2018 – Page 7 – FinTech and Blockchain Law Watch

A Regulatory Sandbox for FinTech Innovation Emerges on the U.S. Playground: What It Means for Money Transmitters

May 11 2018

Many FinTechs have benefited from government-established regulatory sandboxes in diverse jurisdictions such as Australia, the UK and Singapore. However, the U.S. has been noticeably slow to adapt these innovation-friendly programs. That is now changing.

Arizona recently enacted a new law (H.B. 2434) to create a Regulatory Sandbox Program (the “Program”) that will allow FinTech companies to temporarily test innovative financial products and services without being subject to money transmitter and similar licensing requirements in that state. The Program will be administered by the Arizona Attorney General (the “AG”) and is the first of its kind among U.S. states.

US Court signals that proving data breach class actions will be difficult

May 10 2018

By Andrew C. Glass, David D. Christensen, Cameron Abbott and Matthew N. Lowe

In the US, several attempts at class actions for those affected by a data breach have failed challenges in early procedural stages. In Dieffenbach v. Barnes & Noble, Inc., 887 F.3d 826 (7th Cir. Apr. 11, 2018), the Seventh Circuit allowed a data breach class action to survive the pleadings stage. At the same time, the Court indicated that the plaintiffs may have a tough time proving their claims on the merits or establishing that class certification is warranted. At the end of the day, the Dieffenbach decision may prove to be less of a boon and more of a bust for plaintiffs in data breach class actions. Although it may provide a means to get into court, the decision makes clear that obtaining a favorable outcome may be a “difficult task.” For a full summary of the Dieffenbach decision please see our client alert here.

U.S. District Court for DC Dismisses CSBS’ Challenge regarding Federal FinTech Charter, All Eyes on the OCC

May 08 2018

By Dan Cohen and Eric Love

The U.S. District Court for the District of Columbia recently granted the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss a lawsuit brought by the Conference of State Bank Supervisors (“CSBS”) challenging the OCC’s authority to issue special purpose charters to FinTech companies. According to the court, the CSBS currently lacks standing to bring the action because the OCC has not to-date issued such a charter.

Restricted ADI Licensing Scheme Commences in Australia

May 08 2018

By Jim Bulling and Edwin Tan

Last Friday, the Australian Prudential Regulation Authority (APRA) finalised its new Restricted Authorised Deposit-taking Institution (ADI) licensing process in Australia that came into effect immediately. New entrants to the banking industry will be able to apply for a Restricted ADI licence, which will have a lower barrier to entry than a full ADI licence, to assist their transition into the industry over a two-year period. This is a significant change as only one ADI licence has been granted to a non existing bank-affiliated entity in the past decade, which has rendered Australia’s start-up banking sector effectively non-existent.

ASIC updates its guidance on treatment of ICO’s

May 07 2018

By Jim Bulling and Felix Charlesworth

On 1 May 2018, the Australian Securities and Investments Commission (ASIC) released its revised Information Sheet 225 which provides an updated guidance on initial coin offerings (ICOs). The updated report expands its scope to include guidance dealing with other crypto-currency and digital token (Crypto-Asset) businesses.

New dispute resolution scheme requirements in Australia

May 04 2018

By Jim Bulling and Michelle Chasser

The Australian Government has authorised a new external dispute resolution (EDR) scheme for financial disputes, the Australian Financial Complaints Authority (AFCA). AFCA will replace the current EDR schemes, FOS, CIO and the Superannuation Complaints Tribunal (SCT), to create a ‘one stop shop’ with higher monetary limits for consumer and small business complaints against financial service providers including roboadvisers, marketplace lenders, payments providers and their representatives.

AFCA will commence accepting complaints from 1 November 2018 and any complaints not yet resolved by FOS or CIO will be transferred to AFCA. The SCT will continue to resolve its existing complaints but will not accept new complaints after 31 October 2018.

All Australian financial services licensees and credit licensees with retail clients have an obligation to become a member of AFCA by 21 September 2018. Existing members of FOS or CIO must also retain their existing memberships until further notice.

AFCA will soon seek public comments on the new AFCA Rules and interim funding model. Which will then need to be approved by the Australian Securities and Investments Commission.

ASX releases consultation paper on its proposed blockchain-based replacement to CHESS

May 03 2018

By Jim Bulling and Felix Charlesworth

On 27 April 2018, the Australian Securities Exchange (ASX) released a consultation paper seeking industry feedback on its proposed implementation and development of a blockchain-based system to perform clearing, settlement and other post trade services in the Australian equity market. As previously mentioned, it is intended that this new platform will replace the existing Clearing House Electronic Sub-Register System (CHESS) which has been used by the ASX since 1995.

ASIC: Australian laws still apply to ICOs created and offered overseas

Apr 30 2018

By Jim Bulling and Edwin Tan

On 26 April 2018, John Price of the Australian Securities and Investments Commission (ASIC) highlighted in a speech that Australian corporate and consumer laws might still apply to ICOs created and offered from overseas, so long as they were offered and sold to Australian consumers. Mr Price warned that there was an incorrect perception that Australian regulations did not apply to activities engaged from overseas.

AUSTRAC, ATO and ASIC DISCUSS THEIR REGULATORY VIEWS ON ICO’S

Apr 20 2018

By Jim Bulling and Felix Charlesworth

On 16 April 2018, representatives from the Australian Securities and Investments Commission (ASIC), Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Tax Office (ATO) convened in Melbourne and delivered presentations outlining their regulatory views on Initial Coin Offerings (ICOs) and blockchain technology in general.

New York Attorney General Launches Fact-Finding Mission into Virtual Currency Exchanges; Exchanges Divided on Response

Apr 19 2018

By Jeremy McLaughlin and Dan Cohen

The Investor Protection Bureau of the New York Office of the Attorney General (Bureau) has established the “Virtual Markets Integrity Initiative,” which the Bureau describes as a “fact-finding inquiry into the policies and practices” of virtual currency exchanges. The Bureau launched the initiative “to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.”

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