Archive: April 2018

1
ASIC: Australian laws still apply to ICOs created and offered overseas
2
AUSTRAC, ATO and ASIC DISCUSS THEIR REGULATORY VIEWS ON ICO’S
3
New York Attorney General Launches Fact-Finding Mission into Virtual Currency Exchanges; Exchanges Divided on Response
4
Japanese Regulator Holds the First Meeting of the New Study Group on Virtual Currency Exchanges
5
6 ways for FinTechs to build trust: a regulator’s view
6
Beneficial Owner New Account Rules: What FinTech AML Program Managers and Their Financial Institutions Need to Know
7
Bank of England Blockchain Settlement Project
8
IOT Group to set up blockchain centre in the Australian energy sphere
9
Senior English Judge Comments on FinTech
10
Australia’s New AML Rules: Reducing the Anonymity of Digital Currencies

ASIC: Australian laws still apply to ICOs created and offered overseas

By Jim Bulling and Edwin Tan

On 26 April 2018, John Price of the Australian Securities and Investments Commission (ASIC) highlighted in a speech that Australian corporate and consumer laws might still apply to ICOs created and offered from overseas, so long as they were offered and sold to Australian consumers.  Mr Price warned that there was an incorrect perception that Australian regulations did not apply to activities engaged from overseas.

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AUSTRAC, ATO and ASIC DISCUSS THEIR REGULATORY VIEWS ON ICO’S

By Jim Bulling and Felix Charlesworth

On 16 April 2018, representatives from the Australian Securities and Investments Commission (ASIC), Australian Transaction Reports and Analysis Centre (AUSTRAC) and the Australian Tax Office (ATO) convened in Melbourne and delivered presentations outlining their regulatory views on Initial Coin Offerings (ICOs) and blockchain technology in general.

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New York Attorney General Launches Fact-Finding Mission into Virtual Currency Exchanges; Exchanges Divided on Response

By Jeremy McLaughlin and Dan Cohen

The Investor Protection Bureau of the New York Office of the Attorney General (Bureau) has established the “Virtual Markets Integrity Initiative,” which the Bureau describes as a “fact-finding inquiry into the policies and practices” of virtual currency exchanges.  The Bureau launched the initiative “to increase transparency and accountability in the virtual currency marketplace—and better inform the actions of enforcement agencies, investors, and consumers in this space.”

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Japanese Regulator Holds the First Meeting of the New Study Group on Virtual Currency Exchanges

By Yuki Sako

As a response to the fallout resulting from the hacking of Japanese cryptocurrency exchange Coincheck Inc., which resulted in $530 million worth of digital currencies being stolen, on April 10, 2018, the Financial Services Agency of Japan (FSA) hosted the first meeting of the Study Group on Virtual Currency Exchange Service Providers (Study Group).

By way of background, beginning April 2017, Japan required virtual currency exchange service providers (Virtual Currency Exchange(s)) to be registered with the Japanese authority.  Registered Virtual Currency Exchanges are subject to certain operational requirements and conduct regulations such as verification of customers’ identities and customer disclosure.

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6 ways for FinTechs to build trust: a regulator’s view

By Michelle Chasser and Jim Bulling

In a recent speech on building trust, Australian Securities and Investments Commission Chair, James Shipton, identified 6 key characteristics that financial service providers, including FinTech companies, should have to ensure that the Australian financial system is efficient, resilient and fair.  Those characteristics are:

  1. Financial products that the FinTech company provides do what they say they will and don’t take advantage of consumer biases or lack of knowledge about the product.
  2. Consumers’ interests are prioritised and put before the FinTech company’s.
  3. The FinTech company acts with integrity and fairness, not just in compliance with the law but also taking into account community expectations and standards.
  4. Mistakes and misconduct are quickly identified, reported and rectified.
  5. Open engagement and cooperation with regulators not only about problems but also in relation to business challenges and risks.
  6. Being innovative and using technology to improve products and services to deliver better outcomes for consumers. Although by their very nature FinTech companies are innovative and use technology, an effort should be made to constantly improve outcomes for consumers and not adopt a ‘set and forget’ mindset.

How many of these characteristics do you demonstrate?

Beneficial Owner New Account Rules: What FinTech AML Program Managers and Their Financial Institutions Need to Know

By Dan Cohen and  John ReVeal

FinCEN’s new beneficial owner rules take effect May 11, impacting banks and the program managers and similar companies that help banks comply with the Bank Secrecy Act, including FinTech companies that provide AML on-boarding and monitoring services.  Under the new rules, banks and other covered financial institutions will be required to identify and verify the identity of the beneficial owners of their legal entity customers.  These rules will add to your regulatory burdens, particularly over the next several weeks.

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Bank of England Blockchain Settlement Project

By Jonathan Lawrence

The Bank of England, the UK’s central bank, is undertaking a Proof of Concept (PoC) to understand how a renewed Real Time Gross Settlement (RTGS) service could be capable of supporting settlement in systems operating on innovative payment technologies, such as those built on Distributed Ledger Technology (DLT). It is hoped that the service will deliver a stronger, more resilient, flexible and innovative sterling settlement system for the United Kingdom to respond to the changing payments landscape. The RTGS blueprint, published in May 2017, stated that the renewed service will offer a diverse and flexible range of settlement models, to enable existing and emerging payment infrastructures to access central bank money.

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IOT Group to set up blockchain centre in the Australian energy sphere

By Cameron Abbott and Sarah Goegan

Technology company IOT Group announced this week that it has signed an Australian first energy and blockchain deal. In the agreement with Hunter Energy, IOT Blockchain will build a blockchain centre at the Redbank coal-fired power station in the Hunter Valley, two hours north of Sydney.

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Senior English Judge Comments on FinTech

By Jonathan Lawrence

In a recent speech, one of England’s most senior judges explored, in the context of the digital revolution, the culture of and relationship between the UK financial services sector, the UK legal profession, and the judiciary in a changing technological environment. Sir Geoffrey Vos, Chancellor of the High Court, gave the Banking Standards Board Lecture on 20 March.

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Australia’s New AML Rules: Reducing the Anonymity of Digital Currencies

By Jim Bulling and Edwin Tan

The Australian Government has recently decided to regulate Digital Currency Exchange (DCE) providers, as they have inherent money-laundering and terrorism financing risks stemming from their high degree of anonymity and ease of cross-border transactions.  As part of this regulation, DCE providers must provide regular reports to the Australian Transaction Reports and Analysis Centre (AUSTRAC).  These reports must include, if known, the social media identifiers, unique device identifiers and digital wallet addresses of the relevant customer.

Many digital currencies operate on public blockchains that contain records of all transactions ever made, which is essential to their transaction validation and anti-tampering features.  This public nature enables every client on the blockchain network to verify that any currency used in relation to a transaction actually exists, by looking through the transaction history of a particular digital wallet address.  As such, being able to link digital wallet addresses to particular individuals will, over time, give AUSTRAC the power to trace suspicious transactions up the chain back to an individual.  It may also be possible for the Australian Taxation Office to use this information in the future to ensure that individuals correctly report any capital gains resulting from the trading of digital currency for taxation purposes.

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