bring certain types of cryptoassets into the scope of financial promotions regulations. Continue Reading

UK Government Launches Major Independent Review of UK Fintech Sector

Posted in Investing in Fintech

The Fintech Strategic Review aims to ensure the ongoing growth and success of UK fintech as a world leader in financial innovation.

By Stuart Davis and Anna Lewis-Martinez

On 20 July 2020, HM Treasury announced the launch of an independent review into the UK’s fintech industry to “identify opportunities to support further growth in the sector”.

The Fintech Strategic Review aims to establish priority areas for industry, policy makers, and regulators to explore in order to support the continuing success of the UK fintech sector. The review will be led by Ron Kalifa OBE, the former CEO of Worldpay and non-executive director of the Court of Directors to the Bank of England. According to Kalifa, “Technology has a vital role to play in the UK’s COVID-19 economic recovery. The fintech review will ensure that we can leverage this innovative technology to help consumers and businesses, through a joined-up strategy that combines investment, skills and policy to deliver it.” Continue Reading

SEC Greenlights Investment Fund Delivered in Security Tokens

Posted in Blockchain, Cryptoassets

The milestone fund structure portends a reduced role for broker-dealers, who may be sidelined by innovators unwilling to wait for regulators.

By Stephen P. Wink and Deric Behar

On July 6, 2020, asset management firm Arca announced that the US Securities and Exchange Commission (SEC) granted it approval under the Investment Company Act of 1940 to issue shares of a closed-end US Treasury fund in the form of digital securities. The fund will comprise a managed portfolio invested primarily in interest-bearing and low-volatility short-term US government bills, bonds, and notes. Interests in the fund will be purchased directly from the fund and will be issued to approved Ethereum wallets as “ArCoin” ERC-1404 tokens, digital securities that are transferable using blockchain technology. ArCoins are decidedly not cryptocurrencies or stablecoins, but are securities tokens representing equity interests in the fund, with a net asset value that will fluctuate based on the value of the fund’s underlying Treasury assets in the same manner as other mutual fund shares. Continue Reading

Bank of England Selected to Host New Innovation Hub Centre

Posted in Investing in Fintech

Bank for International Settlements selects Bank of England as UK centre to host new fintech hub.

By Stuart Davis, Brett Carr, and Sam Maxson

On 30 June 2020, the Bank of England announced that it had been selected to host a centre of the Bank for International Settlements’ Innovation Hub. The UK centre will support the global central banking and finance community through the development of digital public goods. Continue Reading

Webcast: Stablecoins, CBDCs, and the Future of Payments

Posted in Blockchain, Cryptoassets

Latham fintech lawyers and key industry leaders explore the progress and potential of CBDCs, use cases for stablecoins, and the global regulatory landscape.

Many central banks around the world are currently considering central bank digital currency (CBDC). According to the Bank of International Settlements’ recent survey of 66 central banks, 80% of surveyed central banks are engaged in CBDC work in some capacity, whether that work is conceptual research, experimentation, or pilot projects, and over a third stated that it is “possible” they will issue a retail CBDC within one to six years. Additionally, stablecoins based on Ethereum have surged in use recently, which, along with other large and well-publicized stablecoin projects, has drawn the attention of regulators around the globe.

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European Parliament Calls for New EU Common Framework for Cryptoassets

Posted in Cryptoassets, Data Privacy, Cybersecurity, and AI, Digital

An ECON draft report on digital finance recommends legislative action in relation to cryptoassets and cyber resilience and a framework for digital onboarding.

By Stuart Davis, Sam Maxson, and Anna Lewis-Martinez

On 4 June 2020, the European Parliament’s Economic and Monetary Affairs Committee (ECON) published a draft report setting out its recommendations to the European Commission on digital finance, including emerging risks in cryptoassets and regulatory and supervisory challenges in the area of financial services, institutions, and markets.

The aim of the draft report is to address the main areas that demand a pan-European regulatory response to digital finance. Three priority areas are highlighted for consideration for legislative action: cryptoassets, cyber resilience, and data. These areas are noted as key to the future development of digital finance in the EU. Continue Reading

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

Posted in Blockchain, Cryptoassets

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

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