Welcome to Shearman & Sterling’s FinTech Blog, where we provide you with insight on key trends in the FinTech ecosystem. Here you can find relevant information with the latest on digital banking, FinTech regulation, digital assets, blockchain, AI, and more.
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European Commission Sets out EU Digital Finance Strategy
09/24/2020The European Commission has published a Communication on its EU digital finance strategy for the coming years. The global economy has been transformed by digital innovation, and this includes financial services. The Commission's strategic objective is to embrace digital finance for the benefit of consumers and businesses while ensuring digital transformation is soundly regulated. To achieve this objective, the Commission sets out four priorities for the digital transformation of the EU financial sector over the next four years and the actions it will take to achieve them.
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European Commission Proposal for Pilot Distributed Ledger Technology Regime Regulation
09/24/2020The European Commission has published a proposal for a new EU Regulation on a pilot regime for distributed ledger technology. The pilot regime is intended to promote legal certainty, to support innovation, to preserve market integrity and to ensure financial stability for the use of DLT in crypto-asset and e-money token markets. The Commission has simultaneously published a proposed Regulation on markets in crypto-assets and e-money tokens. The proposed Regulations follow the Commission's consultation on an EU framework for crypto-assets, which closed in January 2020.
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European Commission Sets out EU Retail Payments Strategy
09/24/2020The European Commission has published a Communication on its EU retail payments strategy for the coming years. The payments sector has experienced significant change in recent years. Retail payments are increasingly dematerialized and disintermediated, with large technology companies playing a more significant part in the payments sector. The EU payments market is also largely fragmented along national borders, leading to a small number of large firms providing cross-border services and inhibiting domestic FinTechs. The Commission's strategic objective is to establish a clear EU policy framework for retail payments that manages the risk of inconsistencies and market fragmentation across the EU.
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European Commission Proposals for Digital Operational Resilience Regulation and Amending Directive
09/24/2020The European Commission has published proposals for a new EU Regulation on digital operational resilience for the financial sector and a new EU Directive amending certain pieces of existing EU financial services legislation to strengthen digital operational resilience and provide legal certainty on crypto-assets. The new legislation has been proposed as a result of the risks arising from the increase in digital opportunities within the financial sector. There are currently no detailed rules at EU level on digital operational resilience, exposing the need for comprehensive and harmonized legislation governing this area.
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European Commission Proposal for Crypto-asset Regulation
09/24/2020The European Commission has published a proposal for a new EU Regulation on crypto-assets. The proposed Regulation is intended to improve legal certainty in the regulatory treatment of crypto-assets, to support the development of crypto-assets, to preserve consumer protection and market integrity in crypto-asset markets and to ensure financial stability. The Commission has simultaneously published a Regulation on a pilot regime for distributed ledger technology. The proposed Regulations follow the Commission's consultation on an EU framework for crypto-assets, which closed in January 2020.
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How Can Blockchain Track Conflict Minerals and Help with Compliance?
09/26/2019
In recent years, more companies have begun marketing ethically sourced or “conflict-free” diamonds, gold and other minerals in response to growing consumer appetite for information on responsible sourcing. They are also increasingly subject to regulatory obligations aimed at improving due diligence and transparency with respect to the minerals in their supply chains. But how can the source of these minerals be verified while also helping the companies comply with regulations?
Associate Naffie Lamin (New York-Derivatives & Structured Products), counsel Jonathan Handyside (London-Capital Markets) and partner Cynthia Urda Kassis (New York-Project Development & Finance) wrote an article for Mining.com which examines how blockchain could help verify the sourcing of these minerals and could assist companies that use these materials in their supply chains to comply with their regulatory reporting obligations pursuant to the U.S. Securities and Exchange Commission (SEC) “Conflict Minerals Rule” and its EU equivalent.
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How Should Competition Law React to FinTech?
08/05/2019
FinTechs are an increasingly prominent and disruptive presence in the financial services market. While these technologies are having a significant impact on the competitive landscape, the European Commission and national competition authorities have expressed concern as to whether the current competition legal framework is equipped to deal with the challenges created by these new technologies, some of which we discuss in the article.
Read this chapter in Shearman & Sterling’s 2019 Antitrust Annual Report, “How Should Competition Law React to FinTech?” -
Shearman & Sterling Launches FinTech Regulatory Sandbox Map Update
05/17/2019Shearman & Sterling’s FinTech Foundry last week updated its FinTech regulatory sandbox map, which provides an interactive look at the over 40 FinTech regulatory sandboxes located throughout the world. The updated map accounts for the launch of four new FinTech regulatory sandboxes, including those in Kenya, South Korea, the United Kingdom (Information Commissioner's Office) and the United States (Utah).
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Shearman & Sterling Launches Interactive FinTech Regulatory Sandbox Survey
03/28/2019Through our FinTech Foundry, Shearman & Sterling today has launched an interactive survey of the FinTech regulatory sandboxes located throughout the world. Each point on the map indicates the existence of a regulatory sandbox and a user may click to get further information such as launch date, governing commission, law & regulations and sandbox environment.
Regulatory sandboxes provide a controlled environment for eligible FinTech firms to conduct live testing in under regulatory supervision. The number of regulatory sandboxes worldwide has grown significantly over the past two years, as now over 30 countries and jurisdictions have launched sandbox initiatives, with several others set to follow suit.
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European Banking Authority Reports on EU Regulatory Perimeter for Crypto-Assets
01/18/2019The European Banking Authority has published a report on the application and suitability of the EU bank regulatory framework for crypto-assets. The report is in response to the European Commission's request in its FinTech Action Plan 2018. The report confirms that EU activities related to crypto-assets are fairly low and do not present any financial stability risks. The European Securities and Markets Authority also published a similar report covering Initial Coin Offerings issues within its remit on the same day.
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European Securities and Markets Authority Publishes Recommendations on Crypto-Assets and Initial Coin Offerings
01/18/2019The European Securities and Markets Authority has published a report on the application and suitability of the EU securities regulatory framework to crypto-assets, including Initial Coin Offerings. The report is in response to the European Commission's request in its FinTech Action Plan 2018. Like the European Banking Authority, which published a report on the same day in relation to banking sector issues, ESMA found that EU activities related to crypto-assets are fairly low and do not present any financial stability risks.
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EU Report on Regulatory Sandboxes and Innovation Hubs
01/14/2019Fulfilling the mandate in the European Commission's March 2018 FinTech Action Plan, the Joint Committee of the European Supervisory Authorities has published a report on regulatory sandboxes and innovation hubs, together referred to as innovation facilitators. Innovation hubs are a dedicated point of contact for firms raising queries with national regulators on FinTech-related issues. Regulatory sandboxes enable firms to test innovative financial products, services or business models under the supervision of a national regulator.
The ESAs' report states that most EU member states have one or both forms of these innovation facilitators. The facilitators operate at national level and the ESAs identify this as a potential challenge to the EU objective of scaling-up FinTech. For example, national regulators are likely to adopt different approaches to the same innovation which can hinder opportunities for extending an innovation across the EU as well as present regulatory arbitrage risks. The potential absence of passporting innovative products throughout the EU can raise issues for their users.
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Three Central Banks Explore Advantages Of Wholesale Central Bank Digital Currencies
11/27/2018On November 15, 2018, the Bank of England, the Bank of Canada and the Monetary Authority of Singapore published a joint report entitled, "Cross-Border Interbank Payments and Settlements." Referring to current industry projects to address existing problems in cross-border payments affecting end-users, commercial banks and central banks, the report analyzes these issues and discusses proposed new models for processing cross-border transactions. The report sets out three models for cross-border payments and settlements and discusses the key considerations and dependencies of each model. Each model is then assessed against the existing identified challenges in cross-border payments.
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EU Supervisory Authority Reports on ICO and Crypto-Asset Risks and Potential Regulation
10/19/2018The European Securities and Markets Authority (ESMA) has published an own-initiative report prepared by its Securities and Markets Stakeholder Group (SMSG). The purpose of the report is to provide advice to ESMA on steps it might take to contain the risks of initial coin offerings (ICOs) and crypto-assets, on top of existing regulation.
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