March 2021 – FinTech and Blockchain Law Watch

The NFT Explosion – What lawyers need to know

Mar 26 2021

First there were CryptoKitties. Then came Digital art, CryptoPunks and NBA tokens. But when Beeple’s digital art piece sold at Christie’s for $69 million, the mania truly began. And as with any wave of media mania, also came the groundswell of negative media and hand-wringing about NFTs. Of course, NFTs are not all evil nor are they a panacea for artists and musicians. If properly issued and positioned, they can provide a win-win for both artists and collectors.

First Cannabis-related Business SARs Penalty Against a Depository Institution

Mar 23 2021

By: Daniel Cohen, Judie Rinearson, Jeremy McLaughlin

On 21 February 2021, the National Credit Union Administration (NCUA) became the first prudential regulator to issue an administrative order against a depository institution primarily on the basis of noncompliance with the Financial Crimes Enforcement Network’s (FinCEN) “BSA Expectations Regarding Marijuana-related Businesses” (FIN-2014-GOO1) (MRB Guidance). NCUA and Live Life Federal Credit Union entered into a stipulation and a consent to a cease and desist order in which the credit union, without admitting any wrongdoing, agreed to “implement an automated system to effectively monitor and identify all transaction for suspicious activity…includ[ing] functions to support [its] compliance with FinCEN requirements for Marijuana-Related Businesses (“MRB”).”

UK Makes Contactless Payments Easier – Purchases up to £100 (~$140) Will No Longer Require Strong Customer Authentication

Mar 08 2021

By Kai Zhang

Following consultation in January 2021 (CP21/3), the UK Financial Conduct Authority (“FCA”) published its decision, on 3 March (PS21/2), to increase the contactless payment limits under the Strong Customer Authentication (“SCA”) requirements. Essentially, SCA is not required for single contactless transactions up to the value of £100 (about $140) per transaction (increased from the previous £45 ($62)), subject to (amongst others) the cumulative transaction value threshold of £300 (about $420) (increased from the previous £130 ($180)). Once this cumulative threshold is hit, the contactless transaction must again be authenticated before the transaction can proceed. The cumulative threshold was initially proposed at £200 in the consultation but is set at £300 in response to the industry feedback (according to the FCA).

It’s Happening in the UK: UK Treasury to Regulate Stablecoins

Mar 02 2021

By Kai Zhang and Judie Rinearson

On 7 January, the UK Treasury published a consultation on its proposed approach to regulating stablecoins. https://www.gov.uk/government/consultations/uk-regulatory-approach-to-cryptoassets-and-stablecoins-consultation-and-call-for-evidence Although the title of the consultation includes “cryptoassets” – this is the just first stage in the consultative process for cryptoassets, which focuses on stablecoins referred to as “stable tokens”. The consultation closes on 21 March. For US readers, a “consultation” is the start of regulatory process, not unlike an “Advance Notice of Proposed Rulemaking” or “ANPR” in the US. The UK government sets out the supervisory perimeters, seeking input from the public, and leaving the detailed requirements to be designed by the regulators. Accordingly, the consultation discusses only general principles and the overall framework.

Post-Brexit: Significant Changes to UK Cross-Border Payments Regulation

Mar 01 2021

By Kai Zhang, Philip Morgan and Judie Rinearson

The EU Cross-Border Payments Regulation 924/2009 (as amended by Regulation 2019/518) (EU CBPR) has been “onshored” with significant changes into UK law following the end of the Brexit transition period (i.e., since 1 January 2021). The EU CBPR applied directly in the UK until 31 December 2020. Essentially, the onshored UK CBPR regime only retains the transparency requirements on currency conversion charges under the EU CBPR. This means that UK payment service providers (PSPs) no longer have to comply with other requirements under the EU CBPR.

Significant Changes are Coming: UK Payments Regulation

Mar 01 2021

By Kai Zhang, Philip Morgan, and Judie Rinearson

The UK Financial Conduct Authority (FCA) commenced, on 28 January 2021, a consultation (CP21/3) on various changes to the UK regulation of payment services and electronic money. The proposals include amendments to the substantive regulatory requirements as well as changes to the FCA guidance. Similar to an Advance Notice of Proposed Rulemaking (ANPR) in the US, the consultation seeks industry and public feedback, and is fully expected to lead to formal regulation in the near future.

Archive:March 2021