Archive: June 19, 2017

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Cryptocurrencies becoming more mainstream?
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UK P2P lending platform to launch Innovative Finance ISA
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U.S. Regulation CC amendments reallocate risks for remote deposit check payments

Cryptocurrencies becoming more mainstream?

By Jim Bulling and Michelle Chasser

Steps have been taken this year in Japan and Norway towards the integration of digital currencies such as Bitcoin into the mainstream financial sector. Japan has amended financial laws to include coverage of digital currencies as a type of ‘prepaid payment instrument’, and an online bank in Norway has announced plans to offer clients the ability to link their bank accounts with cryptocurrency accounts.

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UK P2P lending platform to launch Innovative Finance ISA

By Jacob Ghanty and John Van Deventer

RateSetter, a UK P2P lending platform, has raised £13 million in its latest round of fundraising as it prepares to launch its “innovative finance” ISA (IF-ISA).  The IF-ISA allows investors, or lenders, to earn interest free of income tax.  Before a P2P platform can offer its own ISA, it must be fully authorised by the Financial Conduct Authority (FCA).

This comes at a time of increased regulatory scrutiny of the P2P lending sector.  There is growing frustration in the industry at the prolonged regulatory approval process for IF-ISAs.  This is a function of high numbers of applications before the FCA and a high level of regulatory scepticism over this type of product.

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U.S. Regulation CC amendments reallocate risks for remote deposit check payments

By John ReVeal

More than three years after proposing amendments to the Regulation CC to add new indemnities for remotely deposited checks (cheques), new warranties for electronic checks and electronic returned checks and new indemnities for electronically-created items, the U.S. Federal Reserve has at last issued final rules. These new rules also modify the expeditious return rules, including by making electronic returned checks subject to those requirements. The final rules were issued on May 31, 2017, and will take effect on July 1, 2018.

Perhaps the rules of most importance to the banking and emerging payments industries are those providing for indemnities for remotely deposited checks. An inherent problem with remote deposits is that the person depositing the check retains the original paper check and can negligently or intentionally deposit or cash it again. The bank on which the check is drawn will usually refuse to pay it twice, as it should. This leaves the writer of the check, the bank that accepted the remote deposit, and the bank or check cashing store that accepted the original paper check arguing over who should take the loss. Under current rules, unless the parties have entered into side agreements to allocate losses, the bank or check store paying the original check can normally bring a Uniform Commercial Code (UCC) holder-in-due-course claim against the check writer and that person has no remedy unless recovery is possible from the negligent or crooked payee that cashed the item twice.

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