FinTech Law Watch

At the Crossroads of Law, Innovation and Commerce

 

1
The NFT Explosion – What lawyers need to know
2
First Cannabis-related Business SARs Penalty Against a Depository Institution
3
UK Makes Contactless Payments Easier – Purchases up to £100 (~$140) Will No Longer Require Strong Customer Authentication
4
It’s Happening in the UK: UK Treasury to Regulate Stablecoins
5
Post-Brexit: Significant Changes to UK Cross-Border Payments Regulation
6
Significant Changes are Coming: UK Payments Regulation
7
Potential Major Change for U.S. Prepaid Products: Paypal vs CFPB Court Vacates Two Significant Restrictions in CFPB’s Prepaid Account Rule
8
Brexit: Payment Regulations on a Temporary Standstill
9
The Next Wave of Fintech Investors: Banks!
10
Good News for Fintechs: Taiwan Announces Plans to Streamline Payments Regulations

The NFT Explosion – What lawyers need to know

First there were CryptoKitties. Then came Digital art, CryptoPunks and NBA tokens. But when Beeple’s digital art piece sold at Christie’s for $69 million, the mania truly  began.  And as with any wave of media mania, also came the groundswell of negative media and hand-wringing about NFTs.   Of course, NFTs are not all evil nor are they a panacea for artists and musicians. If properly issued and positioned, they can provide a win-win for both artists and collectors.

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First Cannabis-related Business SARs Penalty Against a Depository Institution

By: Daniel Cohen, Judie Rinearson, Jeremy McLaughlin

On 21 February 2021, the National Credit Union Administration (NCUA) became the first prudential regulator to issue an administrative order against a depository institution primarily on the basis of noncompliance with the Financial Crimes Enforcement Network’s (FinCEN) “BSA Expectations Regarding Marijuana-related Businesses” (FIN-2014-GOO1) (MRB Guidance). NCUA and Live Life Federal Credit Union entered into a stipulation and a consent to a cease and desist order in which the credit union, without admitting any wrongdoing,  agreed to “implement an automated system to effectively monitor and identify all transaction for suspicious activity…includ[ing] functions to support [its] compliance with FinCEN requirements for Marijuana-Related Businesses (“MRB”).”

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UK Makes Contactless Payments Easier – Purchases up to £100 (~$140) Will No Longer Require Strong Customer Authentication

By Kai Zhang

Following consultation in January 2021 (CP21/3), the UK Financial Conduct Authority (“FCA”) published its decision, on 3 March (PS21/2), to increase the contactless payment limits under the Strong Customer Authentication (“SCA”) requirements. Essentially, SCA is not required for single contactless transactions up to the value of £100 (about $140) per transaction (increased from the previous £45 ($62)), subject to (amongst others) the cumulative transaction value threshold of £300 (about $420) (increased from the previous £130 ($180)). Once this cumulative threshold is hit, the contactless transaction must again be authenticated before the transaction can proceed.  The cumulative threshold was initially proposed at £200 in the consultation but is set at £300 in response to the industry feedback (according to the FCA).

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It’s Happening in the UK: UK Treasury to Regulate Stablecoins

By Kai Zhang and Judie Rinearson

On 7 January, the UK Treasury published a consultation on its proposed approach to regulating stablecoins. https://www.gov.uk/government/consultations/uk-regulatory-approach-to-cryptoassets-and-stablecoins-consultation-and-call-for-evidence  Although the title of the consultation includes “cryptoassets” – this is the just first stage in the consultative process for cryptoassets, which focuses on stablecoins referred to as “stable tokens”. The consultation closes on 21 March. For US readers, a “consultation” is the start of regulatory process, not unlike an “Advance Notice of Proposed Rulemaking” or “ANPR” in the US.  The UK government sets out the supervisory perimeters, seeking input from the public, and leaving the detailed requirements to be designed by the regulators. Accordingly, the consultation discusses only general principles and the overall framework.

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Post-Brexit: Significant Changes to UK Cross-Border Payments Regulation

By Kai Zhang, Philip Morgan and Judie Rinearson 

The EU Cross-Border Payments Regulation 924/2009 (as amended by Regulation 2019/518) (EU CBPR) has been “onshored” with significant changes into UK law following the end of the Brexit transition period (i.e., since 1 January 2021). The EU CBPR applied directly in the UK until 31 December 2020. Essentially, the onshored UK CBPR regime only retains the transparency requirements on currency conversion charges under the EU CBPR. This means that UK payment service providers (PSPs) no longer have to comply with other requirements under the EU CBPR.

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Significant Changes are Coming: UK Payments Regulation

By Kai Zhang, Philip Morgan, and Judie Rinearson

The UK Financial Conduct Authority (FCA) commenced, on 28 January 2021, a consultation (CP21/3) on various changes to the UK regulation of payment services and electronic money. The proposals include amendments to the substantive regulatory requirements as well as changes to the FCA guidance. Similar to an Advance Notice of Proposed Rulemaking (ANPR) in the US, the consultation seeks industry and public feedback, and is fully expected to lead to formal regulation in the near future.

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Brexit: Payment Regulations on a Temporary Standstill

By Kai Zhang, Special Counsel, London

Changes are coming to the UK payment services regulatory landscape post-Brexit (from 1 January 2021). However, certain Brexit-triggered changes have been put by the FCA on “standstill”, which lasts until 31 March 2022; i.e. during this standstill period, firms can effectively ignore the relevant changes and continue to comply with the current requirements.

We summarise here how the standstill applies to some of the key legislation. Note that this does not cover the changes themselves that have been made due to Brexit.

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The Next Wave of Fintech Investors: Banks!

By: Judie Rinearson

While global investment in fintechs has slowed, interest in fintech investments from the banking sector has actually increased. What’s particularly intriguing is that this is not coming just from the big banks (who have been involved in the fintech sector for years) but frequently many smaller banks are starting to recognize the opportunity presented by investing in the fintechs — especially those fintechs that the banks already work with. Boston partners, Stan Ragalevsky and Rob Tammero have analyzed this development, which looks to be a true win-win for both the banks and fintechs involved. Click here to read more.

Good News for Fintechs: Taiwan Announces Plans to Streamline Payments Regulations

By: Joseph Tseng

In an effort to promote the use of electronic payments and develop its fintech industries, Taiwan’s financial regulator has moved to combine the existing legal regime governing payment institutions and electronic money by proposing an amendment to the Act Governing Electronic Payment Institutions. The proposed amendment seeks both to cope with the disappearing line between physical cards, electronic stored-value cards and virtual, app-based services, while expanding the businesses that electronic payment institutions can do. Click here for more information.

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