FinTech and Blockchain Law Watch – Page 23 – At the Crossroads of Law, Innovation and Commerce

Conference Report – Blockchain and the Law: Towards a Responsible Blockchain Sector

Jun 22 2018

By Anthony R. G. Nolan and Julien E. F. Barbey

On June 14, Cardozo Law School in New York City held a conference entitled “Blockchain and the Law: Towards a Responsible Blockchain Sector.” The conference was led by a panel consisting of current and former commissioners and staff members of the SEC and the CFTC including Rob Cohen, director of the SEC’s enforcement division.

Among topics discussed was SEC Director William Hinman’s recent speech in which he stated that Ethereum is not a security. Panelists suggested this may indicate that the SEC would regard a token as being able to change its character over time, such that a token that was once a security can morph into one that is not a security. This would have important implications for market practices, potentially including the utility of SAFTs.

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.

New FCA “Dear ICO” Letter warns of financial crime associated with cryptocurrencies

Jun 14 2018

By Judith E. Rinearson and Rizwan Qayyum

On June 11 2018, the Financial Conduct Authority (the “FCA”) issued a “Dear CEO” letter, which provided guidance for banks on how to handle the growing risks associated with “cryptoassets”.

The FCA defines “cryptoassets,” using Bitcoin and Ether as an example, as “any publicly available electronic medium of exchange that features a distributed ledger and a decentralised system for exchanging value.” While acknowledging that there are “many non-criminal motives” for using cryptoassets, the letter asserts that these products can be abused because they offer “potential anonymity and the ability to move money between countries.”

An old-fashioned bank heist – in cyberspace

Jun 13 2018

By Cameron Abbott and Sarah Goegan

In the old days the bank robbers would rob the local town and ride off into the sunset. The new version is a little less easy to see. Coinrail, a South Korean cryptocurrency exchange, has announced that it was hacked on 10 June. That’s a polite phrase for “our customers lost a lot of coins”.

The cyberattack resulted in more than $40 million USD worth of altcoins (coins that aren’t bitcoin or Ethereum) being stolen. This represented around 30% of coins traded on the exchange. Quite a substantial amount, considering Coinrail is a smaller cryptocurrency exchange!

UK Cryptoassets Taskforce meets for first time

Jun 12 2018

By Jonathan Lawrence

The first meeting of the UK’s new Cryptoassets Taskforce took place on 21 May 2018. First announced in April 2018 by the Chancellor of the Exchequer as part of the UK government’s Fintech Sector Strategy, the Taskforce is a central part of the government and financial regulators’ efforts to understand and engage with the implications of new technologies in financial services. At the first meeting, the Taskforce agreed its objectives, which include:

exploring the impact of cryptoassets;
the potential benefits and challenges of the application of distributed ledger technology in financial services; and
assessing what, if any, regulation is required in response.

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.

Understanding the Effect of Wyoming’s Blockchain and Cryptocurrency Legislation

Jun 06 2018

By Carl E. Volz, Eden L. Rohrer, Judith E. Rinearson, Jeremy M. McLaughlin and Daniel S. Cohen

March was a busy month in the blockchain and cryptocurrency space for the Wyoming state government. The legislature passed, and the governor signed, five bills that many in the industry view as favorable to blockchain and cryptocurrency businesses. While the bills provide some beneficial clarity in this space and may attract businesses to the state, the scope and effect of some of the bills is limited. Accordingly, it is important that industry participants fully understand what the new Wyoming laws address, and, perhaps more importantly, what they do not.

Please see our latest thinking here for a full discussion of Wyoming’s new blockchain and cryptocurrency legislation.

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.