FinTech and Blockchain Law Watch – Page 24 – At the Crossroads of Law, Innovation and Commerce

U.S. District Court for DC Dismisses CSBS’ Challenge regarding Federal FinTech Charter, All Eyes on the OCC

May 08 2018

The U.S. District Court for the District of Columbia recently granted the Office of the Comptroller of the Currency’s (“OCC”) motion to dismiss a lawsuit brought by the Conference of State Bank Supervisors (“CSBS”) challenging the OCC’s authority to issue special purpose charters to FinTech companies. According to the court, the CSBS currently lacks standing to bring the action because the OCC has not to-date issued such a charter.

Restricted ADI Licensing Scheme Commences in Australia

May 08 2018

By Jim Bulling and Edwin Tan

Last Friday, the Australian Prudential Regulation Authority (APRA) finalised its new Restricted Authorised Deposit-taking Institution (ADI) licensing process in Australia that came into effect immediately. New entrants to the banking industry will be able to apply for a Restricted ADI licence, which will have a lower barrier to entry than a full ADI licence, to assist their transition into the industry over a two-year period. This is a significant change as only one ADI licence has been granted to a non existing bank-affiliated entity in the past decade, which has rendered Australia’s start-up banking sector effectively non-existent.

ASIC updates its guidance on treatment of ICO’s

May 07 2018

By Jim Bulling and Felix Charlesworth

On 1 May 2018, the Australian Securities and Investments Commission (ASIC) released its revised Information Sheet 225 which provides an updated guidance on initial coin offerings (ICOs). The updated report expands its scope to include guidance dealing with other crypto-currency and digital token (Crypto-Asset) businesses.

New dispute resolution scheme requirements in Australia

May 04 2018

By Jim Bulling and Michelle Chasser

The Australian Government has authorised a new external dispute resolution (EDR) scheme for financial disputes, the Australian Financial Complaints Authority (AFCA). AFCA will replace the current EDR schemes, FOS, CIO and the Superannuation Complaints Tribunal (SCT), to create a ‘one stop shop’ with higher monetary limits for consumer and small business complaints against financial service providers including roboadvisers, marketplace lenders, payments providers and their representatives.

AFCA will commence accepting complaints from 1 November 2018 and any complaints not yet resolved by FOS or CIO will be transferred to AFCA. The SCT will continue to resolve its existing complaints but will not accept new complaints after 31 October 2018.

All Australian financial services licensees and credit licensees with retail clients have an obligation to become a member of AFCA by 21 September 2018. Existing members of FOS or CIO must also retain their existing memberships until further notice.

AFCA will soon seek public comments on the new AFCA Rules and interim funding model. Which will then need to be approved by the Australian Securities and Investments Commission.

ASX releases consultation paper on its proposed blockchain-based replacement to CHESS

May 03 2018

By Jim Bulling and Felix Charlesworth

On 27 April 2018, the Australian Securities Exchange (ASX) released a consultation paper seeking industry feedback on its proposed implementation and development of a blockchain-based system to perform clearing, settlement and other post trade services in the Australian equity market. As previously mentioned, it is intended that this new platform will replace the existing Clearing House Electronic Sub-Register System (CHESS) which has been used by the ASX since 1995.

ASIC: Australian laws still apply to ICOs created and offered overseas

Apr 30 2018

By Jim Bulling and Edwin Tan

On 26 April 2018, John Price of the Australian Securities and Investments Commission (ASIC) highlighted in a speech that Australian corporate and consumer laws might still apply to ICOs created and offered from overseas, so long as they were offered and sold to Australian consumers. Mr Price warned that there was an incorrect perception that Australian regulations did not apply to activities engaged from overseas.

AUSTRAC, ATO and ASIC DISCUSS THEIR REGULATORY VIEWS ON ICO’S

Apr 20 2018

By Jim Bulling and Felix Charlesworth

On 16 April 2018, representatives from the Australian Securities and Investments Commission (ASIC), Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Tax Office (ATO) convened in Melbourne and delivered presentations outlining their regulatory views on Initial Coin Offerings (ICOs) and blockchain technology in general.

New York Attorney General Launches Fact-Finding Mission into Virtual Currency Exchanges; Exchanges Divided on Response

Apr 19 2018

By Jeremy McLaughlin and Dan Cohen

The Investor Protection Bureau of the New York Office of the Attorney General (Bureau) has established the “Virtual Markets Integrity Initiative,” which the Bureau describes as a “fact-finding inquiry into the policies and practices” of virtual currency exchanges. The Bureau launched the initiative “to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.”

6 ways for FinTechs to build trust: a regulator’s view

Apr 17 2018

By Michelle Chasser and Jim Bulling

In a recent speech on building trust, Australian Securities and Investments Commission Chair, James Shipton, identified 6 key characteristics that financial service providers, including FinTech companies, should have to ensure that the Australian financial system is efficient, resilient and fair. Those characteristics are:

Financial products that the FinTech company provides do what they say they will and don’t take advantage of consumer biases or lack of knowledge about the product.
Consumers’ interests are prioritised and put before the FinTech company’s.
The FinTech company acts with integrity and fairness, not just in compliance with the law but also taking into account community expectations and standards.
Mistakes and misconduct are quickly identified, reported and rectified.
Open engagement and cooperation with regulators not only about problems but also in relation to business challenges and risks.
Being innovative and using technology to improve products and services to deliver better outcomes for consumers. Although by their very nature FinTech companies are innovative and use technology, an effort should be made to constantly improve outcomes for consumers and not adopt a ‘set and forget’ mindset.

How many of these characteristics do you demonstrate?