2018 – Page 4 – FinTech and Blockchain Law Watch

Regulation of Crypto Asset Activities on the Abu Dhabi Global Market

Aug 03 2018

By William M. Reichert and Zaid Abu-Shattal

Recent technological innovations are transforming how financial activites are conducted and regulated. Technological advances have also resulted in disrupting traditional financial services and other related activities globally. In response to this, the Abu Dhabi Global Market introduced its legal framework regulating spot trading of crypto assets, including activities carried on by crypto asset exchanges, crypto asset custodians, and, where applicable, intermediaries engaged in crypto asset activities.

Please see our latest thinking here for a full discussion of Abu Dhabi’s new crypto asset legal framework.

South Carolina Is the Latest State to Implement Money Transmitter Licensing Laws and Regulations

Aug 03 2018

By Eric A. Love and Judith E. Rinearson

On May 25, 2018, South Carolina’s money transmitter licensing law, the South Carolina Anti-Money Laundering Act, and its implementing regulations (collectively, the “Act”) became effective.

This means that the newly established Money Services Division (the “Division”) within the SC Attorney General’s Office is now accepting applications for licensure to engage in money transmission and currency exchange in that state. Entities that were engaging in such activities in South Carolina as of May 25 had until June 29, 2018 to submit an application. After submission, such entities were able to continue operating while their applications were being reviewed.

Court of the Blockchain Announced

Aug 01 2018

By Jonathan Lawrence

The Dubai International Financial Centre (DIFC) Courts have partnered with Smart Dubai to create what they say is the world’s first “Court of the Blockchain”. According to an announcement on 30 July, they will initially explore how to aid verification of court judgments for cross-border enforcement. They say they plan to create a blockchain-based court designed to streamline the judicial process, remove document duplications, and drive efficiencies. Future research announced will investigate handling disputes arising out of private and public blockchains and out of regulation and contractual terms encoded within smart contracts.

CFPB’s New Office of Innovation to be led by Arizona FinTech Regulatory Sandbox Official; Cryptocurrencies and Blockchain will likely be on the Agenda

Aug 01 2018

By Eric A. Love

On July 18, 2018, Consumer Financial Protection Bureau (“CFPB”) Acting Director Mick Mulvaney announced that Paul Watkins, who previously led the FinTech initiatives in the Arizona Attorney General’s Office, will head the CFPB’s newly created Office of Innovation. According to a CFPB press release about the selection, the Office of Innovation will replace the CFPB’s Project Catalyst initiative (which the CFPB launched in 2012) and will “focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.” Project Catalyst and the Office of Innovation share the stated overarching objective of promoting “consumer-friendly innovation” in consumer financial services.

P2P lending: UK rule changes

Jul 31 2018

By Jonathan Lawrence

The UK Financial Conduct Authority (FCA) has issued its recommendations for changes to P2P lending regulations for loan-based crowdfunding platforms. Based on the FCA’s findings it invites responses to rule changes for loan-based firms which cover proposals to:

ensure investors receive clear and accurate information about a potential investment and understand the risks involved;
ensure investors are adequately remunerated for the risk they are taking;
provide transparent and robust systems for assessing the risk, value and price of loans, and fair/transparent charges to investors; and
promote good governance and orderly business practices.

Crypto-Assets: FSB Report To The G20

Jul 30 2018

By Jonathan Lawrence

The Financial Stability Board (FSB) has published a report to the G20 on the crypto-assets work of the FSB, Committee on Payments and Market Infrastructures (CPMI), International Organisation of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision (BCBS).

IOSCO confirms its belief that crypto-assets and platforms do not a pose global financial stability risk, nonetheless they raise other significant concerns (potentially needing further regulation) regarding investor protection, market integrity and money laundering. IOSCO suggests that it could work more closely with BCBS and CPMI for payment coin exchanges, which could be viewed more as spot market exchanges/payment infrastructures.

Australia’s first crypto-custody vault is open for business

Jul 25 2018

By Jim Bulling, Edwin Tan and Maria Downie

Australian companies Decentralised Capital and Custodian Vaults have recently announced a partnership to launch Australia’s first insured crypto-currency custody vault. This follows the earlier commencement of Coinbase’s crypto-custody service in the USA and Europe. These offerings are in response to growing investor demand for reliable and secure crypto-currency storage.

One Year after the “DAO Report” Three U.S. Courts Begin to Provide Crypto-Clarity

Jul 24 2018

By Clifford C. Histed and Nicole C. Mueller

One year ago today, the U.S. Securities and Exchange Commission (“SEC”) published the “DAO Report” which concluded that certain tokens issued in an initial coin offering (“ICO”) were securities under the Supreme Court decision SEC v. W.J. Howey Co. The Report stated that whether an ICO is a security offering will depend on the facts and circumstances, including the economic realities of the transaction. Confusion, private lawsuits, SEC enforcement actions, and even criminal prosecutions ensued, but three courts are about to provide clarity.

Hong Kong SFC: E-Signature Verification Proposal to Boost Online Investing

Jul 24 2018

By Jim Bulling and Edwin Tan

On 12 July 2018, the Hong Kong Securities and Futures Commission (SFC) distributed a circular providing guidance to Hong Kong intermediaries which intend to onboard and verify individual clients digitally. This guidance was drafted in response to the increasingly common occurrence of electronic transactions where a more efficient onboarding process is necessary.

Intermediaries are required to take all reasonable steps to establish the identity of their clients, including adopting a satisfactory account opening approach for their clients. If clients are not physically present for identification purposes, there will be a higher chance of risks eventuating including impersonation.

UK Law Commission: Smart Contract Research

Jul 24 2018

By Jonathan Lawrence

Published on 19 July, the UK Law Commission’s 2017-2018 Annual Report includes a section dedicated to a research project into smart contracts. The Commission is a statutory independent body. Its aims include the conduct of research and consultations in order to make systematic recommendations for consideration by the UK Parliament. The Commission defines “smart contracts” as the technology which runs on blockchain and by which legal contracts may be executed automatically, at least in part. The body says there is a compelling case for a Law Commission scoping study to review the current English legal framework as it applies to smart contracts. The project’s purpose would be to ensure that English law is sufficiently certain and flexible to apply in a global, digital context and to highlight any topics which lack clarity or certainty. The body has started its initial research and its main work will begin in summer 2018.

Archive:2018