Global Fintech & Payments Blog

Cyber and Payments Are Priority Areas for Policy Changes

Posted in Payments

Elisabeth Stheeman of the Financial Policy Committee outlined the new frameworks for building operational resilience against cyber risks and protection of payment chains.

By Brett Carr and Stuart Davis

On 9 September 2020, Elisabeth Stheeman, an External Member of the Financial Policy Committee (FPC) for the Bank of England (BoE) delivered a speech entitled, “The Financial ‘Plumbing’ Committee: from Plumbing to Policy” outlining the changes that financial services firms can expect in two priority areas — cyber and payments — in order to build operational resilience of the financial system. Continue Reading

BoE Governor Speaks: Payments Firms Should Expect Regulatory Change

Posted in Payments

Andrew Bailey outlined what payments market participants can expect from regulators seeking to address financial stability risk in the world of payments, including as part of the rise and adoption of global stablecoins.

By Brett Carr and Stuart Davis

On 3 September 2020, the Governor of the Bank of England (BoE) Andrew Bailey delivered a speech “Reinventing the Wheel (with more automation)”, in which he outlined regulatory changes that payments market participants can expect, including as part of the global regulatory response to stablecoins. Continue Reading

SAMA Updates Payment Services Provider Licensing Regime in the KSA

Posted in Payments

The updates are part of SAMA’s efforts to promote an innovation-based financial technology ecosystem in the KSA.

By Salman Al-Sudairi, Brian A. Meenagh, and Homam Khoshaim

Last month, the Saudi Arabian Monetary Authority (SAMA) issued an update to the recently implemented Payment Services Provider Regulations (PSPR), which was introduced in January 2020 to regulate Payment Services Providers (PSPs) operating in the Kingdom of Saudi Arabia (KSA). The PSPR provides a clear path for PSPs to obtain SAMA-issued licenses to provide payment services in the KSA. Notably, the PSPR applies concepts implemented by the European Union’s Payment Services Directive (PSD2). This should remove some of the friction involved in international PSPs launching operations in the KSA by allowing them to apply the same business models and operating processes already applied in the jurisdictions in which they operate. Continue Reading

Latham Collaborates on Pioneering Paper for Outsourcing in Financial Services

Posted in Digital

New resource developed following increased regulatory focus on outsourcing.

Latham & Watkins has partnered with the Association for Financial Markets in Europe (AFME) and law firms Matheson and BSP to develop: Outsourcing – Guidance on the Legal and Regulatory Framework, a pioneering resource examining the key European legislation, rules, and guidance for financial services firms to consider in relation to outsourcing.

In light of the plethora of legislative change and increasing regulatory focus on outsourcing in financial services, as well as the growing range of sources that need to be taken into account to ensure compliance in this area, the Paper is designed to provide compliance, legal, and risk teams within regulated firms with a single reference point of regulatory requirements. The resource also provides a number of practical tools to help firms effectively map out their processes and procedures for legal compliance.

Partners Nicola Higgs, Fiona Maclean, and Andrew Moyle and associates Anne Mainwaring, Jagveen Tyndall, Oscar Bjartell, Sean Wells, and Sidhartha Lal led a team of more than 25 lawyers from five Latham offices and local law firms Matheson (Ireland) and BSP (Luxembourg) to produce the Paper. Continue Reading

OCC’s New Comptroller Announces Innovative Fintech Initiatives

Posted in Payments

A new Payments Charter could enable entities to engage in payments-related activities on a nationwide basis, rather than by state.

By Alan W. Avery, Todd Beauchamp, Pia Naib, Loyal T. Horsley, and Charles Weinstein

The US Office of the Comptroller of the Currency’s (OCC) newly appointed Acting Comptroller, Brian P. Brooks, is already advancing the agency’s fintech-focused modernization initiatives and taking steps to fulfill his promise to support technological innovation in the banking industry. On June 25, 2020, while speaking on the American Bankers Association’s podcast, Brooks announced that the OCC will introduce a new Payments Charter 1.0 (Payments Charter) this fall that will serve as a federal alternative to obtaining state money transmitter licenses. That announcement came less than a month after the OCC issued an advance notice of proposed rulemaking (ANPR) requesting public comment regarding the OCC’s regulations relating to “digital activities” of national banks and federal savings associations (FSAs). The ANPR was issued in an effort to ensure that such regulations continue to evolve with industry developments. Comments in response to the ANPR are due August 3, 2020. Continue Reading

From Safe Deposit Boxes to Cold Wallets, Bank Custody Evolves

Posted in Cryptoassets

The OCC greenlights bank custody of cryptoassets, opening a significant door to mainstream adoption and innovation.

By Alan W. Avery, Todd Beauchamp, Yvette D. Valdez, Pia Naib, Loyal T. Horsley, Charles Weinstein, and Deric Behar

On July 22, 2020, the US Office of the Comptroller of the Currency (OCC) issued Interpretive Letter #1170 (the Letter), giving national banks and federal savings associations (FSAs) the greenlight to provide customers with custody services for cryptocurrencies and digital assets that are not broadly used as currencies (collectively, cryptoassets). The Letter, addressed to an unspecified recipient bank seeking to offer cryptoasset custody services as part of its existing custody business, noted that the opinion applies to national banks and FSAs of all sizes. Continue Reading

FCA Issues New Safeguarding Guidance for Payment and E-Money Firms Amid COVID-19

Posted in Payments

The additional temporary guidance aims to strengthen the arrangements for safeguarding customers’ funds and firms’ prudential risk management in light of the impact of COVID-19.

By Stuart Davis, Brett Carr, and Anna Lewis-Martinez

On 9 July 2020, the FCA published its finalised guidance on safeguarding customers’ funds during the COVID-19 crisis. The finalised guidance applies to payment and e-money firms.

The FCA’s guidance for firms on safeguarding and managing prudential risk is already available in the FCA’s payment services approach document (Approach Document). However, in light of the exceptional circumstances of COVID-19 on firms’ business models, the FCA has provided additional temporary guidance to strengthen firms’ prudential risk management and arrangements for safeguarding customers’ funds in this period of economic stress. Continue Reading

What the CFTC Interpretation of “Actual Delivery” Means for Crypto

Posted in Cryptoassets

The long-awaited guidance clarifies the application of the “actual delivery” exception to leveraged virtual currency transactions with retail purchasers.

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

Earlier this year, the US Commodity Futures Trading Commission (CFTC) approved final interpretive guidance (Guidance) concerning retail commodity transactions involving certain digital assets. The Guidance clarifies the CFTC’s views regarding the “actual delivery” exception to Section 2(c)(2)(D) of the Commodity Exchange Act (CEA) in the context of virtual currencies, and is intended for exchanges, trading platforms, custodians, and other market participants transacting in virtual currencies that are considered commodities (such as Bitcoin and Ether) and traded via leverage, margin, or other financing provided by the seller, trading platform, or other third party. Continue Reading

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

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