Archive: December 4, 2017

1
LabCFTC’s First Primer Covers Bitcoin, other Virtual Currencies, Virtual Tokens and ICOs
2
Bank of England Stress Tests Reveal FinTech Competition

LabCFTC’s First Primer Covers Bitcoin, other Virtual Currencies, Virtual Tokens and ICOs

By Anthony Nolan and Eric A. Love

The U.S. Commodity Futures Trading Commission’s (CFTC) New York-based LabCFTC has released a twenty-page primer (the “Primer”) about virtual currencies, virtual tokens and initial coin offerings (ICOs).  It’s the first in a series of educational primers that LabCFTC will issue in the coming months about innovations in the FinTech industry.

The Primer answers important questions about how CFTC regulations apply to virtual currencies, virtual tokens and ICOs.  Notably, the Primer reiterates that Bitcoin and other virtual currencies are appropriately categorized as commodities and also states that virtual tokens can in some instances be commodities or derivatives contracts even if they are also considered to be securities under the U.S. securities laws.  The Primer notes that, in applying U.S. commodity futures laws to virtual tokens, the CFTC will look beyond form and examine the “actual substance and purpose” of particular activities.

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Bank of England Stress Tests Reveal FinTech Competition

By Jonathan Lawrence

The Bank of England (BofE) published its 2017 UK bank stress test results on 28 November. The BofE found that incumbent institutions are probably underestimating the impact that increased FinTech competition could have on their profitability:

  • Diminishing revenue from overdraft products. Currently, unarranged overdraft fees are one of the biggest contributors to UK banks’ annual pre-tax profits. FinTechs, like personal financial management services, should help people better manage their money to avoid becoming overdrawn, and aggregation platforms will increasingly redirect customers to cheaper credit options, diminishing their need for overdraft facilities and reducing banks’ returns on such products. Banks may be doubly hit if the UK Financial Conduct Authority decides to impose a strict price cap on the overdraft fees banks can charge customers.

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