Global FinTech & Payments Blog

Hong Kong’s SFC Issues Policy Statement on Security Token Offerings

Posted in Cryptoassets, Data Privacy, Cybersecurity, and AI

The SFC’s guidance provides helpful clarity amidst growing interest in security token offerings.

By Simon Hawkins and Kenneth Hui

On 28 March 2019, the Hong Kong Securities and Futures Commission (SFC) issued a policy statement on security token offerings (STOs) summarizing the legal and regulatory requirements applicable to parties engaging in STOs. This guidance follows the SFC’s 5 September 2017 policy statement on initial coin offerings (ICOs).

STOs typically refer to specific offerings which are structured to have features of traditional securities offerings, and involving security tokens that are digital representations of ownership of assets (e.g., gold or real estate) or economic rights (e.g., a share of profits or revenue) using blockchain technology. Continue Reading

The Book of Jargon® – Cryptocurrency & Blockchain Technology Now Available

Posted in Blockchain, Cryptoassets

Mobile and desktop reference tool defines nearly 300 industry terms.

We are pleased to announce the launch of The Book of Jargon® – Cryptocurrency & Blockchain Technology, a comprehensive digital glossary of nearly 300 terms developed for the business, academic, and legal community. The easy-to-use reference tool demystifies the often complex legal and regulatory terminology, acronyms, and slang of the cryptocurrency and blockchain industry.

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

Posted in Cryptoassets, Digital, Investing in FinTech, Payments

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 the Potential of Digital Central Banking” — featured a series of panels led by digital finance industry leaders and Latham lawyers from around the world. Panelists discussed a range of topics, including investing in innovation, international perspectives on the crypto “state of play,” and 2019 market trends and predictions for the digital finance industry.

See below for video highlights from the event.

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

Posted in Digital, Investing in FinTech

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 FinTech players who pioneered this market. This turn toward robo-advisers is being driven by the potential for cost efficiencies, as well as the desire to connect with younger investors, who often prefer an online interface.

Over the past few years, regulators, lawyers, and compliance professionals have grappled with how to apply established regulatory concepts to the robo-advisory context, in which human involvement can be minimal to nonexistent. At the 2019 SIFMA Compliance & Legal Society Seminar, Latham & Watkins participated in a panel discussion with legal executives from banks and investment firms on this issue. Continue Reading

Will Developments in the UK’s Regulation of Cryptoassets Bring Them Into The Mainstream?

Posted in Cryptoassets

UK regulators are addressing regulatory uncertainty through a number of regulatory initiatives due for implementation in 2019.

By Stuart Davis

Background

Following the FCA’s consultation paper that offers guidance on the regulatory status of cryptoassets published in January 2019, the regulator is now engaging with the industry and other stakeholders such as law firms to finalise its guidance.

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Firm Joins the Global Blockchain Business Council

Posted in Blockchain

Leading association focuses on advancing the adoption of blockchain technology across industries.

Latham & Watkins has joined the Global Blockchain Business Council (GBBC), a leading industry association for the blockchain technology ecosystem, which brings together organizations and innovators from over 40 countries to advance understanding of blockchain technology. The organization focuses on “furthering [the] adoption of blockchain technology through engaging regulators, business leaders, and global changemakers.” Latham has also joined the GBBC’s Legal and Regulatory Group (LRG), which facilitates dialogue on the legal and regulatory issues originating from the development of blockchain technology. Continue Reading

FCA Consumer Research on Cryptoassets: A Summary

Posted in Cryptoassets

As part of its ongoing work to investigate and understand the UK cryptoassets sector the FCA has published the findings of two pieces of complementary consumer research on cryptoassets.

By Sam Maxson and Stuart Davis

Following the publication of the UK Cryptoassets Taskforce final report in October 2018, the FCA has engaged in a series of focused pieces of work relating to the UK cryptoassets sector.

This work includes the headline public consultations that were announced in the Taskforce final report — such as the FCA Cryptoassets Perimeter Guidance Consultation (published in January 2019 and open for responses until 5 April 2019) and the proposed FCA consultation on a potential ban on the sale of certain cryptoasset derivatives to retail investors (expected later this year) — as well as more “behind the scenes” work that the FCA is conducting to improve its evidence base and understanding of the cryptoassets sector. Continue Reading

What EBA’s Outsourcing Guidelines Mean for Financial Institutions

Posted in Digital, Investing in FinTech, Payments

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 of draft guidelines in June 2018 (Draft Guidelines) and the ensuing public consultation in September 2018 (Public Consultation).

The Guidelines replace the 2006 Committee of European Banking Supervisors (CEBS) Guidelines on Outsourcing (CEBS Guidelines) and replace and incorporate the EBA’s final recommendations on outsourcing to cloud service providers (Cloud Recommendations). Financial institutions will now only need to consult one set of guidelines for cloud and non-cloud outsourcing. Continue Reading

FCA Publishes Policy Statement Extending Rules to Payment Services and E-Money Sectors

Posted in Payments

From August 2019, certain existing FCA rules and guidance will extend to payment service providers and e-money issuers in a signal that the FCA wants a consistent approach to consumer protection.

By Rob Moulton, Brett Carr, and Frida Montenius

The FCA has published a Policy Statement extending certain rules and guidance to the payment services and e-money sectors, following a Consultation Paper published in August 2018. The extensions concern the FCA’s Principles for Businesses (Principles) and the Banking Conduct of Business Sourcebook (BCOBS), along with new guidance concerning the communication and marketing of currency transfer services. The FCA has made these changes, aimed at payment institutions (PIs), electronic money institutions (EMIs), and registered account information service providers (RAISPs), with a hope to protect consumers by providing a clear and consistent set of rules that firms must abide by.

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Payment Systems Regulator Finalises Scope of Card Acquiring Market Review

Posted in Payments

The PSR will not review the fees and rules set by Visa and Mastercard, but will look at the practice of bundling, and will examine effects on innovation in card-acquiring services.

By Brett Carr, Stuart Davis, and Christian McDermott

Following the publication of its Draft Terms of Reference in July 2018, the PSR has now listened to market feedback and has issued its Final Terms of Reference, marking the launch of its review into whether competition in the supply of card-acquiring services is working well for merchants and consumers.

Card-acquiring services allow merchants to accept payment for goods and services via debit, credit, charge, and prepaid cards. In order to benefit from card-acquiring services, merchants must enter contracts with so-called “merchant acquirers.”

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