FinTech Industry & Regulation – Page 14 – FinTech and Blockchain Law Watch

Are Digital Asset Transactions Always Securities Offerings?

Jun 22 2018

On June 14, 2018, William Hinman, Director of the Division of Corporation Finance at the United States Securities and Exchange Commission, shared his views on whether digital assets (such as tokens or coins) that were originally offered in a securities offering can be subsequently sold in a manner that does not constitute a securities offering. CLICK HERE for the full remarks.

In some cases where a central enterprise is no longer being invested in, or where the digital asset is used for consumption (to purchase a good or service available through the network it was created), Hinman believes such an asset would not be considered a security. However, labeling a digital asset a “utility token” does not automatically cause the digital asset to become something that is not a security. Although the Supreme Court has stated that if someone is purchasing something for consumption, it is not a security, Hinman emphasized the Supreme Court’s stance that economic substance, not labels, of the transaction guides the legal analysis.

Amazon Unveils Plans to Provide Blockchain-as-a-Service

Jun 21 2018

By Warwick Andersen, Rob Pulham and Georgia Mills

Amazon Web Services (AWS) plans to be one of a handful of tech companies providing blockchain-as-a-service (BaaS) for customers wanting to test the new technology without the costs or risks of developing it in house. Other providers of BaaS include Microsoft, IBM, HP, Oracle and SAP.

AWS has partnered with Kaleido, a new blockchain business cloud service for enterprises. Kaleido will offer its cloud services to host an Enterprise Ethereum-based, open-source blockchain platform, making Kaleido the first managed blockchain SaaS available on AWS. The platform has been designed to be easy to use, as the uncertainty surrounding the new technology has prevented its widespread adoption.

Mastercard assists Open Banking

Jun 07 2018

By Jonathan Lawrence

On 13 January 2018 the second Payment Services Directive (PSD2) became law across the European Union, leading to Open Banking. For background information, please see EU oversight on payments and Open Banking.

Mastercard announced on 5 June that it is launching a suite of services to help banks and FinTech companies navigate the Open Banking environment. The programme seeks to address the liability issues of banks sharing their data with third parties and to help startups to better communicate with their banking partners. For banks, Mastercard is building a pan-European directory of verified and legitimate third party providers, backed by a fraud monitoring service and dispute resolution mechanism. Startups in turn will be provided with a ‘connectivity hub’ that will help third parties establish and maintain communication with banks.

The new services will be launched first during a pilot phase in early 2019, with the UK and Poland being a particular priority, before being rolled out across Europe later that year.

Dubai Fintech Goes Global

Jun 06 2018

By Jonathan Lawrence

Dubai International Financial Centre (DIFC) has signed a FinTech Memorandum of Understanding (MoU) with professional services company Accenture. Under the MoU, FinTech Hive at DIFC – the first financial technology accelerator in the Middle East region – will collaborate with Accenture’s FinTech Innovation Labs in New York, London and Hong Kong, to share resources and knowledge on research and trends in FinTech. In line with the DIFC Growth Strategy 2024 and Dubai Vision 2021, FinTech Hive gives financial companies access to technologies to support their digital transformation while providing innovators with access to potential clients and investors.

OCC Expected to Release Guidance on FinTech Charter in July 2018

May 30 2018

By Eric A. Love and Dan Cohen

On May 24, 2018, Comptroller of the Currency Joseph Otting indicated during a press call that the Office of the Comptroller of the Currency (“OCC”) will release guidance in July 2018 on whether it will move forward with issuing a special purpose charter to FinTech companies. According to press reports, Comptroller Otting had previously indicated that the OCC hasn’t yet made a final decision about issuance of a FinTech charter, although he had also signaled that guidance from the OCC on the matter could be released as early as June. His more recent comments during the press call extend this timetable by a month.

Augmented Reality: Coming to a Store Near You?

May 29 2018

By Cameron Abbott, Warwick Anderson and Georgia Mills

Recent moves from PayPal and Target have brought fresh attention to the use of augmented reality (AR) in commercial settings. The technology remains in its infant stage but the revival of PayPal’s patent for payment-enabled AR glasses has some analysts wondering how close the technology is to becoming the mainstream.

The software described in the patent would give consumers with the glasses access to product and purchasing data simply by looking at an item on a store shelf.

Commissioner Peirce Remarks on the Challenges of Cryptocurrency Regulation

May 16 2018

By Andrew Massey, C. Todd Gibson , Philip J. Morgan and Evan J. Glover

On May 2, 2018, Commissioner Hester Peirce shared her views regarding how cryptocurrencies fit within the regulatory landscape of the United States Securities and Exchange Commission (“SEC”). Click here for the full remarks.

Commissioner Peirce, recognizing that not all tokens are alike, acknowledged that the appropriate regulatory scheme for cryptocurrencies will be the product of a function over form analysis. Additionally, Peirce noted that the functionality of a token changes over time, requiring a more nuanced regulatory scheme to ensure market safety.

Federal Government to implement Open Banking regime in Australia

May 15 2018

Jim Bulling, Daniel Knight and Felix Charlesworth

On 9 May 2018, the Australian Government confirmed their decision to establish an Australian Open Banking regime and implement the recommendations set out in the Farrell Report titled “Review into Open Banking in Australia”. This follows the Government’s report into Open Banking released in February 2018 which broadly supported the creation of a new data-sharing regime in the financial services industry. The Australian Government has set aside roughly $45 million over four years to develop the creation of a Consumer Data Right which includes the establishment of the Open Banking framework.

U.S. Government Accountability Office Issues Recommendations on FinTech Regulation

May 14 2018

By Judith Rinearson and Eric A. Love

The U.S. GAO issued its anticipated 132-page report entitled “Financial Technology: Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight.” In the report, the GAO describes the benefits and risks; regulatory oversight and challenges; and regulatory efforts to foster innovation with respect to the following four specified FinTech activities: person to person payments, marketplace lending, digital wealth management and distributed ledger technology. It also offers recommendations about how to enhance FinTech regulation.

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

May 11 2018

By Eric A. Love and Judith Rinearson

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.

Category:FinTech Industry & Regulation