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P2P lending: UK rule changes

Jul 31 2018

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.

Surprise: New York State Court Ruling Means That NY Payroll Card Regulations Could Go into Effect After All

Jul 23 2018

By Judith Rinearson and Eric A. Love

The years-long endeavor in New York State to extensively regulate payroll cards (referred to in the NY regulations as “payroll debit cards”) recently entered a new phase when the New York State Supreme Court, Albany County, annulled the New York State Industrial Board of Appeals’ (“IBA”) February 2017 decision to revoke new payroll card regulations that had previously been issued in that state. This means that, depending on the outcome of the recently filed appeal of the court’s decision, the controversial and highly restrictive NY payroll card regulations could become effective after all.

RBA: accessibility, security and resilience are key to the future of retail payment systems in Australia

Jul 11 2018

By Jim Bulling and Felix Charlesworth

The Assistant Governor of the Reserve Bank of Australia (RBA), Michele Bullock, delivered a speech at the Bund Fintech Summit in Shanghai on the developments in the retail payments industry and the potential implications these pose for regulators.

UK FCA – Fourth Sandbox Cohort Announced

Jul 11 2018

By Jonathan Lawrence

29 businesses have been accepted into cohort four of the UK Financial Conduct Authority (FCA) regulatory sandbox to test innovative FinTech products, services, business models and delivery mechanisms. The FCA received 69 applications for cohort four. Applications came from a diverse range of firms operating across the financial services sector including in areas such as consumer credit, automated advice and insurance. 29 firms have been accepted to develop towards testing, including three firms that were accepted as part of previous cohorts but did not proceed to test. Firms that have been accepted to develop towards testing are listed here, except for one firm that has asked not to be named at this point in time. Read More

Artificial Intelligence in Wealth Management

Jul 10 2018

By Jim Bulling and Tiarna Meka

A recent report by Forbes Insights and Temenos suggests that wealth managers must embrace the development in Artificial Intelligence (AI) technology in order to sustain a long-term future. The use of AI technology allows financial advisors to provide high quality, customised client advice.

There has been a significant rise in the attitudes of wealth managers towards AI since 2016 with global statistics showing that 52% of wealth managers now view AI as essential in their business operations. In Asia-Pacific, this statistic is substantially higher with 70% of wealth managers viewing AI as essential and 80% deploying or testing AI.

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