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Global Digital Assets Regulatory Developments - November 2024: Europe in Focus


Executive Summary: Global Digital Asset Regulatory Developments - November 2024


November 2024 witnessed significant regulatory progress in the digital asset landscape, with Europe leading the charge by advancing its Markets in Crypto-assets (MiCA) regulation.


Key Highlights:


  • MiCA Takes Center Stage: The European Commission issued a wave of delegated and implementing regulations under MiCA, covering transparency data, authorisation processes for crypto-asset service providers, reporting requirements, and market integrity measures. This signals Europe's commitment to establishing a comprehensive regulatory framework for digital assets.

  • UK Focuses on Growth and Innovation: The UK government emphasised economic growth and regulatory streamlining, with initiatives exploring the role of AI in financial services, reforming MiFID, and promoting cyber resilience in the digital asset sector.

  • Global Regulatory Momentum: Regulators worldwide demonstrated increased engagement with digital assets, with notable developments in Thailand, Canada, the US, and Australia. International organisations like the FSB, IMF, and IOSCO also contributed to the evolving regulatory landscape.

  • Collaboration and Key Themes: International collaboration is intensifying, with cross-border initiatives and efforts by global organisations. Key themes include cybersecurity, AI, and combating financial crime in the digital asset space.


Looking Ahead:


The regulatory landscape for digital assets is rapidly evolving. Europe's MiCA implementation is setting a precedent for other jurisdictions. Globally, regulators strive to balance innovation with investor protection and market integrity. Staying informed about these developments is crucial for all stakeholders in the digital asset ecosystem.



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Introduction


November 2024 saw significant regulatory activity in the digital asset space, particularly in Europe, with the advancement of MiCA. Here's a breakdown of key developments:


Europe


  • MiCA Dominates: The European Commission was highly active in pushing forward the Markets in Crypto-assets (MiCA) regulation:

    • Transparency Data: A Delegated Regulation was adopted concerning the presentation of pre- and post-trade transparency data. This aims to ensure market clarity and fairness.

    • Implementing Regulations: Several Implementing Regulations were published in the Official Journal of the EU (OJ) covering:

      • Information Technology Systems (ITS) for standard forms, templates, and procedures for cooperation and exchange of information.

      • Reporting requirements for asset-referenced tokens (ARTs) and e-money tokens (EMTs) denominated in non-EU currencies.

    • Delegated Regulations: A flurry of Delegated Regulations were released, focusing on:

      • Crypto-asset white paper approval procedures.

      • Methodology for estimating transaction numbers and values for ARTs and EMTs in non-EU currencies.

      • Information requirements for financial entities notifying their intention to provide crypto-asset services.

      • Authorisation application information for crypto-asset service providers (CASPs).

      • Conditions for establishing and operating consultative supervisory colleges.

      • Continuity and regularity in the performance of crypto-asset services.

    • Public Disclosure: An Implementing Regulation addressed technical means for disclosing inside information and delaying its public release, which is vital for market integrity.

  • DORA Guidance: Joint Guidelines on oversight cooperation and information exchange between the European Supervisory Authorities (ESAs) and competent authorities under the Digital Operational Resilience Act (DORA) were released. These guidelines aim to strengthen the financial sector's resilience against operational disruptions in the digital age.


United Kingdom


  • Mansion House 2024: The Chancellor of the Exchequer's speech at the Mansion House event signalled a focus on economic growth and streamlining regulations, potentially impacting the digital asset sector.

  • AI in Financial Services: The Bank of England (BoE) and Financial Conduct Authority (FCA) published a report on Artificial intelligence in UK financial services, examining its implications and potential risks.

  • Payments Guidance: The FCA issued guidance for firms enabling risk-based payment approaches to balance innovation with consumer protection.

  • Financial Services Growth & Competitiveness: A call for evidence was launched to gather input on enhancing the UK's financial services sector, including the role of digital assets.

  • MiFID Reforms: A policy paper outlined the next steps for reforming the UK Markets in Financial Instruments Directive (MiFID), which could potentially impact digital asset trading.

  • PISCES Consultation Outcome: The outcome of a consultation on the Private Intermittent Securities and Capital Exchange System (PISCES) was published, with implications for digital asset issuance and trading.

  • Digital Assets Property Bill: A factsheet clarified the scope and objectives of the Digital Markets: Property (Digital Assets Etc.) Bill.

  • BoE on Wholesale Markets: A speech titled "Beyond Faster Horses: Wholesale Financial Markets in the Digital Age" explored the transformative potential of digital assets in wholesale markets.

  • Cyber Resilience: A report examined the components of a significant cyber event from a (re)insurance perspective, highlighting the increasing importance of cybersecurity in the digital asset space.

  • Financial Crime: A letter to online, social media, and tech firms addressed upcoming Payment Systems Regulator (PSR) fraud enabler data, aiming to combat economic crime related to digital assets.

  • Crypto Asset Promotions: The FCA updated crypto-asset financial promotions and fiat-to-crypto on/off ramp services, emphasising consumer protection.

  • Cryptoasset Reporting Framework: A summary of responses was published on the Cryptoasset Reporting Framework, Common Reporting Standard amendments, and potential extensions to domestic reporting.

  • Financial Crime Guide: The FCA released a Policy Statement (PS24/17) on changes to the Financial Crime Guide, incorporating feedback and final guidance.


Other Notable Developments


  • Thailand: The Bank of Thailand partnered with the Hong Kong Monetary Authority on cross-border tokenisation initiatives, signalling growing international collaboration in digital assets.

  • Canada: The Bank of Canada explored the legal aspects of retail Central Bank Digital Currencies (CBDCs) in a publication on central bank digital currencies.

  • United States: The Commodity Futures Trading Commission (CFTC) received recommendations from the Global Markets Advisory Committee (GMAC) Digital Asset Markets Subcommittee. A Federal Reserve Board member gave a speech on the role of AI in the financial system.

  • Australia: The Reserve Bank of Australia released a consultation paper for Project Acacia, exploring the role of digital money in wholesale tokenised asset markets.

  • International:

    • The Financial Stability Board (FSB) published its 2024 annual report, focusing on promoting global financial stability in the context of digital assets.

    • The International Monetary Fund (IMF) released a paper on the progress of central bank digital currency and further considerations.

    • The Bank for International Settlements (BIS) published a paper examining liquidity provision in decentralised exchanges.

    • A white paper explored unpacking cyber resilience in the digital age.

    • The International Organization of Securities Commissions (IOSCO) launched a consultation on financial influencers (finfluencers).

    • PwC released its 6th Annual Global Crypto Hedge Fund Report.

    • The Wolfsberg Group published FAQs on defining digital assets for anti-money laundering purposes.

    • HSBC released a report on asset tokenisation in the quantum age.

    • A report examined the financial stability implications of digital assets.

    • IOSCO published a final report on the evolution of exchanges and their regulatory implications.

    • IOSCO unveiled a new roadmap to enhance online safety for retail investors in the context of digital assets.


Key Takeaways:


  • MiCA Implementation: Europe is making significant strides in implementing MiCA, which focuses on transparency, investor protection, and market integrity.

  • Global Regulatory Focus: Digital assets are attracting increasing attention from regulators worldwide, who are focused on balancing innovation with risk management and consumer protection.

  • International Collaboration: Cross-border cooperation is increasing, as seen in initiatives between Thailand and Hong Kong and through international organisations like the FSB, IMF, and IOSCO.

  • Key Themes: Cybersecurity, AI, and financial crime are key themes in the evolving regulatory landscape for digital assets.

This report provides a snapshot of the dynamic regulatory landscape for digital assets. It's essential to stay informed about these developments, as they will shape the industry's future.



 
 

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The posts listed on the 'What we think' webpages are our interpretation of regulatory developments we have been reading about. They should not be considered legal, regulatory or other advice. Contact us if you want to understand the impact of public policy, regulation and governance changes for you.

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