FinTech and Blockchain Law Watch – Page 41 – At the Crossroads of Law, Innovation and Commerce

Proprietary companies to be able to access crowd sourced funding

May 18 2017

On 9 May 2017, the Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Bill 2017 (Bill) was released for public consultation. If passed into law, the Bill will allow proprietary companies that meet eligibility requirements to access crowd-sourced funding (CSF).

As detailed in a recent blog post on the FinTech Law Watch, CSF will become available in Australia on 28 September 2017 due to the Corporations Amendment (Crowd Sourced Funding) 2016 (Cth) (Act). However, the Act limits the availability of crowd-sourced funding to public unlisted companies.

Dubai International Financial Centre’s FinTech Hive accelerator opens

May 18 2017

By Jonathan Lawrence

The Dubai International Financial Centre (DIFC) has formally opened its call for applicants to its ‘FinTech Hive at DIFC’ accelerator programme, following registered interest from over 200 companies since its launch in January 2017. The 12-week programme is aiming to help early and growth-stage FinTech companies accelerate product and business development by gaining exposure to help from financial institution executives. Successful applicants will be offered the opportunity to develop, test and modify their innovations in collaboration with senior representatives from DIFC Authority, Accenture, and financial institutions such as Citi, HSBC, Standard Chartered, Visa, Emirates NBD, and Mashreq.

The programme also aims to provide access to mentorship from technology partners such as Facebook and Envestnet | Yodlee. Facebook will run an independent mentorship workshop for startups, providing advice on monetisation, growth and engagement, development and marketing tools, and analytics. Envestnet | Yodlee will provide developers with access to Application Program Interfaces (APIs) to build innovative financial applications and services.

The changing nature of payments in the US and UK

May 11 2017

By Judith Rinearson

Rarely does a FinTech lawyer have the opportunity to experience payments regulations in two very different locations. US K&L Gates Partner, Judith Rinearson, had the opportunity to do just that when she spent 20 months in London working as a payments regulatory lawyer. Her insightful commentary on the two different approaches to payments regulations was recently published in the UK’s Law 360.

To read the article, click here.

Surge in fintech patent applications

May 05 2017

By Alistair Mann and Steven Wulff

Several business publications have recently reported a dramatic increase in the number of patent applications filed globally for fintech-related inventions. According to one widely-reported analysis, 9,545 applications were filed in 2016 which is 500 more than in 2015 and over 49% more than in 2011. The United States is reportedly leading the charge with 4,523 patent filings in 2016 and China, in a somewhat distant second place, filed about half that number in the same year.

A patent gives an inventor exclusive rights to exploit their invention commercially for a limited term (usually 20 years) in return for public disclosure of the invention. The monopoly conferred serves to incentivize innovation and encourages public disclosure of innovations for the advancement of technology and the common good. The recent surge in patent applications clearly reflects a significant uptick in research and development efforts in fintech and shows that innovators in this space are serious about protecting and commercialising the fruits of their labour.

The types of fintech-related inventions seeking to be patented are diverse and include systems for managing bitcoin and blockchain-based currency reserves. Other examples include credit risk assessment tools and artificial intelligence agents for identifying and analysing fraud and irregular trading activities.

K&L Gates has significant experience filing fintech-related patents including for SMEs and large entities in Australia and the United States. Innovators should consider patenting their new fintech technologies to help protect their competitive advantage and reward their R&D efforts.

ASIC signs fintech Cooperation Agreement with Indonesia

May 05 2017

By Claire de Koeyer and Jim Bulling

The Australian Securities Investment Commission (ASIC) has entered into a Cooperation Agreement (Agreement) with Indonesia’s financial services sector regulator Otoritas Jasa Keuangan (OJK) which focuses on promoting innovation in financial services in their respective markets.

The Agreement establishes a framework for cooperation between ASIC and OJK in the expanding space of financial services innovation, including an agreement to share information on emerging market trends and regulatory issues arising from the growth in innovation.

Voice biometrics and fraud prevention in payments

May 05 2017

By Claire de Koeyer and Jim Bulling

The ability to transfer funds from one account to another in near real-time using just an email address or mobile number is getting closer for Australians with the RBA advising that developments are on track to allow the first payments to be made through a new payment platform towards the end of 2017. The new platform, the development of which was commenced by the RBA in 2012, allows for near real-time funds transfer between bank accounts, regardless of who people bank with.

K&L Gates hosts FinTech event in Perth

May 03 2017

By Adam Levine and Ben Kiernan-Green

On 19 April 2017 the K&L Gates Perth office hosted a Perth FinTech Meetup, chaired by ASIC Commissioner John Price. The event provided clients, lawyers and members of the FinTech and crowd-funding communities an opportunity to hear about ASIC’s involvement and commitment to the development of the ASIC Innovation Hub, ASIC’s regulatory sandbox and RegTech.

European Commission to set up a blockchain observatory

May 03 2017

By Giovanni Campi and Jonathan Lawrence

The European Commission recently announced that it is working on setting up an EU blockchain observatory. This will be a pilot project to build up technical expertise and regulatory capacity on topics related to blockchain and distributed ledger technology (DLT).

The EU blockchain observatory is being developed under the framework of the European Commission’s Task Force on FinTech, which was established following the adoption by the European Parliament of an own-initiative report on virtual currencies on 26 May 2016. Co-chaired by the European Commission’s Directorate Generals on Financial Services (DG FISMA) and on the Digital Single Market (DG CONNECT), the Task Force was set up in November 2016 to explore policy responses to FinTech. It is expected to deliver its final recommendations in the course of 2017.

U.S. Government Accountability Office Issues Long-Awaited Report on Fintech Industry

May 01 2017

By Judith Rinearson and Eric A. Love

The U.S. GAO has issued a long-awaited report on the fintech industry, which focuses on the regulation of marketplace lenders, mobile payments, digital wealth management platforms and distributed ledger technology (“DLT” – often referred to as blockchain). For each of these fintech industry “subsectors,” the GAO report details the nature of the subsector and how it operates, as well as its potential benefits and risks. Moreover, the GAO report addresses industry trends, regulation and oversight for each subsector.

Marketplace lenders. The GAO report indicates that marketplace lenders may provide expanded and quick access to credit at lower cost than banks, although the report also notes risks related to loan term transparency and certain protections for small business borrowers. Read More

CFPB Finalizes Extension of Prepaid Account Rule Effective Date

May 01 2017

By Judith Rinearson and Eric A. Love

On April 20, the CFPB issued a final rule to delay for six months the October 1, 2017 effective date of its comprehensive Final Rule amending Regulation E and Regulation Z as applied to prepaid accounts. The Final Rule will now become effective on April 1, 2018.

In announcing the delay, the CFPB indicated that it has decided to “revisit at least two substantive issues” in the Final Rule through a separate rulemaking process. Based on CFPB Director Richard Cordray’s recent testimony before the House Financial Services Committee, the two substantive issues most likely relate to: (1) the Final Rule’s applicability to “the linking of credit cards to digital wallets that are capable of storing funds,” and (2) error resolution for unregistered prepaid cards. The CFPB can be expected to issue a proposal on these issues “in the coming weeks.”

Notably, the CFPB’s action could help to address concerns raised by Congressional Republicans about the scope of the Final Rule and its potential impact on industry participants and consumers, thus complicating ongoing efforts in Congress to repeal the Final Rule using the Congressional Review Act (CRA). In order to repeal the Final Rule utilizing the CRA, Congress would be required to pass a repeal bill by May 9, 2017.