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Australian Gift Cards – Additional Consumer Protections

Nov 11 2018

By Jim Bulling, Edwin Tan and Elise Hamblin

Every year, Australian consumers suffer an estimated loss of $70 million through gift cards expiring before use. On 18 October 2018, the Treasury Laws Amendment (Gift Cards) Act 2018 (Gift Card Act) was passed in an effort to reduce this loss. Fintech card issuers should be aware of the upcoming changes and start making preparations to ensure that they continue to be compliant with the regulatory requirements.

What will change?

The Gift Card Act amends the Australian Consumer Law to create a national regime where:

gift cards must have a minimum expiry period of three years;
expiry information on gift cards must be prominently displayed; and
the charging of fees (except certain prescribed fees) after a gift card has been supplied will be prohibited.

We expect that the amendments will not apply to reloadable cards.

UK’s Green FinTech Challenge

Nov 08 2018

By Jonathan Lawrence

The UK’s Financial Conduct Authority has launched its Green FinTech Challenge. This is aimed at firms developing green financial technology solutions that need specific regulatory support to bring their proposition to market. The Challenge is designed to support innovation and growth in the Green Finance sector as part of the UK government’s Green GB Week which started on 15 October 2018.

Firms that require specific regulatory support are invited to apply. The Challenge will provide support to a selection of firms developing innovative products and services to assist in the UK’s transition to a greener economy. It is open to start-ups, incumbents and technology providers.

Global AML Regulator Amends Its International Standards for Virtual Assets

Nov 07 2018

By Jim Bulling and Felix Charlesworth

On 19 October 2018, the global anti-money laundering and counter terrorism financing watchdog, the Financial Action Task Force (FATF), made a series of amendments to its rules framework (Standards), in response to international developments in the use and exchange of virtual assets such as cryptocurrencies and other virtual tokens.

The Standards set out the FATF’s recommended framework of rules and measures which countries, including Australia, should adopt in order to combat money laundering and terrorist financing.

As part of the revised Recommendation 15, the FATF has written “to manage and mitigate risks emerging from virtual assets, countries should ensure that virtual asset providers are regulated for AML/CTF purposes“.

Fintech Trends – Shift From ICOs to STOs

Nov 06 2018

By Nicholas Hanna and Mark Tan

In recent months, there has been a noticeable shift by token issuers away from initial coin offerings (ICOs) towards security token offerings (STOs) largely driven in part to a recent bottoming out of the retail market (including Bitcoin and Ethereum) and softening demand from retail investors for ICOs.

This trend appears to have resulted from retail investors having come to realize the inherent limitations that ICOs possess, namely the fact that tokens issued in connection with an ICO generally only have “utility” and not much inherent value. Additionally, we are now also starting to see more interest from sophisticated and/or accredited investors and funds, who also tend to prefer “security” tokens instead of “utility tokens” when looking to make an investment, due to the inherent value that the former possess.

Fintech Lenders To Face Senate Inquiry

Oct 24 2018

By Jim Bulling and Edwin Tan

On 17 October 2018, the Senate resolved to refer certain credit service providers, including payday lenders, fintech “buy now, pay later” providers and credit repair agencies to the Senate Economics References Committee for inquiry. Under the proposed terms of reference, the inquiry will look at:

the impact of the service providers on individuals, communities and the broader financial system;
whether current regulation of the service providers meets community standards and expectations;
whether reform is needed to address harm being caused to consumers; and
the present capacity and capability of the financial counselling sector to provide financial counselling services to financially stressed and distressed members of the community.

The Rise of PayWear

Oct 23 2018

By Jim Bulling and Elise Hamblin

Contactless payment technology has expanded beyond traditional credit or debit cards to include smart watches and phones that are fitted with “Near Field Communication” technology. Westpac is now the first major bank in Australia to embrace “PayWear” as the next development in this space.

What is “PayWear”?

PayWear allows a consumer to make payments by tapping a “Smart” accessory to a contactless payment terminal. For example, Westpac’s “Centsitive Objects” range has reimagined the traditional Debit Mastercard as an accessory. Other smaller banks have also recently introduced PayWear options for consumers, including Heritage Bank’s wearable wrist band and Bankwest’s payment ring.

Commissioner Brian Quintenz Comments On The Liability Of Smart Contract Developers For Uses In Violation of CFTC Regulations

Oct 22 2018

By Anthony R.G. Nolan and Russell E. Deutsch

Recently, Commissioner Brian Quintenz of the US Commodity Futures Trading Commission (CFTC) commented that smart contracts that have the defining features of a swap, future or option are subject to CFTC regulation. The Commissioner posited the hypothetical that, after appropriate analysis, the CFTC has concluded that a particular smart contract, e.g., a binary option executed on a blockchain, is within its jurisdiction. He queried: If that contract is executed in violation of CFTC regulations, then against whom should the CFTC bring enforcement action?

Financial Stability Board’s View on Crypto-Assets

Oct 17 2018

By Jim Bulling and Edwin Tan

On 10 October 2018, the Financial Stability Board (FSB) released a report assessing the risks and implications of crypto-assets on financial stability. The FSB considered that the growth of crypto-asset trading platforms, the introduction of new financial products (crypto-asset funds and exchange-traded products) and growing interest by retail investors together could lead to implications on global financial stability.

In its report, the FSB assessed the primary risks in crypto-asset markets which could expose and undermine confidence in the financial system and in financial regulators.

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