Global Digital Assets Digest December 2024

Welcome to this month's Global Digital Assets Digest.  The big news this month is that certain  aspects of MiCA and the Recast Wire Transfer Regulation become applicable in December 2024. There are rumblings that the deadline for MiCA may prove a bit tricky. Not surprisingly, a number of delegated acts under MICA have been finalised in the last month. 

In the UK, the FCA has published its cryptomap and provided further details on the next steps for a regulatory regime.

In APAC, there's news from Hong Kong on a Stablecoins Bill and the Digital Bond Grant Scheme, while MAS gives us the latest on tokenisation in Singapore. 

Stateside, there's a changing of the guard at one regulator, a development of significant impact for the cryptoassets industry.

Updates and Guidance: International Bodies

1. EU: Correspondence on interplay between MiCA and PSD2

2. ESAs: Final report on guidelines on explanations, opinions and standardised test for classifying cryptoassets under MiCA

3.  ESMA: Joint EBA and ESMA Guidelines on the assessment of the suitability of the members of the management body of issuers and CASPs 

4. EBA: Consultation paper on draft RTS for  appointment of central contact points for CASPs under MLD4

5. ECB: Slides: The case for a digital euro in the European payments landscape 

6. BIS: Paper: Central bank digital currencies and fast payment systems: rivals or partners?

7. MiCA: Commission Implementing Regulation on ITS on forms, formats and templates for cryptoasset white papers  published in OJ

8.  ESMA: Authorised DLT Market Infrastructures 

9.  ECB: Progress report on the digital euro 

10. European Commission: Adoption of Delegated Regulation under MiCA covering RTS on the content and format of order book records for trading platforms

11. ECB: Norway joins TIPS, adding Norwegian krone to Eurosystem’s instant payment service

12. European Commission: Commission Delegated Regulation on regulatory technical standards relating to publication of transparency data by CASPs under MiCA

13.  MiCA: Commission Implementing Regulation (EU) 2024/2902 on reporting related to ARTs and certain EMTs 

14. MiCA: Commission Implementing Regulation on forms, templates and procedures for the cooperation and exchange of information published in OJ

15. ECB: Eurosystem completes tests using DLT for central bank money settlement 

16. Global Digital Finance: GDF Announces New Travel Rule VASP Working Group led by OKX and Other Global Crypto Exchanges

17.  CGAP/BIS/IMF/UNSGSA/The World Bank: Report: Key Considerations for Open Finance 

18. IOSCO: New Roadmap to enhance Retail Investor Online Safety

19.  ESMA: Report on the assessment of the shortening of the settlement cycle in the EU

Updates and Guidance: UK

20. FCA: Next steps for regulation of cryptoassets 

21.  FCA: Policy statement: Financial Crime Guide Changes Feedback to CP24/9 and Final Guidance (PS 24/17) 

22. BoE: Speech by Sasha Mills, Executive Director for Financial Market Infrastructures: Beyond Faster Horses: Wholesale Financial Markets in the Digital Age 

23.  HM Treasury: Speech by Tulip Siddiq, Economic Secretary to the Treasury: Tokenisation Summit: UK government approach to tokenisation and regulation

24.House of Lords (Property (Digital Assets etc) Bill [HL] Special Public Bill Committee): Call for Evidence: Property (Digital Assets etc) Bill

25.  FMLC: Minutes: FMLC Committee Meeting 16 October 2024

26.  FCA: Discussion Paper: Transaction reporting paper

Updates and Guidance: Europe

No new entries

Updates and Guidance: APAC

27.  MAS: Remarks by Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) at the Futures Industry Association

28.  Hong Kong Stablecoins Bill

29. HKEX: Virtual Asset Index Series

30. HKMA: Digital Bond Grant Scheme

Updates and Guidance: Australia

31.  Australian Parliament: AML/CTF laws passed

32.  ASIC: Consultation Paper 381: Updates to INFO 225: Digital Assets: Financial Products and Services

33. SEC: Arbitration, Alternative Assets, and Aging Actors: Remarks at the meeting of the SEC Investor Advisory Committee

34.  SEC: Departure of Gary Gensler

35.  House Committee on Financial Services: Hearing on financial innovation

36.  CFTC’s Global Markets Advisory Committee advances Recommendation on Tokenised Non-cash collateral

37.  House Financial Services Committee: Hearing on prudential banking regulators

38.  Remarks by Assistant Secretary for International Finance Brent Neiman on the US Cross-Border Payments Agenda

Updates and Guidance: International Bodies

1. EU: Correspondence on interplay between MiCA and PSD2

On 10 December 2024, correspondence between the European Commission and EBA was published in relation to the interplay between PSD2 and MiCA.

MiCA notes a degree of overlap between cryptoasset services provided by CASPs under MiCA and payment services regulated under PSD2, particularly where this concerns certain services relating to EMTs. EMTs fall within the definition of funds under PSD2 and consequently have a dual nature i.e. they are cryptoassets under MiCA and are electronic money/funds within PSD2. 

The Commission notes that CASPs providing payment services with EMTs will therefore need to either hold an authorisation as a PSP, or partner with an authorised PSP to provide certain payment services. According to the Commission, the provision of transfers of EMTs by CASPs may be considered as a payment service (execution of payment transactions), while cryptoasset services relating to EMTs could fall under points 1 and 2 of Annex I of PSD2 (operations required for operating a payment account).

The Commission calls for the EBA to consider issuing an opinion on the enforcement of the authorisation requirement in PSD2 where this concerns EMTs provided by CASPs (or by entities benefiting from the transitional period under Article 143(3) of MiCA). 

The EBA confirms that it will publish its response by April 2025.

2.ESAs: Final report on guidelines on explanations, opinions and standardised test for classifying cryptoassets under MiCA

On 10 December 2024, the ESAs published a final report on guidelines designed to encourage consistency on the  classification of cryptoassets under MiCA. The Guidelines include a standardised test, as well as templates market participants should use when communicating classification of a cryptoasset to supervisors.

The templates for explanations and legal opinions provide descriptions of the regulatory classification of cryptoassets in the following instances.

The guidelines will apply two months after the publication of their translation in all official languages of the EU.

For more on MiCA, please see our briefings here and here.

3.ESMA: Joint EBA and ESMA Guidelines on the assessment of the suitability of the members of the management body of issuers and CASPs 

On 4 December 2024, ESMA published a webpage with links to the official  translations of joint ESMA and EBA guidelines on suitability assessments.

MiCA requires members of the management body to be of sufficiently good repute and capable of committing sufficient time to effectively perform their duties. This includes an assessment of whether members of the management body have the appropriate knowledge (individually and collectively), skills and experience to perform their duties. 

ESMA and the EBA published a final report on the joint guidelines in June 2024.

For more on MiCA, please see our briefings here and here.

4. EBA: Consultation paper on draft RTS for  appointment of central contact points for CASPs under MLD4

On 4 December 2024, the EBA published a public consultation on draft RTS on the criteria used by CASPs to appoint a central contact point to ensure compliance with local AML/CFT obligations of the host Member State. 

The Recast Wire Transfer Regulation amends MLD4 by extending to CASPs the provisions that Member States may require EMIs and PSPs established on their territory in forms other than a branch to appoint a CCP point in their territory. 

The change to MLD4 will require updates to Commission Delegated Regulation (EU) 2018/1108. The EBA proposes to retain the structure and approach with new provisions introduced to reflect the business model of CASPs. This includes specific criteria for determining when as CCP should be appointed for CASPs. The EBA also notes that the notion of "establishment" is challenging from a practical perspective owing to the nature of some cryptoasset services (limited physical equipment needed for operators mainly providing services to customers through non-physical means).
The deadline for comments is 4 February 2025. The final report on draft regulatory technical standards is to be published in Q2, 2025.

For more on MiCA, please see our briefings here and here.

5. ECB: Slides: The case for a digital euro in the European payments landscape 

On 4 December 2024, the ECB published slides on the digital euro. Areas covered in the slides include the following: responding to a fast changing payments landscape; the impact of fragmentation and digitalisation on the euro area's strategic autonomy; the need to involve stakeholders in both the private and public sector in relation to work on the digital euro; and  ways that the distribution of a digital euro via PSPs will help maintain customer relationships amid trend towards digital wallets.

6.  BIS: Paper: Central bank digital currencies and fast payment systems: rivals or partners? 

On 3 December 2024, BIS published a paper titled "Central bank digital currencies and fast payment systems: rivals or partners?". The paper, which is the result of interviews with central banks in 14 jurisdictions, compares the features of retail CBDC and faster payment systems, offering insights into why some jurisdictions opt for a retail CBDC, while others have opted for  FPS (or both). The paper concludes that choice between a retail CBDC or an FPS will depend on factors such as market features and the level of  maturity and innovation of existing payment infrastructures.

7. MiCA: Commission Implementing Regulation on ITS on forms, formats and templates for cryptoasset white papers  published in OJ

On 3 December 2024, Commission Implementing Regulation (EU) 2024/2984 setting out ITS on the forms, formats and templates for cryptoasset white papers under MiCA was published in the Official Journal of the EU This follows a final report on the draft ITS in July 2024.

MiCA requires white papers to contain information that is relevant to enable investors to make an informed investment decision and to be available in a machine-readable format. The aim of having standardised templates to report the information is to encourage transparency and comparability of white papers.

The Implementing Regulation comes into force on 23 December 2024 and will apply from 23 December 2025.

For more on MiCA, please see our briefings here and here.

 8. ESMA: Authorised DLT Market Infrastructures 

On 3 December 2024, ESMA published a webpage in relation to authorised DLT market infrastructures. This sets out a list of DLT SSs and DLT TSSs.

9.ECB: Progress report on the digital euro 

On 2 December 2024, the ECB published a progress report in relation to the digital euro. The preparation phase outlines progress made during the preparation phase in respect of the digital euro between May and October 2024. The preparation phase of the project began in November 2023 and involves testing and experimentation, as well as regular exchanges with stakeholders.

Key actions cited in the report include: 

• the digital euro scheme’s Rulebook Development Group (RDG)[  concluding a review of the first draft of the rulebook (version 0.8);
• progress made on the sourcing procedures for selecting potential providers for a digital euro service platform; and
• progress made in relation to the design of a digital euro (specifically on: the calibration of the digital euro holding limit; and the offline digital euro solution on the secure elements of mobile devices).

Next steps include the following:

• the RDG will produce a revised draft of the rulebook, incorporating feedback from the first draft;
• the ECB aims to conclude the procurement to select potential providers for the DESP in 2025; and
• the next progress report on the preparation phase will be published in the second quarter of 2025 (Governing Council to decide by end of 2025 on whether to move on to the next phase of preparations).

The ECB has also published a letter from Piero Cipollone, Member of the Executive Board, ECB, to Aurore Lalucq, ECON Chair, on the second progress report on the digital euro preparation phase.

10. European Commission: Adoption of Delegated Regulation under MiCA covering RTS on the content and format of order book records for trading platforms

On 29 November 2024, the European Commission adopted a Delegated Regulation on RTS in relation to the content and format of order book records. MiCA requires CASPs operating trading platforms for cryptoassets to keep records of all orders in cryptoassets and make these records available to the competent authorities. The data to be shared with competent authorities is to be recorded on JSON format based on ISO 20022 methodology;

Requirements imposed on cryptoasset trading platforms by the RTS include;

• maintaining designations to identify the parties involved in an order;
• identifying natural persons in the order book records and use of legal identity identifier/equivalent entity identifier in respect of  legal entities; 
• description of the trading capacity of participants of the trading platform;
• recording the date and time of certain specified events relating to orders in cryptoassets; and
• keeping records of priority and sequence numbers for orders executed in their trading systems. maintaining an individual identification code for orders in cryptoassets

The Delegated Regulation will now be scrutinised by EU co-legislators. If neither objects, the Regulation will be published in the Official Journal of the EU.

For more on MiCA, please see our briefings here and here.

11. ECB: Norway joins TIPS, adding Norwegian krone to Eurosystem’s instant payment service 

On 29 November 2024, the ECB confirmed that Norway had joined TARGET Instant Payment Settlement TIPS. This will result in the Nowegian krone being the fourth currency available for settlement in TIPS in addition to the euro, the Swedish krona and the Danish krone). This step forms part of the Eurosystem's TARGET Services planned for the first half of 2028.

12. European Commission: Commission Delegated Regulation on regulatory technical standards relating to publication of transparency data by CASPs under MiCA

On 28 November 2024, the European Commission adopted a Delegated Regulation (containing RTS specifying how CASPs operating a trading platform for cryptoassets are to present transparency data under MiCA. This follows a July 2024 final report.

Article 76 of MiCA sets out requirements in relation to requires trading platforms to make public pre-trade transparency requirements and post-trade transparency requirements.  Among other things, the RTS set out the general principles of presentation of information on operating rules for trading platforms, as well as the requirements concerning the data disaggregation of pre-trade and post-trade data.

For more on MiCA, please see our briefings here and here.

13. MiCA: Commission Implementing Regulation (EU) 2024/2902 on reporting related to ARTs and certain EMTs 

On 28 November 2024, Commission Implementing Regulation (EU) 2024/2902 on reporting related to ARTs and to EMTs denominated in a currency that is not an official currency of a Member State was published in the Official Journal.

MiCA requires issuers of ARTs and EMTs denominated in a non-EU currency to report specified information to the relevant competent authority on a quarterly basis. CASPs providing services related to ARTs must also provide issuers of ARTs with the information needed to prepare these reports. Article 58(3) of MiCA specifies that Article 22 applies to ARTs and EMTs denominated in a non-EU currency.

Areas covered by the ITS include requirements concerning:

• reporting reference dates;
• reporting remittance dates;
• data exchange formats and information accompanying submissions; and
• the retention period of personal data by issuers.

For more on MiCA, please see our briefings here and here.

14.MiCA: Commission Implementing Regulation on forms, templates and procedures for the cooperation and exchange of information published in OJ

On 26 November 2024, the Commission Implementing Regulation (EU) 2024/2545 on standard forms, templates and procedures for the cooperation and exchange of information between competent authorities was published in the Official Journal. The purpose of the delegated act is to encourage information exchange between NCAs to enable the effective supervision of issuers and offerors of cryptoassets.

The Implementing Regulation comes into force on 16 December 2024.

For more on MiCA, please see our briefings here and here.

15.ECB: Eurosystem completes tests using DLT for central bank money settlement  

On 4 December 2024, the ECB provided further details in relation to tests carried out concerning the use of DLT for wholesale settlement in central bank money. The ECB confirms that 64 participants carried out over 40 trials and experiments. Lessons gained from the work will inform analysis on the opportunities and challenges presented by DLT for financial markets (including how to facilitate the provision of central bank money settlement for wholesale transactions of assets on DLT platforms).

16.Global Digital Finance: GDF Announces New Travel Rule VASP Working Group led by OKX and Other Global Crypto Exchanges

On 22 November 2024, the Global Digital Finance announced the New Travel Rule VASP Working Group led by OKX and Other Global Crypto Exchanges. The project looks at challenges faced by VASPs in implementing the FATF Travel Rule. This will focus on developing best practices for VASPs; (screening protocols, requests for information, transaction returns, and exception handling); and supporting global regulatory engagement.

Comment: The Travel Rule was introduced in the UK in September 2023, with the FCA setting out expectations for UK CASPs. It was implemented in the EU via the Recast Wire Transfer Regulation, with the EBA issuing guidelines on detecting missing/incomplete information accompanying a transfer of funds/cryptoassets. These guidelines apply from 30 December 2024.

17.CGAP/BIS/IMF/UNSGSA/The World Bank: Report: Key Considerations for Open Finance 

On 20 November 2024, the World Bank issued a report on high level considerations for financial sector authorities wishing to implement open finance. The report focuses on: open finance; sector wide arrangements; country level data sharing. It also sets out 10 key elements of an open finance framework. These include: objectives; process leadership; governance arrangements; regulation; oversight and supervision; consumer and data protection; and consumer information and awareness

18.IOSCO: New Roadmap to enhance Retail Investor Online Safety

On 19 November 2024, IOSCO published details of a roadmap focused on regulation, education and collaboration to tackle risks arising from technological developments. The Roadmap consists of five waves of targeted actions planned over the next 12 months.

• First wave. A series of reports on good practices for Finfluencers; copy trading; and digital engagement practices. 
• Second wave. Consultation report on broker dealer conflicts of interest and engagement with internet service providers.
• Third wave. Joint roundtable with OECD on retail investor themes and publication of final reports from Wave 1.
• Fourth wave. 9th edition of World Investor Week 2025.
• Fifth wave. Final report of broker dealer conflict.

Comment: The reports contain draft good practices for market participants active in this area. Final reports will follow the consultations and the Roadmap is an ongoing initiative. This is an area of increased regulatory scrutiny.  ESMA has already published a discussion paper on the impact of digitalisation and the MiFID investor protection framework (see our briefing here), while the FCA has issued communications in this area. The results of IOSCO work will likely inform future FCA and ESMA work.

19.ESMA: Report on the assessment of the shortening of the settlement cycle in the EU

On 18 November 2024, ESMA published a Final Report on shortening the settlement cycle EU.

The report outlines benefits that a move to T+1 would  bring (e.g. increased efficiency and resilience of post-trade processes) . ESMA recommends migration to T+1 simultaneously across all relevant instruments by Q4 2027, with 11 October 2027 as the optimal date for the transition to T+1 in the EU. A coordinated approach with other jurisdictions in Europe is also proposed.

ESMA notes that amendments will need to be made to the CSDR and the settlement discipline framework in order move successfully to T+1.  It also states that coordination and standardisation efforts from market participants will be required. 

ESMA is to continue its regulatory work on settlement efficiency, and T+1 governance with the European Commission and the ECB.

Comment: There have been various efforts in a number of jurisdictions to shorten the settlement cycle. Changes occurred in the US in May 2024. In the UK, the terms of reference for the taskforce on shortening the settlement cycle discussed the case for the UK moving to T+0 and eventually to atomic settlement/instantaneous settlement (noting the impact of blockchain and other technology).

Updates and Guidance: UK

20.FCA: Next steps for regulation of cryptoassets 

On 26 November 2024, the FCA published three important publications on cryptoassets:

• FCA crypto roadmap (see here);
• Outcome of crypto roundtables (see here); and
• Cryptoassets consumer research note (wave 5) (see here).

Key milestones set out by the FCA in relation to a regulatory for cryptoassets include:

• FCA discussion paper on admission and disclosures, as well as on market abuse is expected in Q4 2024;
• FCA discussion paper covering: trading platform rules; intermediation rules; lending rules; staking; and prudential considerations is expected in Q1 2025.
• A consultation paper on: conduct and firm standards for all Regulated Activities Order (RAO) activities is expected in Q3 2025.

For more information, please see our briefing here.

Comment: These publications provide clarity on the emerging legal and regulatory framework for cryptoassets in the UK. Importantly, the publications demonstrate that next year will be critical for cryptoassets firms operating, or wishing to operate, in the UK.

21.FCA: Policy statement: Financial Crime Guide Changes Feedback to CP24/9 and Final Guidance (PS 24/17) 

On 24 November 2024, the FCA published a Policy Statement containing feedback on proposed changes to its Financial Crime Guide following an earlier consultation. The Guide is sector agnostic and looks at financial crime controls and specific risks. The FCA explicitly confirms that the Guide applies to firms registered under the MLRs. 

Self-assessment questions in the Guide include how to assess and address the risks of different types of cryptoassetst (e.g. anonymity-enhanced or privacy coins). Poor practice in relation to ongoing monitoring for customer due diligence includes: CASPs assuming that blockchain analysis alone is sufficient to monitor transactions and failing to do own transaction monitoring based on the knowledge of customers. Good practice for CASPs in relation to preventing loss from fraud includes pre-screening  outbound transactions for addresses linked to fraud.

Comment: Firms may want to assess provisions in the Guide against pre-existing crime systems and controls/internal policies.

22.BoE: Speech by Sasha Mills, Executive Director for Financial Market Infrastructures: Beyond Faster Horses: Wholesale Financial Markets in the Digital Age 

On 21 November 2024, the BoE published a speech by Sasha Mills, Executive Director for Financial Market Infrastructures, titled "Beyond Faster Horses: Wholesale Financial Markets in the Digital Age." This speech was delivered at the Tokenisation Summit and looked at the impact of programmable platforms and adoptions of new technologies on post trade processes and on the wider financial system.

• Tokenised MMFs could address issues with liquidity mismatch identified by the BoE and other regulators.
• The BoE considers that fund tokenisation is consistent with DSS objectives and encourages firms to use the Sandbox for experimentation in relation to MMFs. This should assist efforts to assess the benefits of tokenised funds units as collateral.
• Tokenisation could widen asset pool for activities such as repo, lending and collateralisation. Digital innovation can also streamline and make more efficient the process for short term lending.
• The BoE is working with other international regulators to arrive at a common understanding of benefits and risks of tokenisation (among other areas). Examples of collaborative initiatives include BIS’ Project Agorá (see Ashurst Global Digital Assets Digest April 2024 Edition).
• Initiatives by central banks, such as the MAS Global Layer 1 also seek to advance technical standards for tokenisation platforms

23.HM Treasury: Speech by Tulip Siddiq, Economic Secretary to the Treasury: Tokenisation Summit: UK government approach to tokenisation and regulation

On 21 November 2024, HMT published a speech by Tulip Siddiq, Economic Secretary to the Treasury. The speech outlines initiatives the UK government is taking forward such as the  DSS and the wider cryptoasset strategy.

Key issues

• Ms Siddiq is ready to engage with the sector on DIGIT (see our briefing here)
• The DSS and the pilot to deliver a Digital Gilt Instrument (DIGIT) complement other work being undertaken, such as legislative initiatives in relation to legal treatment of digital assets.
• The Government is to implement the proposals set out in October 2023 consultation on a regime for regulated activities involving cryptoassets.
• The new regulated activities regime for stablecoin will be implemented at the same timetable as the rest of the regulatory regime for cryptoassets.
• The Government is to provide guidance on whether cryptoasset staking services constitute collective investment schemes.

Comment: After months of speculation and delay, this speech provides concrete information form the Government for firms on the direction of travel and expected publications in relation to the regulatory regime for cryptoassets.

 

24.House of Lords (Property (Digital Assets etc) Bill [HL] Special Public Bill Committee): Call for Evidence: Property (Digital Assets etc) Bill  

The Special Public Bill Committee on the Property (Digital Assets etc) Bill has issued a call for evidence in respect of the Bill.  

The Bill, which was introduced in the House of Lords in September 2024, clarifies that certain digital assets can be recognised as property, even where they do not fit into the two traditional categories of personal property in English and Welsh law. The Bill avoids stating the digital assets that are to fall within the “third category” of personal property rights or their legal treatment (these details will be developed by the courts on a case-by-case basis).

Questions posed by the call for evidence include: negative or unexpected consequences of the Bill; areas for improvement; and implications the Bill has for the development of common law in England and Wales (and in other legal jurisdictions).

The deadline for comments is 20 December 2024.

25.FMLC: Minutes: FMLC Committee Meeting 16 October 2024

The FMLC has published the minutes of the FMLC Committee Meeting held on 16 October 2024. Topics for discussion included a letter form the FMLC setting out certain areas of uncertainty relating to the scope of the MLRs, as well as a draft paper on the financial services regulatory regime for cryptoassets setting out potential uncertainties.

26.FCA: Discussion Paper: Transaction reporting paper

The FCA published a discussion paper (DP 24/2) on the future of the transaction reporting regime under UK MiFIR. Among other areas, the discussion paper looks at the role the transaction reporting regime could play to support the development of new and existing technologies. The FCA also discusses how to monitor trading in tokenised securities more effectively (e.g. when trading is in a tokenised security or has a tokenised security as an underlying). Views are sought on adding new fields for the Digital Token Identifier (the global standard for identifying digital tokens) for the instrument and for the underlying in RTS 22. The field would be filled in when a tokenised security is traded or an instrument with a tokenised instrument as the underlying is trade.

Comment: ESMA's consultation paper on amendments to the EU transaction reporting regime as a result of MiFiR II also considered ways to enhance monitoring of trading in tokenised securities. 

Updates and Guidance: Europe

No new entries

Updates and Guidance: APAC

27.MAS: Remarks by Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) at the Futures Industry Association

On 4 December 2024, MAS published the keynote address by Mr Lim Tuang Lee, Assistant Managing Director (Capital Markets) MAS, delivered at the Futures Industry Association. The speech provided an overview of MAS' regulatory priorities in relation to capital markets and also touched on the transformative potential of DLT, as well as the importance of balancing robust regulation and active collaboration. The speech calls for more legal and regulatory certainty concerning how certain activities are treated in the blockchain and confirms that MAS has initiated a review of existing rules and regulations relating to the tokenisation of capital markets products. This review will look at existing regulatory barriers and may provide further industry guidance.

28.Hong Kong Stablecoins Bill

 On 6 December 2024, the Hong Kong government published the Stablecoins Bill in the Gazette which aims to put in place a regulatory regime for issuers of fiat-referenced stablecoins (FRS) in Hong Kong and enhance the framework for virtual asset activities.  This will be through introducing licensing requirements to certain activities related to FRS and providing the HKMA with the necessary powers for implementation of the regime.  The bill will be introduced into the Legislative Council for first reading on 18 December 2024.

29.HKEX: Virtual Asset Index Series

On 15 November 2024, the HKEX announced that their Virtual Asset Index Series is live.  The virtual asset indices for bitcoin and ether provide a single reference price, enabling investors to make informed decisions in the virtual asset space.  This further supports Hong Kong's development as Asia's leading digital assets hub. 

30. HKMA: Digital Bond Grant Scheme

On 28 November 2024, the HKMA launched the Digital Bond Grant Scheme (DBGS) which aims to promote the development of the digital securities market and encourage tokenisation in the capital markets.  The DBGS allows for a maximum grant of HK$2.5 million, subject to eligibility criteria, for each digital bond issuance in Hong Kong. 

Updates and Guidance: Australia

31.Australian Parliament: AML/CTF laws passed

The Australian Parliament has passed the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024. The Bill, which was introduced in September 2024, makes amendments to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 in areas such as customer due diligence; governance and oversight; value transfers; and risk assessments. It also expands the regulation of virtual assets.

For more information, please see our briefings here and here.

32.ASIC: Consultation Paper 381: Updates to INFO 225: Digital Assets: Financial Products and Services

On the 4th of December 2024, ASIC released Consultation Paper 381 Updates to INFO 225: Digital Assets: Financial Products and Services. INFO 225 Crypto-assets provides guidance to persons offering products and services in relation to crypto- and digital assets.

Consultation Paper 381 will provide further guidance on ASIC's interpretation of how the Corporations Act 2001 applies to crypto and digital assets. Consultation paper 381 also details ASIC's proposals for licensing entities that provide financial services in relation to crypto- and digital assets that are financial products. 

The updates through Consultation Paper 381 are necessary to reflect the significant changes and expansion over the last 10 to 15 years in digital asset markets. Under Consultation Paper 381 the title of INFO 225 will be changed to "Digital Assets". The proposed changes in Consultation Paper 381 include:

• adding guidance on a facility for making a financial investment (s763B of the Corporations Act);
• decreasing the focus on the role of initial coin offerings, as this is only one method for selling digital assets to consumers;
• adding further discussion of the typical financial services that an entity would apply for when applying for or applying to vary an Australian financial services (AFS) licence;
• including 13 worked examples to outline how ASIC interprets the existing financial product definitions applied to hypothetical scenarios;
• extending the good practice guidance directed to responsible entities in INFO 225 to also apply to providers of custodial and depository services;
• adding a section to address applications for relief and granting no-action letters; and
• edits to consolidate concepts, improve flow and provide further details and clarifications, where appropriate.

Consultation Paper 381 also sets out (in Section B) ASIC's proposed approach to licensing digital asset businesses under the AFS licensing regime. These updates do not create new regulatory obligations and instead clarify ASIC's interpretation of existing financial services law.

Consultations on the paper close on the 28th of February 2025.

For more information, please see briefing here.

Updates and Guidance: North America

33.SEC: Arbitration, Alternative Assets, and Aging Actors: Remarks at the meeting of the SEC Investor Advisory Committee

On 10 December 2024, the SEC published remarks delivered by Commissioner Hester M. Peirce at the meeting of the SEC Investor Advisory Committee. The Committee advises SEC on regulatory priorities, and on the regulation of securities products.

Peirce referred to key initiatives undertaken by the Investor Advisory Committee, including draft recommendations on the regulation of finfluencers Among other things, the draft recommends that the SEC looks at possible gaps in disclosure requirements and work with the Federal Trade Commission.

34. SEC: Departure of Gary Gensler

The SEC has announced that its 33rd Chair, Gary Gensler, will step down from the SEC on 20 January 2025. The SEC states that Gensler had been responsible for a robust rule making agenda, overseeing high impact enforcement cases.  Gensler was formerly Chair of the U.S. Commodity Futures Trading Commission, assisting the Obama Administration’s reform of the swaps market. The statement also provides an overview of Gensler's achievements in relation to corporate governance, disclosure. 

The SEC published a statement from Commission Jaime Lizárraga in response to the news.

Comment: The impact of the US election is still being digested by the industry. This is a significant development that may have impact on regulatory travel and policy where it concerns digital assets.

35. House Committee on Financial Services: Hearing on financial innovation

On 4 December 2024, the House Committee on Financial Services held a Hearing titled “Innovation Revolution: How Technology is Shaping the Future of Finance". Areas covered included the regulatory framework for blockchain technology and digital sectors. The session included contributions from representatives from the Fintech industry. 

36. CFTC’s Global Markets Advisory Committee advances Recommendation on Tokenised Non-cash collateral

On 21 November 2024, the CFTC announced that its Global Markets Advisory Committee had advanced a recommendation to expand the use of non-cash collateral through the use of DLT. The GMAC’s Digital Asset Markets Subcommittee also presented on the progress of its Utility Tokens workstream.

This recommendation contains a legal and regulatory framework on how existing policies, procedures, practices, and processes can be used to support the use of DLT for non-cash collateral in a manner consistent with margin requirements.

37. House Financial Services Committee: Hearing on prudential banking regulators

On 20 November 2024, the House Financial Services Committee, led by Chairman Patrick McHenry held a hearing on prudential banking regulators. In opening remarks, Chairman McHenry provided an overview of post-financial crisis regulation and cited legislative initiatives such FIT21 (see Global Digital Assets Digest May 2024 Edition). The session include contributions from federal agencies including the FDIC.

• Statement of Michael J. Hsu, Acting Comptroller of the Currency. Digitalisation of banking has led to non-bank financial technology companies offering a variety of services to consumers. The OCC has sought to provide an adequate response to this new reality. Examples include the interagency guidance on third-party risk management, which includes banks’ arrangements with Fintechs, as well as the July 2024 interagency Request for Information on bank-fintech arrangements and effective risk management practices. The Treasury Department’s call for federal payments regulation and a chartering regime for nonbanks is to be welcomed.
• Statement of Martin J Gruenberg, Chairman of the FDIC. The FDIC has responded to the increase in false advertising and misrepresentations about FDIC insurance. This includes requesting that offenders cease and desist the misleading conduct. The FDIC has also issued a final rule on requirements concerning display of the FDIC digital sign on a bank’s website and mobile applications.

38. Remarks by Assistant Secretary for International Finance Brent Neiman on the US Cross-Border Payments Agenda

On 19 November 2024, the US Treasury published remarks by Assistant Secretary for International Finance, Brent Neiman, on the US Cross-Border Payments Agenda. Neiman argues that there is broad based consensus among stakeholders in relation to US cross-border payments agenda, calling for a modern systems of payments underpinned by strong US international financial leadership. The speech outlines key areas of action for the US in terms of payments:  encouraging and participating in responsible payments innovation and experimentation; coordinating with the private sector and foreign partners to better align legal, regulatory, and supervisory frameworks; supporting strong international standards and high-quality compliance regimes to ensure the stability of payments and of the broader financial system.

Notable points

• International projects the US has been involved with include Project Agorá, as well as Project Cedar x Ubin+ (an initiative looking at improvements to multi-currency wholesale cross-border payments on a bilateral and technology-neutral basis).
• The Treasury is looking at how to enhance bilateral payment system connectivity with other jurisdictions (e.g. interconnecting fast payment systems or supporting the participation of foreign banks in domestic payment platforms).
• A federal payments framework would help maintain the global leadership of US financial firms.

39. SEC: Agency Financial Report 2024

The SEC has published its FY 2024 Agency Financial Report. This provides an overview of activities of key divisions and offices of SEC, including the Division of Investment Management.

Press/Articles

No new entries.

Contributors: Max Williams; Sasha Sawant; Anna He; Anson Chan