FinTech and Blockchain Law Watch – Page 29 – At the Crossroads of Law, Innovation and Commerce

Comptroller Otting: A New Ally for a FinTech Charter?

Jan 10 2018

The FinTech charter may have an important new, if tepid, ally: U.S. Comptroller of the Currency Joseph Otting. Speaking at a press conference on December 20^th, Comptroller Otting signaled a cautious openness to the charter, stating, according to various media outlets, that although he is “not sure what it [FinTech charter] looks like and how it’s funded…there’s a space there that a technology solution can solve.” The key question to him is “what is the requirement…to get that charter”, a topic on which he did not elaborate.

Islamic FinTech in 2018

Jan 08 2018

By Jonathan Lawrence

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech.

Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, insurance (or takaful), investment advisory services and online trading. The overlap between Islamic finance and ethical finance and the opening of financial services to the “unbanked” are important issues to be tackled. In the coming years, demand from consumers (mostly millennials who form a large part of the populations of Muslim-majority countries) is expected to give rise to the faster adoption of these technologies across various verticals in the banking and financial sector.

FinTech in the Fight Against Money Laundering

Dec 22 2017

By Jonathan Lawrence

Rob Gruppetta, Head of the Financial Crime Department at the UK Financial Conduct Authority (FCA), recently gave a speech at the FinTech Innovation in Anti-Money Laundering (AML) and Digital ID regional event, London about “Using artificial intelligence to keep criminal funds out of the financial system”. He considered whether machine learning and artificial intelligence (AI) techniques could help. Better transaction monitoring is not the only way AI can aid the fight against money laundering. The Financial Stability Board (FSB) published a report on 1 November about the impact of AI that identified other ways it can help. Examples include AI-driven anti-impersonation checks that evaluate whether photos in different identity documents match, and using machine learning to identify customers that may pose a higher risk and so warrant, say, a deeper probe into the sources of their wealth.

FinTech outlook for 2018: US Banks look to AI

Dec 22 2017

By Cameron Abbott and Harry Crawford

With 2017 at a close, US banks have set out their 2018 FinTech new year resolutions. According to American Banker, US banks are likely to focus their FinTech investment in 4 major areas in 2018:

Artificial intelligence and machine learning
Open banking
Cybersecurity and biometrics
Commercial banking innovation

What the CFPB Leadership Dispute Means for the Prepaid Account Rule

Dec 20 2017

By Eric A. Love and Dan S. Cohen

With Office of Management and Budget Director Mick Mulvaney in place as Acting Director of the Consumer Financial Protection Bureau (CFPB) and a legal challenge to his appointment to that position brought by CFPB Deputy Director Leandra English continuing to proceed through the courts, prepaid industry participants are rightly asking what this ongoing leadership dispute means for the CFPB’s sweeping Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts.

ASIC Fintech Sandbox Here To Stay

Dec 20 2017

By Jim Bulling, Michelle Chasser and Edwin Tan

The Australian Securities & Investments Commission (ASIC) released a consultation paper on 12 December 2017 seeking feedback on its fintech licensing exemption, also known as the regulatory sandbox. Following comment, ASIC will review whether the exemption is operating as intended, and consider whether it should be broadened or changed in any other way.

The licensing exemption allows eligible businesses to provide certain financial products and services for up to 12 months without a valid Australian Financial Services or credit licence. Contrary to the strategy of the UK Financial Conduct Authority, ASIC does not take an active approach in selecting applicants and negotiating individual terms for each entity using the exemption.

Bitcoin Remarks by UK FCA Head

Dec 20 2017

By Jonathan Lawrence

Andrew Bailey, the Chief Executive of the UK Financial Conduct Authority (FCA), recently gave an interview to the BBC in connection with bitcoin. In remarks on 14 December, Mr Bailey said that he currently sees no systemic risk in bitcoin and is not pushing the UK government to make the cryptocurrency part of the FCA’s regulatory remit. He emphasised that investors should be prepared to lose everything if they buy bitcoin, however as long as people understood the risks of what he termed “a very volatile commodity”, he would not press the UK government to legislate that the FCA regulate it. He said “I don’t think bitcoin is prevalent enough at the moment to be a systemic threat in the way we experienced during the financial crisis other threats; it needs watching carefully but I don’t think we’re there yet… If I thought there was evidence of people saying: ‘You know what I’m going to put my pension into? bitcoin!’ I’d be very concerned, but we don’t see that at the moment.”.

FCA comment on ICOs

Dec 20 2017

By Rizwan Qayyum

The UK Financial Conduct Authority (FCA) has released a feedback statement on the Distributed Ledger technology discussion paper from April 2017 (DP17/3).

As a part of this, they commented on ICOs, noting:

“On the Initial Coin Offering (ICO) market, the FCA will gather further evidence and conduct a deeper examination of the fast-paced developments. Its findings will help to determine whether or not there is need for further regulatory action in this area beyond the consumer warning issued in September”

The feedback is available here.

ASIC broadens Fintech Cooperation with Canadian Regulators

Dec 19 2017

By Jim Bulling, Michelle Chasser and Edwin Tan

The Australian Securities & Investments Commission (ASIC) has announced a new Cooperation Agreement with the Canadian Securities Administrators (CSA), a year after entering into a similar agreement with the Ontario Securities Commission. The CSA is made up of the following Canadian regulators:

Autorité des marchés financiers (Québec);
British Columbia Securities Commission;
Alberta Securities Commission;
Financial and Consumer Affairs Authority of Saskatchewan;
Manitoba Securities Commission;
Financial and Consumer Services Commission (New Brunswick); and
Nova Scotia Securities Commission.

UK Investment Management Industry and FinTech

Dec 14 2017

By Jonathan Lawrence

The UK Treasury recently published its Investment Management Strategy II Report. Building on its 2013 strategy report ‒ which mainly focused on how to improve the UK as a fund domicile ‒ this report sets out the UK government’s strategy to build upon the success of the UK’s investment management industry in the long-term.

One chapter is devoted to FinTech. The government is keen to see FinTech and asset management firms utilising the Financial Conduct Authority’s (FCA) Project Innovate, engaging early with the regulator to gain tailored regulatory support and test innovative products in a safe place. It also encourages the sector to take advantage of the FinTech bridges established between the UK to its global partners. Since 2015, the government has established four ‘FinTech Bridges’ – with Singapore, the Republic of Korea, China and Hong Kong. FinTech Bridges provide opportunities for firms to scale up their UK FinTech innovations, internationally. By establishing links between government, regulators and private sectors, FinTech bridges reduce the barriers to entry in a new jurisdiction and link UK FinTech firms to international investment opportunities. The UK’s FinTech Bridges all contain regulatory co-operation agreements negotiated between the FCA and their regulatory counterparts.