FinTech Law Watch

At the Crossroads of Law, Innovation and Commerce

 

1
Wyoming Moving to Exempt Virtual Currency from its Money Transmitter Law
2
Maltese Government releases consultation paper on DLT and ICOs
3
A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization
4
Hong Kong regulators take action against cryptocurrency exchanges and ICOs
5
Australian Open Banking Developments
6
Plastic – that is so yesterday
7
Cryptocurrency 2018: When the Law Catches Up with Game-Changing Technology
8
The Shoe Finally Drops: CFPB Makes Final Changes to the Prepaid Account Rule and Delays the Effective Date until 2019
9
Starbucks – a trust legitimiser for blockchain?
10
Hacking of digital currency exchange leaves Japanese company footing the bill

Wyoming Moving to Exempt Virtual Currency from its Money Transmitter Law

By Dan S Cohen

With unanimous support, the Wyoming House of Representatives passed House Bill 19, which exempts virtual currencies from the state’s money transmission law. HB 19 defines virtual currency as a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and is not recognized by the federal government as legal tender. If enacted, the Wyoming Money Transmitter Act would no longer apply to the buying, selling, issuing, or taking custody of virtual currency, or receiving virtual currency for the purpose of transmitting that currency within or outside of the United States.

The proposed change comes almost two years after Coinbase announced its indefinite suspension of business in the state due to its belief that the Wyoming Division of Banking interpreted the Wyoming Money Transmitter Act to apply to entities offering hosted wallet services. Wyoming would become the first state to completely exempt virtual currency from its money transmitter law if the bill is adopted. To date, Illinois, Kansas, Tennessee, and Texas have issued guidance excluding some but not all virtual currency activities from their respective money transmitter laws.

HB 19 is one of several virtual currency and blockchain-related bills the Wyoming legislature is considering. Bills to exempt “utility tokens” from securities regulation, and to allow companies to store records and accept shareholder votes through blockchain technology are also under consideration. Wyoming political leaders are clearly moving quickly to adapt to the rise of virtual currency and blockchain technology.

Maltese Government releases consultation paper on DLT and ICOs

By Rizwan Qayyum

The Government of Malta has issued a consultation paper on the framework relating to distributed ledger technology, ICOs and cryptocurrency exchanges and wallet providers dealing in such assets. This follows their initial Discussion Paper on ICOs and Virtual Currencies published in November 2017, which outlined the basis for this consultation paper.

A Small, But Promising, Step Towards State Money Transmitter Licensing Harmonization

By Jeremy M McLaughlin

The time and expense of applying for state money transmitter licenses can be an incredibly steep barrier to entry for many fintech and cryptocurrency businesses.  Seven states—Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington (collectively, “Signatory States”)—have taken an initial step to lower that barrier.  They have signed an agreement (“Protocol”) aimed at expediting and simplifying the application process for money services businesses.  The Conference of State Bank Supervisors (“CSBS”) announced the agreement and indicated other states are expected to join.

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Hong Kong regulators take action against cryptocurrency exchanges and ICOs

By Rizwan Qayyum

Hong Kong’s Securities and Futures Commission (“SFC”) have issued formal warnings to seven cryptocurrency exchanges and seven issuers of initial coin offerings. This follows their initial statement on ICOs released on 5 September 2017, and represents their first regulatory action.

The SFC has sent letters to seven cryptocurrency exchanges “in Hong Kong or with connections to Hong Kong”, which provides a warning that they should not be trading cryptocurrencies which are “securities” as defined in the Securities and Futures Ordinance (“SFO”) without a licence.  The exchanges responded immediately, either by confirming that they do not provide trading services for such currencies or took rectification measures, including removing relevant cryptocurrencies from their platforms.

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Australian Open Banking Developments

By Jim Bulling and Edwin Tan

The Australian Government has today released a report into Open Banking in Australia that sets out recommendations in relation to the method of implementation and proposed timelines.  Some key points are:

  • the Australian Competition and Consumer Commission (ACCC) should be primarily responsible for overseeing standards-setting and accreditation, assisted by the Office of the Australian Information Commissioner for privacy issues;
  • the obligation to share data should apply to all Australian Deposit-taking Institutions (ADIs) as well as reciprocally for other participating entities;
  • all ADIs should be automatically accredited to receive data.  A risk-based accreditation standard should be used for non-ADIs (this would include most FinTech startups, for example);
  • the use of Application Programming Interfaces to facilitate data sharing; and
  • mandatory implementation of “read-only” access should be approximately 12 months from a final Government decision to implement Open Banking for the big 4 banks, with a further 12 months transitory period for other banks.

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Plastic – that is so yesterday

By Cameron Abbott and Samantha Tyrrell

Many readers won’t be surprised by a new report out of the US that mobile peer-to-peer (P2P) payment services are now more popular than ever. However, it may be surprising to readers that the flipside of this increase is that our use of plastic money is on the decline, with a future free of debit cards potentially on the horizon.

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Cryptocurrency 2018: When the Law Catches Up with Game-Changing Technology

By David E. Fialkow, Edward J. Mikolinksi and Jack S. BrodskyBlockchain technology and the virtual currency, or cryptocurrency, that uses this technology are revolutionizing the way businesses function and deliver goods and services. Even as cryptocurrency becomes a widely debated topic, gaining the critical attention of regulators and policymakers, individuals and businesses are investing billions of dollars in cryptocurrency annually. To understand how blockchain and cryptocurrency may impact you, your business, and your industry, it is important to understand what cryptocurrency is and how the underlying blockchain works. This article provides a brief introduction to these concepts as well as a primer on cryptocurrency legal issues.  To read the full article, click here.

 

Starbucks – a trust legitimiser for blockchain?

By Cameron Abbott and Samantha Tyrrell

In a recent quarterly investor call, Starbucks’ Chairman Howard Schultz discussed the possibility of incorporating blockchain technology into Starbucks’ impressive digital repertoire.

Starbucks’ commitment to being a first mover when it comes to disruptive technology has already resulted in the hugely successful implementation of its mobile payment app, launched in 2015. The app allows users to order, pay and accrue rewards remotely and now accounts for nearly one third of Starbucks’ US transactions. According to Schultz, these figures may warrant a move towards integrating some entirely cashless stores throughout the US.

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Hacking of digital currency exchange leaves Japanese company footing the bill

By Cameron Abbott and Allison Wallace

Coincheck – one of Japan’s largest digital currency exchanges – says it will repay hundreds of millions of dollars’ worth of virtual money, after hackers broke into its network, stealing a reporting 58 billion yen (AUD660 million) worth of NEM (a cryptocurrency like Bitcoin).

Hackers broke into the Coincheck network early Friday morning, but it wasn’t discovered until nearly eight and a half hours later. Read More

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