In this regular update, we round-up FinTech-related regulatory developments for the week ending 28 May 2021.
|PDP: Call for input on staged connection to dashboards
The Pensions Dashboards Programme (PDP) has issued a call for input on proposals for the staged compulsory connection of pension providers to the dashboards ecosystem. The proposed staging principles focus on achieving the widest coverage of pensions as soon as possible, while considering industry, regulatory and PDP deliverability. Feedback received will help inform policy development ahead of the legislation that will bring this compulsion into effect.
|ASA: Ruling on cryptocurrency exchange service
The Advertising Standards Authority (ASA) has published its ruling following an investigation of a cryptocurrency exchange service after complaints were made, including that the advertising failed to communicate the risk associated with investment in cryptocurrencies.
The ASA upheld the complaints and has told the firm that: “The ads must not appear again in the form complained about. … their future marketing communications made sufficiently clear that the value of investments in Bitcoin was variable and could go down as well as up, that [the company] and the Bitcoin market were unregulated, and that they did not irresponsibly take advantage of consumers’ lack of experience or credulity by implying that Bitcoin investment was straightforward or accessible.” [26 May 2021]
|HMT: Answer to written question on cryptocurrencies
HM Treasury (HMT) has provided an answer to a written question asking the Chancellor of the Exchequer, Rishi Sunak, what his planned timescale is for providing a common definition for environmentally sustainable economy activities for Bitcoin and other cryptocurrencies.
HMT’s answer notes the role of the Cryptoasset Taskforce is to consider the impact of cryptoassets and assess if regulation is required in response. It states that HM Government (HMG) will respond to emerging risks or changes in the market and continue to monitor developments in cryptoassets. HMT further notes that the UK will implement a green taxonomy and that more details on this will be announced in due course. [26 May 2021]
|PRA: Speech on cyber risk
The PRA has published a speech on cyber risk, delivered by Lyndon Nelson, Deputy CEO and Executive Director for Regulatory Operations and Supervisory Risk Specialists. Mr Nelson discussed steps to counter cyber risk, including simulation exercises, penetration testing and international collaboration. [25 May 2021]
|HMT: Joint Statement on U.S.-UK Financial Regulatory Working Group Meeting
HM Treasury (HMT) has published a Joint Statement on the fourth meeting of the U.S.-UK Financial Regulatory Working Group on 20 May 2021. The Working Group meeting focused on the following seven themes:
EC: Review of the Directive on DMD(FS)
The EC has published its inception impact assessment which details its review of the Directive on Distance Marketing of Consumer Financial Services (DMD(FS)). The DMD(FS) harmonises consumer protection rules for financial services sold at a distance, e.g., by phone, mail, internet, etc.
Feedback on the assessment is requested by 25 June 2021.
The EC intends to consult further in Q3 2021 and before issuing a proposal for a revised directive in Q1 2022. [28 May 2021]
|ECB: Speech on necessity of using supervisory technology
The European Central Bank (ECB) has published a speech on the necessity of using supervisory technology, delivered by Supervisory Board Member, Pentti Hakkarainen. Among other things, Mr Hakkarainen spoke about the necessity of the banking sector using supervisory technology and becoming a ‘digital innovation house’ by relying on four building blocks:
|ESMA: Call for evidence on digital finance
The European Securities and Markets Authority (ESMA) has published a call for evidence on digital finance, which aims to gather information on issues including value chains, platforms and groups’ provision of financial and non-financial services. The feedback will contribute to the ESMA’s technical advice to the European Commission that will be delivered by 31 January 2022.
Feedback is requested by 1 August 2021. [25 May 2021]
|FSTB publishes consultation conclusions on proposed licensing regime for VASPs and other enhancements to AMLO
The Financial Services and the Treasury Bureau (FSTB) has published its conclusions on the consultation on proposals to enhance anti-money laundering and counter-terrorist financing (AML/CFT) regulation in Hong Kong, via amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). The consultation was launched in November 2020 (see our previous update).
The respondents generally agreed with the overall direction and principles behind the proposals. The FSTB will proceed to prepare an amendment bill based on the feedback received during the consultation, fine-tuning the proposals to address stakeholders’ concerns, with a view to introducing the amendment bill into the Legislative Council in the 2021-22 legislative session.
The enhancements to the AMLO include the introduction of a licensing regime for virtual asset services providers (VASPs) to be administered by the SFC – Persons seeking to operate a virtual asset exchange in Hong Kong will be required to apply for an SFC license, subject to meeting a fit-and-proper test. Licensed VASPs will be required to comply with AML/CFT and other regulatory requirements under the AMLO. VASPs will be permitted to provide services to professional investors only, but the FSTB will review in the future whether VASPs should be permitted to serve retail investors. In light of feedback, the proposals will be amended to allow overseas-incorporated companies registered under the Companies Ordinance to apply for a licence. [21 May 2021]
|MAS speech: Building resilience and navigating risks for fund managers
The Monetary Authority of Singapore (MAS) has published the opening address delivered by Mr Tan Keng Heng, Executive Director, at the Investment Management Association of Singapore (IMAS) 7th Regulatory/Legal Roundup Forum. In an address titled, “Building Resilience and Navigating Risks for Fund Managers”, the Executive Director covered:
|MAS announces collaboration with Mojaloop Foundation to advance financial inclusion
MAS has announced that it has joined the Mojaloop Foundation as a Sponsor-level member to collaborate on providing the underserved access to affordable financial services through digital currency based settlement systems and foundational digital infrastructure. [26 May 2021]