FinTech and Blockchain Law Watch – Page 35 – At the Crossroads of Law, Innovation and Commerce

Australian Securities and Investments Commission announces the commencement date for its crowd-sourced funding regime

Sep 13 2017

By Jim Bulling, Daniel Knight and Felix Charlesworth

The Australian Securities and Investments Commission (ASIC) has announced that will begin accepting applications under its new crowd sourced funding (CSF) regime from 29 September 2017 onwards. From this date, applications can be submitted via the existing ASIC ‘eLicensing’ portal.

In preparation for the commencement of the CSF regime, ASIC has released an information sheet outlining:

the expected application process and timeframe; and
its approach of assessing applicants.

During the period between 29 September 2017 and 27 October 2017, ASIC will assess applications lodged on similar dates in ‘batches.’ Successful applications from each batch will progress broadly at the same time. Incomplete or inadequate applications lodged during this period may be refused or placed in later application batches. Applications which are lodged from 27 October 2017 onwards will be considered individually as soon as possible.

Switzerland and Israel sign cooperation agreement

Sep 13 2017

By Jonathan Lawrence

Swiss and Israeli financial regulators entered into a FinTech cooperation agreement on 4 September. The Swiss Financial Market Supervisory Authority (FINMA), the Israeli Capital Markets Insurance and Savings Authority (CMISA) and the Israel Securities Authority (“ISA”) intend to cooperate with the aim of encouraging and enabling innovation in their respective financial services industries and of supporting financial innovators in complying with the regulations in each other’s jurisdictions.

The agreement sets out existing activities in the FinTech regulatory space by each regulator. The new cooperation will include information sharing (including on regulatory issues), support to financial innovators from the other’s country (including help to understand the relevant regulatory environment), dialogue on new innovations and knowledge and expertise sharing.

Hong Kong Securities and Futures Commission statement on initial coin offerings

Sep 11 2017

By Jonathan Lawrence

The Hong Kong Securities and Futures Commission (SFC) issued a statement about initial coin offerings (ICOs) on 5 September. The SFC noted an increase in the use of ICOs to raise funds in Hong Kong and elsewhere. The SFC said that, depending on the facts and circumstances of an ICO, digital tokens that are offered or sold may be “securities” as defined in the Hong Kong Securities and Futures Ordinance (SFO), and therefore subject to the securities laws of Hong Kong. ICOs typically involve the issuance of digital tokens, created and disseminated using distributed ledger or blockchain technology.

Securities over the Blockchain expected to get legal framework in France this fall

Sep 08 2017

By Claude-Étienne Armingaud & Sidney Lichtenstein

The French Act no.2016-1691 dated 9 December 2016 on Transparency, Anti-Corruption and Modernization of Economic Life empowered the Government to amend the regulatory framework to facilitate the transmission of certain financial securities through blockchain technology.

In order to prepare such executive order, the Ministry of Finance initiated last Spring a public consultation, whose key trends were made public on 30 August 2017.

World Economic Forum publishes report on FinTech

Sep 08 2017

By Giovanni Campi and Ignasi Guardans

On 22 August, the World Economic Forum (WEF) published the report “Beyond FinTech: A Pragmatic Assessment of Disruptive Potential in Financial Services”. The report, prepared in collaboration with Deloitte, maps out the impact of FinTech firms on different sectors and presents contrasting outlooks for the future of the industry.

One its key takeaways is that FinTech companies have changed how financial services are structured, but have so far failed to establish themselves as dominant players in the market. However, they have created the basis for potential disruption in the future. The success of financial institutions is thus increasingly more dependent on their ability to promptly adapt their business models and develop partnerships.

Hong Kong and South Korea on ICOs

Sep 07 2017

By Rizwan Qayyum and Robert Crea

Hong Kong’s Securities and Futures Commission released a statement discussing whether existing regulations could be applicable to ICOs. This is a move likely precipitated by China’s ban on ICOs announced earlier this week.

The Executive Director of Intermediaries at the SFC, Julia Leung, warned that purchasers and those involved in an ICO need to be “that some ICO structures may be subject to Hong Kong securities laws.”

South Korean regulators have also taken a step towards tightening ICO regulation. South Korea’s digital currency task force group, comprised of the country’s central bank, and the Financial Services Commission (amongst other bodies) held a meeting on 3 September 2017, in which they discussed ICOs. It was noted that authorities will punish ICO fundraising platforms for violating the Capital Market Act by raising funds through stock issuance using digital currencies.

Bahrain announces first entrants into its FinTech regulatory sandbox

Sep 07 2017

By Jonathan Lawrence

The Central Bank of Bahrain (CBB) has announced the first two entrants into its FinTech regulatory sandbox: Tramonex, a London-based foreign exchange cash management solution for businesses; and NOW Money, a Dubai-based account and remittance service for low-income workers in the Gulf Cooperation Council countries. The CBB launched its Regulatory Sandbox Framework in June and updated the framework rules at the end of August. The sandbox application process is open to both existing CBB licensees (financial institutions with FinTech initiatives) and other companies (local and foreign). The latter may include financial sector companies as well as technology and telecom companies intending to test an innovative product or service, professional service firms which partner with or service financial institutions, or any other type of applicant working within the financial services.

Federal Government extends AML/CTF regulation to capture digital currency exchanges

Aug 31 2017

By Michelle Chasser and Felix Charlesworth

On Thursday 17 August 2017, the Minister for Justice tabled the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2017 (Bill).

The Bill will extend the Australian AML regime to cover digital currency exchange providers. Currently the AML regime applies only to ‘e-currencies’ which are backed by physical things such as bullion or precious metals while digital currencies backed by a cryptographic algorithm such as Bitcoin are excluded. The Bill repeals the definition of ‘e-currency’ and replaces it with the broader term ‘digital currency’ which is defined as a digital representation of value that:

functions as a medium of exchange;
is not issued by the authority of a government body;
is interchangeable with money; and
is generally available to members of the public.

Dubai and Hong Kong sign cooperation agreement

Aug 30 2017

By Jonathan Lawrence

On 28 August, the Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) of Hong Kong entered into a co-operation agreement to establish a framework for mutual assistance to keep abreast of the development and application of FinTech in their jurisdictions. Under the agreement, the SFC and the DFSA will cooperate on information sharing, potential innovation projects and referrals of innovative firms seeking to enter one another’s markets.

The agreement follows the launch of:

the SFC’s FinTech Contact Point in March 2016 to enhance communication with businesses involved in the development and application of FinTech and RegTech in Hong Kong. Its purposes is to facilitate the FinTech and RegTech community’s understanding of the current regulatory regime in Hong Kong and to enable the SFC to stay up to date with industry developments; and
the DFSA’s regulatory FinTech regime (see some of our earlier posts on FinTech in Dubai – crowdfunding, accelerator and innovation testing licences)

Faster Payments Task Force issues Part Two of Final Faster Payments Report

Aug 29 2017

By Eric A. Love and Judith Rinearson

The Faster Payments Task Force (the Task Force) has issued part two of its Final Report that sets forth a blueprint for achieving faster and more secure payments in the U.S. by 2020.

Convened by the Federal Reserve Board (FRB) and comprised of a broad cross-section of over 300 industry, government and consumer group stakeholders, the Task Force released part one of its Final Report in January 2017 which outlined the Task Force’s goals and the many advantages of faster payments. Instead of championing a single method to achieving “ubiquitous faster payments,” the Task Force states in part two that it favors competition among a wide array of potential ways to achieve this goal and supports collaboration with industry stakeholders to ensure “broad adoption; safety, integrity and trust; and interoperability.”