At the Crossroads of Law, Innovation and Commerce
Judith Rinearson and Robert Zinn contributed an article to AmericanLawyer.com on legal trends to watch for in 2017 concerning FinTech. Trends include:
To read the article, click here.
In a recent CoinDesk Op-Ed, Josh Stark makes a useful distinction between smart contract code and smart legal contracts. He describes smart contract code as a program or script executed on a blockchain—this code being what many commentators misleadingly refer to as “smart contracts.” This (mis)use of the phrase has led lawyers to quip that smart contracts are neither smart nor contracts, they’re just code. The better term for blockchain code-enabled legal contracts is “smart legal contracts.”
Although Stark helps us a lot with terminology, his argument goes a little askew in suggesting that smart contract technology enables machine to machine commerce without enforcement by legal entities and therefore is a new tool for solving the problem of trust between trading parties. Individuals and companies are legal entities and at least two of them hold an interest behind every machine operation executing smart contract code. Just because there is no intermediary between the two (or more) parties to the transaction does not mean that traditional legal contract principles do not apply. Smart contract code speeds up and increases integrity in trading transactions by reducing friction in forming, executing and enforcing a contract. It is a new tool in our toolkit, but the toolkit is for building traditional legal contracts. Offer and acceptance, coupled with consideration, are still the basic principles of contracts, whether they are smart, stupid, oral, written or digital.
At the annual consumer electronics show in Las Vegas earlier this month, Honda demonstrated an in-vehicle payments platform. Through a partnership with Visa, Honda will enable drivers to pay for a variety of services through their car, such as for parking and fuel. The car manufacturer made clear, however, that it wanted to enable in-car payments for a variety of other services in the future.
Honda is not alone. Volkswagen Financial Services AG recently announced that it had purchased mobile payment platform PayByPhone. Ford has announced a virtual wallet service called FordPay. And on January 17, 2017, Daimler Financial Services AG announced that it had acquired PayCash Europe SA and was planning to launch its own epayments service, “Mercedes pay.” Read More
By Cameron Abbott and Allison Wallace
After fielding more than 300 applicants around the globe, Accenture has selected 20 start-ups to participate in its largest ever fintech accelerator programme.
Artificial Intelligence, Blockchain and gamification technology are all key features in this year’s 12-week programme running in London.
By the end of the programme, 8 start-ups will be selected to present at the programme’s Graduation Day to a group of venture capitalists and financial industry executives. All of the start-ups will receive mentorship from representatives of 28 financial institutions.
Accenture’s Tom Graham told Finextra “the transformation requirements that the financial services industry must undertake to remain relevant arguably pose a bigger challenge than the immediate geo-political uncertainty casting a shadow over the industry”.
By Joseph A. Valenti, Daniel F. C. Crowley, Michael R. Komo
One of the most significant post-election questions for the financial-services industry—particularly global financial institutions that move money across borders—is what is the status of President-elect Trump’s proposal to tax electronic remittances to Mexico to pay for the wall between Mexico and the United States?
To read the full alert, click here.
Dubai International Financial Centre (DIFC), the federal financial free zone situated in Dubai, United Arab Emirates, announced on 10 January 2017 the launch of the region’s first FinTech accelerator.
The FinTech Hive at DIFC accelerator aims to create a platform that will provide selected companies the opportunity to test and modify their FinTech advances. It will identify leading technology entrepreneurs and companies through a competitive process and offer them the opportunity to collaborate with executives from DIFC and regional and international financial institutions. Accenture has been chosen to set up and operate the accelerator
About 150–200 companies are expected to take part in the FinTech Hive over a five-year period, and no specific funding amount has been provided. The FinTech Hive is also interested in growing companies that have a product currently deployed outside of financial services but that are interested in entering this sector.
For the FinTech Hive at DIFC website, please click here.
By Tyler Kirk
2017 will likely be the year of blockchain, and active fund shops should take notice. With over a quarter trillion dollars fleeing actively managed funds, see Part 1, 2016 was a disappointing year for active managers in the U.S. Blockchain’s cost savings might just be what the doctor ordered.
For 7 years the world struggled to understand bitcoin. Bitcoin was introduced around November 2008, declared property by the IRS in March 2014, and declared a commodity by the CFTC in September 2015. With bitcoin no longer novel, 2016 became the gestation period for bitcoin’s more profound invention, blockchain. As 2017 picks up momentum, we will begin to see financial institutions bringing blockchain applications in from the fringes of the industry and revolutionizing the financial markets. Consider the race by banks to patent their blockchain ideas. It doesn’t look like it will take 7 years for blockchain’s potential to become reality.
The UK’s Competition and Markets Authority (CMA) has found that Mastercard’s acquisition of VocaLink gives rise to UK competition/anti-trust concerns. Mastercard UK Holdco Ltd, a subsidiary of Mastercard International Incorporated (Mastercard), is buying VocaLink Holdings Ltd (VocaLink).
Mastercard already owns and operates credit and debit card schemes Mastercard, Maestro and Cirrus, and has also bid to supply infrastructure services to UK interbank payment systems. VocaLink is a supplier of payment infrastructure services to three major UK interbank payment systems:
Global Advisors (Jersey) Limited (“Global Advisors”), the investment manager of the Global Advisors Bitcoin Investment Fund PLC (“GABI”) announced on 19 December 2016 that the Channel Islands Securities Exchange (“CISE”) has approved the admission to listing of all of the redeemable participating no par value shares of the open ended fund. The CISE listing means that GABI becomes the first regulated bitcoin fund to be listed on any exchange globally.
GABI was launched in 2014 as the world’s first regulated bitcoin fund when it received certification as an Expert Fund from the Jersey Financial Services Commission. Its listing on the CISE means that it joins over 2,000 listed securities on the exchange comprising a market capitalisation of over £300 billion. It is the first digital asset-related listing on the exchange.
GABI is the third exchange listing for Global Advisors. The firm currently manages two Bitcoin Exchange Traded Certificates – COINXBT and COINXBE – on NASDAQ’s OMX in Stockholm. The firm is developing as a platform for digital assets combining digital asset management, direct market access and working with start-up firms developing distributed ledger technologies, including Glint, Gradbase and Aventus Systems.
The UK’s Financial Conduct Authority (FCA) has given an update on the post-implementation review of the UK loan-based and investment-based crowdfunding market since current rules came into force in April 2014. The FCA says it believes it is appropriate to modify a number of rules for the market.
For both loan-based and investment-based crowdfunding platforms the FCA has found that, for example:
In the loan-based crowdfunding market in particular, the FCA is concerned that, for example:
The FCA plans to consult on more prescriptive requirements on the content and timing of disclosures by both loan-based and investment-based crowdfunding platforms. For loan-based crowdfunding the FCA also intends to consult on:
The FCA’s ongoing research and investigatory work should be completed early in 2017. At that stage, the FCA will determine whether further consultation on rule changes is needed.
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