Archive:February 2, 2017

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Banks Help Blockchain Move from Bitcoin to IoT
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Dubai issues loan-based crowdfunding consultation paper

Banks Help Blockchain Move from Bitcoin to IoT

By Susan P. Altman

As companies continue to look for practical uses for blockchain’s distributed ledger technology, we’re seeing interesting collaborations between major banks, global technology players, and nimble startup fintech companies. To be sure, banks are still focused on blockchain as it applies to financial services. BNY Mellon recently hosted a blockchain event at which presenters discussed whether blockchain should be viewed by banks as a disrupter or an opportunity. (Naturally the bank is looking for opportunity.) Of particular interest to the lawyers is the discussion of legal risks raised by blockchain, which include problems already in existence, such as data privacy concerns across geographic jurisdictions, and new problems created by blockchain, such as identifying where an asset is when no one bank or entity is the custodian of the record.

But the banks aren’t only experimenting with, dare we say, traditional financial uses for blockchain; they’re right in the mix trying to figure out how to exploit blockchain in industries far beyond the bitcoin world. BNY Mellon has also, for example, joined Cisco, Foxconn, security company Gemalto and several blockchain startups in a collaboration to develop a shared blockchain protocol for the Internet of Things. Blockchain could potentially improve security of IoT applications and create a tamperproof manufacturing, maintenance and supply chain history, areas not typically viewed as concerns of large financial institutions. Banks are experimenting with supply chain technology. Now that’s looking for opportunity in the world of disruption.

Dubai issues loan-based crowdfunding consultation paper

By Jonathan Lawrence

The Dubai Financial Services Authority (DFSA) issued a consultation paper “Crowdfunding: SME Financing Though Lending” on 31 January 2017. The paper proposes a regulatory framework for anyone looking to operate a loan-based crowdfunding platform in the Dubai International Financial Centre (DIFC). It is the first in a series of papers which will set out the DFSA’s approach to the regulation of FinTech more generally.

The key proposals include:

  • A tailored regime of rules specifically designed for loan-based crowdfunding platform operators.
  • Minimum standards for systems and controls.
  • Operational transparency and adequate disclosure to all participants – borrowers and lenders – on the platform.
  • Suitable checks on platform participants.
  • Appropriate safeguarding and segregation of client money.
  • The development of business cessation plans.
  • Enabling the transfer of rights or obligations between lenders.

The rules are benchmarked against the regimes in the United Kingdom, New Zealand, France, Netherlands and Spain, being those jurisdictions that create an individual regime for these types of platforms.

The DFSA is seeking comments from anyone who is interested in operating, investing in, or providing services to crowdfunding platforms in the DIFC. This can be done via email consultation@dfsa.ae with “CP109″ in the subject line.  Comments should be submitted by 2 March 2017.

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