By Kai Zhang and Judie Rinearson
On 1 February, UK Government commenced another consultation on regulating cryptoassets (other initiatives consulted earlier remain being considered/legislated) which will close on 30 April. This is a consultation on the overall policy approach, i.e. no detailed rules.
Read MoreBy Kai Zhang
Critical third party regime
This is to address the concentration issue where financial services firms outsource key functions/services to a few large service providers (e.g. cloud service providers). HM Treasury will designate which third party service providers are considered “critical”. Then the relevant regulators will be given power to make rules supervising them with respect to certain “material services”. See policy statement of 8 June.
Read MoreBy Judie Rinearson and Kai Zhang
The UK Payment System Regulator (“PSR”), which is becoming increasingly assertive, issued on 21 June 2022 two consultations taking a closer look at the Visa and Mastercard “schemes” in the UK.[1] The PSR proposes two market reviews: one into how Visa and Mastercard set the interchange fees; the other into how Visa and Mastercard set their scheme and processing fees. The market reviews will be conducted after the consultations close on 2 August 2022.
Read MoreBy Judith Rinearson and Kai Zhang
On 24 March 2022, the Bank of England (in the name of its Financial Policy Committee) published a paper on the potential risks of cryptoassets to UK financial stability. While the risks are currently considered to be limited given the small size of the cryptoassets and associated markets relative to the global financial system, the FPC notes that the rapid growth of the crypto sector and potential for interconnections with the wider financial system mean that they will present financial stability risks in the future.
Read MoreBy Judith Rinearson and Kai Zhang
In May 2021, the UK‘s Financial conduct authority (FCA) published a consultation paper proposing there would be a “new consumer duty“.[1] The central proposition is that a firm must deliver “good outcomes” for consumers which is then supplemented by additional requirements.
Read MoreBy Kai Zhang
On 14 December 2021, National Westminster Bank Plc (“NatWest“), a major bank in the UK, was fined by the Financial Conduct Authority (“FCA“) close to £265 million for failure to comply with the relevant anti-money laundering (“AML“) requirements with respect to one single client, a Yorkshire jewelry company (“the Client”) during the period from 8 November 2012 to 23 June 2016 (the “relevant period“). The fine would have been nearly £398 million, but NatWest pleaded guilty and therefore was given a reduction. In addition, slightly over £460,000 of crime money was confiscated (which is essentially the fees NatWest gained from the Client.).
Read MoreBy Kai Zhang
In July 2020, HM Treasury published a “Payments Landscape Review: Call for Evidence” for a strategic review of the UK payments sector. Following feedback from the industry, HM Treasury published its Response to the Call for Evidence in October 2021 which sets out a number of initiatives to ensure the payment sector stays at the “forefront” of technology and innovation.
Read MoreBy 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.
Read MoreBy 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.
Read MoreOn 19 December 2018, the UK tax authority, HM Revenue and Customs (“HMRC”), published a policy paper on the taxation of cryptoassets. The guidance is limited to HMRC’s view in relation to individuals holding cryptoassets and does not extend to tokens or assets held by businesses. The guidance confirms that HMRC does not consider cryptoassets to be currency or money for tax purposes and separates crypto assets into three categories of “tokens”: exchange tokens, utility tokens and security tokens. The guidance focuses on the taxation of “exchange tokens,” a term encompassing assets such as Bitcoin.
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