regulation – Page 5 – FinTech and Blockchain Law Watch

Indonesia’s financial services authority issues its first FinTech regulations

Jan 12 2017

Indonesia’s financial services authority (OJK) has issued its first regulations relating to FinTech. The regulations lay out minimum capital requirements, interest rate provision and education and consumer protection rules.

Every Indonesian FinTech P2P lending firm must now register and secure a business licence from the authority. A company must have Indonesian Rupiah 1 billion ($75,000) in capital to register, and a further Indonesian Rupiah 2.5 billion ($188,000) to apply for a business licence. These figures are approximately half those that had been proposed in previously issued draft regulations. Foreign ownership is limited to 85%.

No maximum interest rate has been set, which again contradicts previous drafts of the regulations which set a cap of seven times Bank Indonesia’s seven-day reverse purchase rate per annum.

Muliaman Hadad, chair of OJK, told the Jakarta Post that the regulation was only an initial step in the authorities’ efforts to regulate and supervise the business. “What’s important is they get onto our radar because we don’t want to regulate the prudential aspects hastily. We want to provide [business] transparency guidelines first,” Hadad said. The OJK also has implemented a regulatory sandbox for firms to test services for consumers.

Bank Indonesia set up a dedicated office and regulatory sandbox in November 2016 to help FinTech developers. It will also provide services to help developers to understand Indonesia’s regulatory policies on FinTech, gather and disseminate information on developments, and hold regular meetings with authorities and international bodies interested in the use of technology in finance, Bank Indonesia said.

For a full text (in Indonesian) of the regulations, please click here.

The post-election fintech world: are happy days (for bankers) here again?

Dec 05 2016

By Judith Rinearson and Eric Love

In the days following the U.S. federal elections that resulted in the election of Donald Trump as President and Republican control of the 115th Congress, FinTech companies, banks, and other financial institutions are increasingly asking whether they still need to worry about compliance with the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), Consumer Financial Protection Bureau (“CFPB”) regulatory actions, and other financial services regulations.

It is true that there will likely be some significant regulatory changes, but it is a little too early for industry participants to pop the champagne corks.

To see are our thoughts about some of the top issues impacting FinTech companies, banks and other financial institutions, click here.

FinTech in Canada – Towards Leading the Global Financial Technology Transition

Nov 15 2016

By Robert Zinn and Jim Bulling

The Digital Finance Institute is a prestigious Canadian-based think tank for FinTech established in 2013 with a mandate to address the balance of innovation and regulation; support initiatives for financial inclusion; and advocate for diversity in FinTech. The Digital Finance Institute also promotes FinTech in Canada through conferences and international alliances; the creation of Canada’s national FinTech Awards; the FinTech Cup, the new university FinTech startup challenge and by preparing research papers on FinTech.

Robert Zinn and Jim Bulling contributed insight and content to the U.S. and Australian FinTech ecyosystems.

To read this publication, click here.

A guide to doing FinTech business in the U.S. and Germany

Oct 28 2016

“Getting the Deal Through” is a publication that provides international expert analysis in key areas of law, practice and regulation for corporate counsel, cross-border legal practitioners, and company directors and officers.

The inaugural edition of Fintech serves as a resource to help fintech entrepreneurs and their advisers and investors around the world navigate the often complex key legal and regulatory issues on which we are most often asked to advise. Two of the chapters were authored by K&L Gates lawyers.

The Germany chapter is authored by Dr. Hilger von Livonius, Dr. Friederike Gräfin von Brühl and Dr. Thomas Nietsch.

The United States chapter is authored by Judith Rinearson, Robert Zinn, Anthony Nolan, C. Todd Gibson and Andrew Reibman.

To read this publication, click here.

To support payments innovation, avoid unnecessary regulation

Sep 12 2016

By John R. Gardner

The rapid growth of new payment system innovation in recent years in many ways mirrors similar growth in the credit card industry in the 1950s and 1960s. A review of the development of the credit card industry leading up to the significant amendments to the Truth in Lending Act in 1970, and the ultimate effect of the legislation when viewed against the concerns voiced by Congress, arguably demonstrate that the legislation was unnecessary, inefficient and anticompetitive. Accordingly, legislatures and regulators should take a cautious approach to enacting restrictions proposed in the name of consumer protection. To avoid the mistakes of the past, legislatures and regulators should carefully consider how such measures might limit competition and innovation, whether such measures would truly result in a benefit to consumers, and whether there are any less restrictive measures that would result in equivalent consumer protection.

You can read my full article here.

Regtech Earns a Name

Sep 12 2016

By Susan Altman

Technology solutions for bank regulatory requirements have been around for decades, but their soaring popularity has led to them earning their own nickname within the fintech world: they’re now “regtech” solutions, according to a new report issued by Bain & Co. in the American Banker. Regtech products are designed to benefit banks’ efforts to comply with growing regulatory burdens and improve internal governance controls. Bain estimates that governance, risk and compliance costs account for 15% to 20% of the total “run the bank” cost base of most major banks. It’s no small wonder that banks are struggling to devise a robust and efficient approach to compliance and are outsourcing the implementation and hosting of advanced compliance tools with nimble regtech-focused outside vendors. Bain has identified more than 80 emerging regtechs that extract and structure data, integrate data from banks’ proprietary systems, third-party data providers and public sources, and crunch the data in automated, scalable ways. Artificial intelligence, or machine learning, continuously improves the quality, precision and reliability of the insights that emerge.

Bain predicts that banks’ relationships with regtechs will be significantly shaped by regulators, in the form of governance, risk and compliance standards and approval of proposed solutions. As new requirements go into effect, banks will need to continuously assess the level of functionality, complexity and efficiency of current technology, systems and data. And did we mention, this all has to be done in a very secure environment?

Movement in marketplace lending regulation for small business loans

Sep 09 2016

By Jim Bulling and Michelle Chasser

Marketplace lenders who cater to small businesses are about to face increased regulation in relation to the credit they provide. From 12 November 2016, some businesses will receive the same protection currently available to consumers as unfair contract terms in small business contracts will become prohibited.

Small business contracts include loans which are entered into with businesses which have fewer than 20 employees for an amount less than $300,000 or less than $1 million if the term of the loan is more than 12 months.

Under the new law, a contract term will be unfair if:

it would cause a significant imbalance in the parties’ rights and obligations;
it is not reasonably necessary to protect the interests of the party who would be advantaged by the term; and
it would cause detriment to a party if the term is relied on.

Proposed FDIC guidance on marketplace lending could have far reaching impact on industry

Aug 31 2016

By Sean Mahoney

Following up on its recent Supervisory Insights article on marketplace lending and Advisory on Effective Risk Management Practices for Purchased Loans and Purchased Loan Participations, the FDIC on July 31, 2016 released its proposed Examination Guidance for Third-Party Lending. If nothing else, this series of recent developments demonstrates the FDIC’s concern with the role of banks in marketplace lending. Unlike the prior two releases, the July proposed guidance is subject to public comment, with a comment period expiring October 27, 2016.

All three issuances share a common set of fundamental concerns. These include concerns that (a) a bank may rely on a marketplace lending platform to an unjustified extent; (b) the marketplace lending activity may not fit within a bank’s corporate strategy; (c) that lending through a marketplace platform may not be consistent with the bank’s underwriting standards; (d) that the bank may not adequately assure that the activity is being conducted in accordance with applicable law; and (e) that the bank may not otherwise adequately manage risks inherent in the activity. The Proposed Guidance goes a few steps further by requiring that banks that engage in marketplace lending activities have specific, detailed policies and procedures addressing a set of prescribed parameters. Further the Proposed Guidance would mandate that contracts between a bank and marketplace lending platform provide the bank with, among other things, (i) the right to mandate that the platform adopt policies and procedures governing any activity outsourced to the platform, and (ii) rights to performance data, audits and funding information.

While the Proposed Guidance will only apply to state-chartered, FDIC-insured banks that are not members of the Federal Reserve System, it could have far-reaching effects given the increased prevalence of state-chartered banks of all types in marketplace lending. Moreover, the Proposed Guidance may strain the tension between financial innovation and comprehensive regulatory oversight inherent in much of FinTech.

Government committed to introducing mandatory data breach notification laws

Aug 22 2016

By Cameron Abbott and Rebecca Murray

After much delay, a spokesperson for Attorney-General, George Brandis has said the government is committed to introducing the Mandatory Data Breach Notification laws this year. We will be sure to look out for it during the next term of Parliament. You can find more information on the proposed scheme and its regulatory impact on the Attorney General’s Department consultation for Serious Data Breach Notification webpage.

K&L Gates Adds Leading FinTech Partners

Jul 28 2016

Global law firm K&L Gates welcomes Judith Rinearson and Linda C. Odom as partners in the firm’s FinTech and Consumer Financial Services practices. Rinearson joins K&L Gates’ New York and London offices, and Odom, joins the Washington, D.C. office. “Judie Rinearson and Linda Odom are highly respected authorities in numerous key regulatory and commercial areas within the FinTech ecosystem,” stated Robert Zinn, co-leader of K&L Gates’ global corporate and transactional practice area as well as of the firm’s market-leading global FinTech practice.

To read our full press release please click here.

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