FinTech Law Watch

At the Crossroads of Law, Innovation and Commerce

 

1
An old-fashioned bank heist – in cyberspace
2
UK Cryptoassets Taskforce meets for first time
3
Mastercard assists Open Banking
4
Dubai Fintech Goes Global
5
Understanding the Effect of Wyoming’s Blockchain and Cryptocurrency Legislation
6
OCC Expected to Release Guidance on FinTech Charter in July 2018
7
Augmented Reality: Coming to a Store Near You?
8
Commissioner Peirce Remarks on the Challenges of Cryptocurrency Regulation
9
Federal Government to implement Open Banking regime in Australia
10
U.S. Government Accountability Office Issues Recommendations on FinTech Regulation

An old-fashioned bank heist – in cyberspace

By Cameron Abbott and Sarah Goegan

In the old days the bank robbers would rob the local town and ride off into the sunset. The new version is a little less easy to see. Coinrail, a South Korean cryptocurrency exchange, has announced that it was hacked on 10 June.  That’s a polite phrase for “our customers lost a lot of coins”.

The cyberattack resulted in more than $40 million USD worth of altcoins (coins that aren’t bitcoin or Ethereum) being stolen. This represented around 30% of coins traded on the exchange. Quite a substantial amount, considering Coinrail is a smaller cryptocurrency exchange!

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UK Cryptoassets Taskforce meets for first time

By Jonathan Lawrence

The first meeting of the UK’s new Cryptoassets Taskforce took place on 21 May 2018. First announced in April 2018 by the Chancellor of the Exchequer as part of the UK government’s Fintech Sector Strategy, the Taskforce is a central part of the government and financial regulators’ efforts to understand and engage with the implications of new technologies in financial services. At the first meeting, the Taskforce agreed its objectives, which include:

  • exploring the impact of cryptoassets;
  • the potential benefits and challenges of the application of distributed ledger technology in financial services; and
  • assessing what, if any, regulation is required in response.

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Mastercard assists Open Banking

By Jonathan Lawrence

On 13 January 2018 the second Payment Services Directive (PSD2) became law across the European Union, leading to Open Banking.  For background information, please see EU oversight on payments and Open Banking.

Mastercard announced on 5 June that it is launching a suite of services to help banks and FinTech companies navigate the Open Banking environment.  The programme seeks to address the liability issues of banks sharing their data with third parties and to help startups to better communicate with their banking partners.  For banks, Mastercard is building a pan-European directory of verified and legitimate third party providers, backed by a fraud monitoring service and dispute resolution mechanism.  Startups in turn will be provided with a ‘connectivity hub’ that will help third parties establish and maintain communication with banks.

The new services will be launched first during a pilot phase in early 2019, with the UK and Poland being a particular priority, before being rolled out across Europe later that year.

Dubai Fintech Goes Global

By Jonathan Lawrence

Dubai International Financial Centre (DIFC) has signed a FinTech Memorandum of Understanding (MoU) with professional services company Accenture. Under the MoU, FinTech Hive at DIFC – the first financial technology accelerator in the Middle East region – will collaborate with Accenture’s FinTech Innovation Labs in New York, London and Hong Kong, to share resources and knowledge on research and trends in FinTech. In line with the DIFC Growth Strategy 2024 and Dubai Vision 2021, FinTech Hive gives financial companies access to technologies to support their digital transformation while providing innovators with access to potential clients and investors.

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Understanding the Effect of Wyoming’s Blockchain and Cryptocurrency Legislation

By Carl E. VolzEden L. RohrerJudith E. RinearsonJeremy M. McLaughlin and Daniel S. Cohen

March was a busy month in the blockchain and cryptocurrency space for the Wyoming state government.  The legislature passed, and the governor signed, five bills that many in the industry view as favorable to blockchain and cryptocurrency businesses.  While the bills provide some beneficial clarity in this space and may attract businesses to the state, the scope and effect of some of the bills is limited.  Accordingly, it is important that industry participants fully understand what the new Wyoming laws address, and, perhaps more importantly, what they do not.

Please see our latest thinking here for a full discussion of Wyoming’s new blockchain and cryptocurrency legislation.

OCC Expected to Release Guidance on FinTech Charter in July 2018

By Eric A. Love and Dan Cohen

On May 24, 2018, Comptroller of the Currency Joseph Otting indicated during a press call that the Office of the Comptroller of the Currency (“OCC”) will release guidance in July 2018 on whether it will move forward with issuing a special purpose charter to FinTech companies.  According to press reports, Comptroller Otting had previously indicated that the OCC hasn’t yet made a final decision about issuance of a FinTech charter, although he had also signaled that guidance from the OCC on the matter could be released as early as June.  His more recent comments during the press call extend this timetable by a month.

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Augmented Reality: Coming to a Store Near You?

By Cameron Abbott, Warwick Anderson and Georgia Mills

Recent moves from PayPal and Target have brought fresh attention to the use of augmented reality (AR) in commercial settings. The technology remains in its infant stage but the revival of PayPal’s patent for payment-enabled AR glasses has some analysts wondering how close the technology is to becoming the mainstream.

The software described in the patent would give consumers with the glasses access to product and purchasing data simply by looking at an item on a store shelf.

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Commissioner Peirce Remarks on the Challenges of Cryptocurrency Regulation

By Andrew Massey, C. Todd Gibson Philip J. Morgan and Evan J. Glover

On May 2, 2018, Commissioner Hester Peirce shared her views regarding how cryptocurrencies fit within the regulatory landscape of the United States Securities and Exchange Commission (“SEC”). Click here for the full remarks.

Commissioner Peirce, recognizing that not all tokens are alike, acknowledged that the appropriate regulatory scheme for cryptocurrencies will be the product of a function over form analysis. Additionally, Peirce noted that the functionality of a token changes over time, requiring a more nuanced regulatory scheme to ensure market safety.

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Federal Government to implement Open Banking regime in Australia

Jim Bulling, Daniel Knight and Felix Charlesworth

On 9 May 2018, the Australian Government confirmed their decision to establish an Australian Open Banking regime and implement the recommendations set out in the Farrell Report titled “Review into Open Banking in Australia”. This follows the Government’s report into Open Banking released in February 2018 which broadly supported the creation of a new data-sharing regime in the financial services industry. The Australian Government has set aside roughly $45 million over four years to develop the creation of a Consumer Data Right which includes the establishment of the Open Banking framework.

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U.S. Government Accountability Office Issues Recommendations on FinTech Regulation

By  Judith Rinearson and Eric A. Love

The U.S. GAO issued its anticipated 132-page report entitled “Financial Technology: Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight.”  In the report, the GAO describes the benefits and risks; regulatory oversight and challenges; and regulatory efforts to foster innovation with respect to the following four specified FinTech activities: person to person payments, marketplace lending, digital wealth management and distributed ledger technology.  It also offers recommendations about how to enhance FinTech regulation.

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