FinTech Industry & Regulation – Page 29 – FinTech and Blockchain Law Watch

The post-election fintech world: are happy days (for bankers) here again?

Dec 05 2016

In the days following the U.S. federal elections that resulted in the election of Donald Trump as President and Republican control of the 115th Congress, FinTech companies, banks, and other financial institutions are increasingly asking whether they still need to worry about compliance with the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Consumer Financial Protection Bureau (“CFPB”) regulatory actions, and other financial services regulations.

It is true that there will likely be some significant regulatory changes, but it is a little too early for industry participants to pop the champagne corks.

To see are our thoughts about some of the top issues impacting FinTech companies, banks and other financial institutions, click here.

UK Supreme Court to stream live today on future of Brexit

Dec 05 2016

By Judith Rinearson

The Fintech world is strongly impacted by Brexit, with the ability to access financial markets easily an important factor for disruptors. No doubt they, like many of us, have a keen eye on the speed in which Brexit can occur.

On 3 November 2016, the High Court in the UK ruled that the Prime Minister cannot trigger Article 50 (the notification that triggers the process of the UK leaving the EU) without the leave of Parliament. The decision was appealed, and the Supreme Court (the highest appellate court in the UK) will hear the matter starting today, 5 December. The four days of hearings will be streamed live from the Supreme Court’s website (click here).

There will be eleven justices hearing the matter, which (according to the UK’s non-profit Full Fact organization) will be the largest panel of judges to have heard a single appeal—since the Supreme Court’s predecessor was established in 1876. There are some interesting potential outcomes of this process, including the possibility that the matter will need to be referred to the Court of Justice of the European Union to interpret Article 50.

Please note that even if the Supreme Court sides with the High Court, and decides that the Article 50 notification requires an Act of Parliament, it will still be for Parliament to decide whether or not they want to confirm and continue with the referendum’s Brexit result, or attempt to impose terms on the triggering of Article 50 (which some say is not possible), or reject it altogether. These are interesting times in the UK. We will be watching these developments closely.

European Commission launches Task Force on Financial Technology

Nov 22 2016

By Jonathan Lawrence

On 14 November 2016, the European Commission launched an internal Task Force on Financial Technology (TFFT) that aims to assess and make the most of innovation in the FinTech area, while also developing strategies to address the potential challenges that FinTech poses. The work of this Task Force builds on the European Commission’s goal to develop a comprehensive strategy on FinTech. It appears to take a cautious approach. The launch statement warns that “technological development provides great opportunities for existing financial institutions, alternative service providers and new business models, provided that any risks are carefully managed”. This internal Task Force will bring together the expertise of European Commission staff across several areas, such as financial and digital services, digital innovation and security, and competition and consumer protection. It will also engage with stakeholders and present policy suggestions and recommendations in the first half of 2017.

Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union said:

“we see technological innovation in finance as a development that we need to encourage and enable. It brings huge opportunities for consumers and for industry, both by established players and new Fintech firms. Our Task Force will help us make sure that our policy supports the pursuit of these opportunities, while addressing any risks that may emerge. Efficient financial markets need to make the best possible use of the opportunities that technology presents, while also preserving competition and making sure that new operating systems are safe.”

Commissioner for Digital Economy and Society Günther H. Oettinger said:

“Digital innovation is transforming the entire economy and in particular the financial services sector. It disrupts business models and value chains, leads to the emergence of new players and services. The Digital Single Market strategy aims at laying down an appropriate framework and enabling solutions concerning for instance electronic authentication or cyber-security. Our ambition is to foster financial innovation while preserving financial stability and protecting consumers and investors.”

SEC FinTech Forum Part 1

Nov 22 2016

By Brian Vargo and Tyler Kirk

On November 14, 2016, the U.S. Securities and Exchange Commission held its first forum exclusively focused on the impact of the FinTech movement on the capital markets. Specifically, the forum was organized into four panels addressing automated investment advice, blockchain and distributed ledger technology, crowd funding and marketplace lending, and investor protection. Over the coming weeks we will be posting the key takeaways and implications of each panel.

In her opening remarks, Chair White called for federal agencies to encourage innovation while balancing such encouragement with appropriate investor protections. She noted that the speed and impact of FinTech innovation increases the need for reviewing the sufficiency of regulation. In that spirit, Chair White asked the SEC staff to form a FinTech Working Group to help foster responsible innovation in the capital markets, while exploring the adequacy of the current regulatory framework to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Commissioner Piwowar said in his remarks that the SEC is uniquely positioned to take the lead regulatory role in the FinTech movement, because many FinTech companies are already registrants and, significantly, the SEC is the only federal agency whose mission includes capital formation. The remarks at the forum indicate that the SEC and industry expect FinTech to play an increasingly important role in the securities industry and that the SEC should continue to engage with industry members in developing regulations that are thorough and forward-looking.

Australian and Kenyan financial regulators sign co-operation agreement

Nov 16 2016

By Jim Bulling and Michelle Chasser

The Australian Securities and Investments Commission (ASIC) and the Capital Markets Authority of Kenya (CMA) have signed a co-operation agreement to share information about innovation in their markets including:

emerging market trends and developments; and
regulatory issues relating to innovation in financial services.

Kenya was an early adopter of FinTech with the launch of mobile phone based payments system M-Pesa back in 2007. It has since become one of the leading FinTech countries in Africa particularly in payments and credit innovations.

FinTech in Canada – Towards Leading the Global Financial Technology Transition

Nov 15 2016

By Robert Zinn and Jim Bulling

The Digital Finance Institute is a prestigious Canadian-based think tank for FinTech established in 2013 with a mandate to address the balance of innovation and regulation; support initiatives for financial inclusion; and advocate for diversity in FinTech. The Digital Finance Institute also promotes FinTech in Canada through conferences and international alliances; the creation of Canada’s national FinTech Awards; the FinTech Cup, the new university FinTech startup challenge and by preparing research papers on FinTech.

Robert Zinn and Jim Bulling contributed insight and content to the U.S. and Australian FinTech ecyosystems.

To read this publication, click here.

FinTech ecosystem in Singapore

Nov 15 2016

By Nicholas Hanna

The FinTech eco-system is rapidly growing in Singapore with the support of recent initiatives by the MAS (Monetary Authority of Singapore) and the Deputy Prime Minister’s announcement to review the regulatory process for Venture Capital managers. MAS recently announced its cooperation agreement with Government of Andhra Pradesh (GoAP) to explore joint innovation projects on technologies including digital payments and blockchain and collaborate on the development of education programmes/curricula on FinTech. Singapore houses over 300 FinTech start-ups already and is known for being a hub to commerce operating in South East Asia. The government and regulatory authorities have indicated to review and introduce further incentives for FinTech companies in 2017.

FCA identifies that many consumers cannot access the financial services they need

Nov 09 2016

By Jacob Ghanty

On 1 November 2016, the FCA published an “Occasional Paper” concerning access to financial services in the UK. In it the FCA highlights that potentially millions of UK consumers cannot use the services that would help them meet their financial needs and get involved more widely in financial markets and the economy. The FCA argues that access problems do not affect just the vulnerable (as has been identified in the past)- it also affects consumers across the spectrum. Examples of access issues include: inconsistent information and long delays in setting up bank accounts; inability to find travel insurance for people with identified health issues; and being declined for a mortgage because of difficulty proving the source of an inheritance.

The FCA highlighted numerous possible causes of problems with access, including financial institutions having inflexible process requirements for customers who have slightly unusual needs, use of jargon creating a barrier to consumer engagement with products or services and issues for consumers with poor digital literacy or limited internet access having increasingly limited choice. Rather than providing solutions, the FCA aims to begin a new conversation about financial services access issues. The FCA does not put a precise figure on the number of people affected in the UK by access issues, but given the broad range and type of issues identified, the number of individuals potentially affected by access issues may run to many millions. The issues laid out by the FCA serve as a useful basis for some firms to identify where access issues may exist in their own businesses and could be useful starting point towards addressing those issues

Rometty Touts Transparent Governance for Blockchain

Nov 08 2016

By Susan P. Altman

Ginni Rometty, CEO of IBM, calls for a system of transparent governance for blockchain in a recent Wall Street Journal Commentary. Rometty predicts that blockchain, once widely adopted, will transform the world. She notes what readers of this blog already know, that financial institutions have become the early adopters of distributed ledger technologies. However, blockchain’s potential is much, much greater than in fintech alone. For example, IBM has estimated that applying blockchain to global supply chains could result in more than $100 billion in annual efficiencies. She describes projects in which blockchain is used in car leasing and ride-sharing in order to speed up the transactions and cut out newly-redundant intermediaries like Uber and Lyft.

In order for us to achieve all of the vast potential of blockchain, Rometty argues that the new technology needs a system of transparent governance developed by not-for-profit groups similar to the way the internet was developed in the 1990s. She notes that IBM and more than 600 firms have joined or applied to join the Linux Foundation’s Hyperledger, an open source collaborative effort created to advance cross-industry blockchain technologies. Hyperledger is attempting to create communities of software developers building blockchain frameworks and platforms to ensure the transparency, longevity, interoperability and support needed to bring blockchain into mainstream commercial adoption. Rometty believes this effort will give businesses the confidence to widely adopt blockchain.

Rometty’s final challenge to readers is to ask themselves, are they going to be the disrupter or the disrupted when it comes to blockchain.

Possible AML implications for FinTechs

Nov 07 2016

By Jim Bulling and Michelle Chasser

The Australian Transaction Reports and Analysis Centre (AUSTRAC) is encouraging FinTech businesses to make contact about Australia’s anti-money laundering and counter-terrorism financing regime (AML/CTF regime) and how it may affect their business. A dedicated online contact form has been established which allows enquiries to be made directly to the Policy and Guidance team.

Businesses which provide a ‘designated service’ are reporting entities which have obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006. There are a number of designated services that a FinTech business may provide including making loans, issuing a stored value card, giving effect to remittance arrangements, issuing interests in a managed investment scheme and (in the capacity of an Australian financial services licensee) arranging for a person to receive a designated service.

Currently activities relating to digital currencies such as BitCoin are not designated services. However, in October 2016 the Attorney General’s Department released its draft project plan for the implementation of the recommendations from the statutory review of the AML/CTF regime. Under the project plan, legislative proposals to regulate digital currencies under the AML/CTF regime will be developed by the first half of 2017.

Category:FinTech Industry & Regulation