Clifford Chance

Welcome to this month's global crypto round-up, summarising crypto regulatory developments that have happened around the world in April 2024 along with our Clifford Chance crypto publications and upcoming events. 

Details of these and previous developments can also be found on our Fintech Topic Guide on the Clifford Chance Financial Markets Toolkit.

If you would like to receive future Round-ups directly to your inbox, please complete this preferences form. You can sign up for the Global Crypto Round-up under the 'Briefings and regular newsletters' heading. 

CLIFFORD CHANCE PUBLICATIONS & MATERIALS

Clifford Chance International Festival of Fintech 2024

All of the videos from our recent International Festival of Fintech are available to watch on demand. International industry experts representing a variety of market-leading organisations (including BlackRock, Bullish, Galaxy Digital, Goldman Sachs, HQLAx, HSBC, JP Morgan, r3, State Street and Stripe to name a few) joined members of the global Clifford Chance fintech team to offer their insights. They shared practical guidance on navigating rapidly-evolving legal, regulatory and market developments across the sector including the latest on AI, digital bonds, tokenisation and global crypto. With thanks again to our incredible speaker line up

UKJT Legal Statement on Digital Assets and English Insolvency Law

On 17 April 2024, the UK Jurisdiction Taskforce (UKJT) published a comprehensive Legal Statement on Digital Assets and English Insolvency Law, following a public consultation in December 2023. While the Statement is non-binding, it is influential in providing clarity to critical legal questions under English law and provides useful guidance regarding the legal status of, and basic principles applicable to, cryptoassets, distributed ledger technology (DLT), smart contracts and associated technologies under English insolvency law. Read our Briefing

GLOBAL LEGAL AND REGULATORY UPDATES, INDUSTRY GUIDANCE AND PUBLICATIONS

International

• (18 Apr 2024) The Bank for International Settlements (BIS) Innovation Hub has published a first interim report on Project FuSSE (Fully Scalable Settlement Engine), focusing on quantum resistant cryptographic functionalities that allow robust digital signature processes. | Project webpage
• (16 Apr 2024) World Economic Forum (WEF) report on the potential of wholesale central bank digital currencies (wCBDC) in modernising financial markets, which calls for collaboration among central banks, commercial banks and financial market infrastructures to use wCBDC to address interbank payment and securities transaction challenges. | Webpage
• (12 Apr 2024) The International Organization for Securities Commissions (IOSCO) has published its updated workplan for 2024, which includes new workstreams to reflect an increased focus on artificial intelligence (AI) and tokenisation, amongst other things.
• (9 Apr 2024) BIS Financial Stability Institute Insights paper on the evolving regulatory landscape for issuers of single fiat-pegged stablecoins, which compares regulatory frameworks issued by 11 authorities in seven jurisdictions to identify emerging trends and commonalities in their respective frameworks. | Webpage

Americas

US

• (17 Apr 2024) Lummis-Gillibrand Payment Stablecoin Act of 2024, which has been introduced as a bipartisan bill to the US Senate by Senators Kirsten Gillibrand and Cynthia Lummis. The Act would (i) require stablecoin issuers to maintain one-to-one reserves and prohibit unbacked, algorithmic stablecoins; (ii) prevent illicit or unauthorised use of stablecoins by issuers and users; and (iii) create federal and state regulatory regimes for stablecoin issuers. | Press release | Section-by-section overview | One-pager

APAC

Hong Kong

• (16 Apr 2024) Hong Kong Monetary Authority circular setting out the key risk management considerations that it has regard to when it reviews proposals from authorised institutions involving the use of DLT.

Singapore

• (2 Apr 2024) The Monetary Authority of Singapore (MAS) has introduced amendments to the Payment Services Act and its subsidiary legislation to expand the scope of payment services regulated by the MAS, and to impose user protection and financial stability-related requirements on digital payment token (DPT) service providers. In particular, the amendments will bring the following activities within the scope of regulation under the Act: provision of custodial services for DPTs; facilitation of the transmission of DPTs between accounts and facilitation of the exchange of DPTs, even where the service provider does not come into possession of the moneys or DPTs; and facilitation of cross-border money transfer between different countries, even where moneys are not accepted or received in Singapore.T hese amendments have taken effect in stages from 4 April 2024. | Press release

EUROPE

EU

• (24 Apr 2024) The EU Parliament has formally adopted a series of legislative proposals that form the EU Commission's July 2021 anti-money laundering and counter terrorist financing (AML/CTF) package. Amongst other things, the package expands the list of obliged entities to cover the majority of the crypto sector, and introduces specific enhanced due diligence measures for cross-border correspondent relationships for cryptoasset service providers. The texts now need to be formally adopted by the Council before they can be published in the Official Journal. | Press release
• (18 Apr 2024) European Central Bank (ECB) occasional paper on digital euro safeguards to protect financial stability and liquidity in the banking sector
• (18 Apr 2024) European Supervisory Authorities (ESAs) consultation paper on draft regulatory technical standards (RTS) on the conduct of oversight activities in relation to the joint examination teams under the Digital Operational Resilience Act (DORA). Deadline for comments: 18 May 2024. | Press release
• (17 Apr 2024) Slides used for a presentation on the digital euro by ECB Executive Board Member Piero Cipollone at a meeting with the Italian Banking Association
• (10 Apr 2024) European Securities and Markets Authority (ESMA) article on cryptoassets, market structures and EU relevance, which provides an overview of patterns in cryptoasset secondary markets.
• (11 Apr 2024) The ESAs have announced that they intend to launch a voluntary exercise for the collection of registers of information of contractual arrangements on the use of ICT third-party service providers by financial entities to help financial entities prepare for the implementation of DORA. As part of the exercise, the ESAs will provide feedback on data quality to financial entities participating, return cleaned files with their register of information, organise workshops and respond to frequently asked questions. The ad-hoc data collection is expected to be launched in May 2024 with financial entities expected to submit their registers of information to the ESAs through their competent authorities between 1 July and 30 August. | Press release
• (10 Apr 2024) EU Commission digital finance newsletter, providing an update on the Commission's new data hub, which is intended to facilitate the exchange of data between supervisory authorities and financial companies.
• (8 Apr 2024) LCH SA has announced that it has received the required regulatory approval from the French national competent authorities and EU supervisory authorities to clear cash-settled Bitcoin index futures and options contracts. LCH SA will provide clearing services through its new dedicated service, LCH DigitalAssetClear, for these contracts traded on the UK Financial Conduct Authority (FCA) regulated digital asset derivatives trading venue, GFO-X. | Press release
• (4 Apr 2024) The Governing Council of the ECB has approved the participation of ten market participants and six market DLT operators in exploratory work on new technologies for the settlement of wholesale transactions in central bank money, starting on 13 May 2024. The call for expression of interest to join a second wave of trials and experiments between July and November 2024 is open until 30 April 2024.

France

• (25 Apr 2024) Decree No. 2024-389 of 25 April 2024 (in French) on the conservation and transfer of cryptoassets by the Caisse des Dépôts et Consignations (CDC) on behalf of the Agence de gestion et de recouvrement des avoirs saisis et confisqués (AGRASC), the agency for the management and recovery of seized and confiscated assets. The decree modifies article R. 54-8 of the French Criminal Procedure Code in order to allow the CDC to provide a service enabling the AGRASC to hold cryptoassets in a secure manner. The decree entered into force on 28 April 2024.
• (25 Apr 2024) The Paris Europlace Working Group on digital finance use cases has published a document on the digitisation of the financial markets and how issuers and investors could take advantage of these innovations in their activities of issuing and investing in digital financial securities, i.e. shares, bonds (or fund units) issued, traded and settled/delivered in infrastructures using blockchain technology and another document on the opportunities of tokenisation for issuers and investors.

Germany

• (5 Apr 2024) The German Federal Ministry of Finance has published a draft 'Accompanying ordinance to transfer the existing legal framework regarding cryptoassets to Regulation (EU) 2023/1114' (in German). In light of the fact that Germany already has a national legal framework for the regulation of the crypto market, including an authorisation requirement for cryptoasset services, the draft ordinance aims to specify provisions in the FinmadiG intended to enable existing companies and new market participants to provide their services EU-wide from day one of the application of the Markets in Cryptoassets Regulation (MiCA). 

Luxembourg

• (17 Apr 2024) Commission de Surveillance du Secteur Financier (CSSF) communiqué on the ESAs' voluntary dry run exercise for the collection of the registers of information required under DORA.

Poland

• (18 Apr 2024) The Ministry of Finance has published a bill (in Polish) amending certain acts in relation to ensuring the operational digital resilience of the financial sector. Amongst other things, the bill indicates that the Financial Supervision Authority will be the authority in Poland responsible for supervising compliance with DORA.

UK

• (26 Apr 2024) New powers under the Economic Crime and Corporate Transparency Act 2023 for the National Crime Agency and police to seize, freeze and destroy cryptoassets have come into force. The Home Office has published Circular 004/2024 on cryptoasset confiscation order provisions and Circular 005/2024 on cryptoasset forfeiture provisions. | Press release
• (15 Apr 2024) UK Finance has announced work on a new UK Regulated Liability Network (RLN) experimentation phase with eleven of its members. The UK RLN is envisaged as a common ‘platform for innovation’ across multiple forms of money, including existing commercial bank deposits and a shared ledger for tokenised commercial bank deposits. | Press release
• (9 Apr 2024) The Payments Association white paper entitled 'Unlocking the potential of programmable money in the digital age', which discusses how the advent of programmable money and smart contract technologies will redefine financial transactions and the payment industry. (N.B. Registration required to access the full paper)
• (3 Apr 2024) Joint Bank of England and Financial Conduct Authority (FCA) consultation paper on their proposed approach to operating the Digital Securities Sandbox (DSS). Alongside the consultation paper, the regulators have published draft guidance for firms looking to enter the DSS, including details of how the Bank proposes to allow firms to scale their activities once authorised to undertake live activity in the DSS, and a detailed breakdown of how existing regulations related to securities depositories will be transposed into ‘Rules’ at different stages of the DSS. Subject to feedback, the regulators propose to publish final guidance for firms and open the DSS for applications in Summer 2024. Deadline for comments: 29 May 2024. | Press release

Middle East

Israel

• (16 Apr 2024) Speech by Deputy Governor of the Bank of Israel Andrew Abir, arguing that the digital shekel could be a trustworthy catalyst for technology to enhance competition in the financial system