Lavan Thasarathakumar’s Post

🚀 *BoE and FCA Launch New Sandbox for Digital Asset Innovation* 🚀 The Bank of England (BoE) and Financial Conduct Authority (FCA) have officially launched a new Digital Securities Sandbox (DSS) aimed at fostering innovation in financial market infrastructure. This initiative offers companies a platform to test innovative ideas involving digital assets and assess their impact on traditional financial systems. Companies can also explore the potential benefits of emerging technologies like distributed ledger technology through this sandbox. Additionally, the DSS provides an opportunity to trial legislative changes and their effects on digital securities, making it a critical space for growth and experimentation in the industry. The BoE and FCA actively encourage firms to engage in this process, offering guidance and pre-application meetings to help firms understand regulatory requirements. This collaborative effort enhances market stability, ensures financial system sustainability, and upholds market integrity. Could this initiative be a game-changer for digital assets in financial markets? #Innovation #DigitalAssets #FinTech #Finance #Banking #RegTech #FinancialServices #DistributedLedger #DLT #FinancialInnovation #DigitalSecurities #MarketIntegrity #FinancialStability #BoE #FCA #Regulation

Asset Tokenisation Guidance: what’s required in Jersey and what are tokenised RWAs? These include blockchain-based tokens that represent physical and traditional financial assets (e.g. securities, bonds, commodities) so that JFSC is likely to consider the issuance of a tokenised equity differently from the issuance of a tokenised bond. #jfsc #blockchain #tokenisation #jfsc #rwa

[May 2] Securities and Markets Stakeholder Group (SMSG) advice on the consultation on 1️⃣reverse solicitation and 2️⃣the qualification of crypto-assets as financial instruments under #MiCA 1️⃣Reverse Solicitation The SMSG supports ESMA's restrictive interpretation of the reverse solicitation exemption in providing crypto-asset services by third-country firms, aimed at protecting investors and ensuring fair competition Emphasis on defining a clear time threshold to determine when reverse solicitation can apply, stressing the need for precise, narrow definitions to prevent misuse. Supports ESMA’s proposal that third-country firms can only market crypto-assets of the "same type" as initially requested by the client, to prevent circumventing MiCA regulations. There is a call for careful assessment to ensure this does not lead to unintended outcomes given the diversity within crypto-asset categories. 2️⃣ Qualification of crypto-assets as financial instruments The SMSG favors clear and consistent definitions across the EU of what constitutes financial instruments, highlighting existing discrepancies among Member States. Advocates for technology neutrality where the nature of financial instruments is defined by their legal and economic characteristics, enhancing investor protection. Suggests ESMA guidelines to clarify the implications of crypto-assets’ qualification as financial instruments, focusing on areas like EU passporting, investor compensation schemes, CASP licensing, and MiFID II business conduct rules. Supports a broader interpretation in qualifying crypto-assets as financial instruments to extend robust MiFID II protections to investors. Recommends disclosing applicable regulatory frameworks (MiCA or MiFID II) to investors for clarity in transactions. Highlights the importance of sharing information between regulatory and other authorities to enhance oversight and regulatory compliance.

📢 ASIC consults on updated guidance (INFO 225) for the Digital Assets sector https://lnkd.in/gHXPdDUZ ASIC has released this morning its much anticipated updated INFO 225 for public consultation. 👨🏫 The proposed updated INFO 225 expands the guidance on the types of digital asset offerings which may be financial products and financial services, including by reference to 13 examples of digital asset offerings. Importantly, the proposed guidance expands the types of digital assets and services that relate to digital assets which come within the Australian financial services licensing regime and therefore may require an Australian Financial Services Licence, Australian Markets License or Clearing and Settlement Facility Licence. In particular, ASIC considers that a greater number of offerings may be non-cash payment facilities. 💳 Businesses who deal in digital assets will need to consider this proposed new guidance carefully against their existing offerings. We do this type of work regularly, and can assist. Businesses will also need to consider whether they need an AFSL or whether there are other alternatives to permissibly come within the Australian financial services licensing regime. We currently have a few Responsible Managers with the required expertise in non-cash payments to assist (at the time of writing this). We have extensive licensing resources. The head of our licensing team was previously a leader in ASIC’s licensing team for 15 years. Finally, businesses have until 28 February 2025 to comment on the proposed new guidance. ASIC intends to issue its final updated guidance in mid 2025. For existing digital asset businesses, if they lodge an AFSL application (that isn't rejected as incomplete or deficient in any material way) or inform ASIC that they're applying for an AML or CS Licence within 6 months of when ASIC issues its guidance, there is a safe harbour for that business during that up-to-6-month window plus the time ASIC takes to assess the application (AML and CS Licence applicants have a bit more time than this). We can assist you in preparing a submission to the consultation. We are running our free Derivatives Compliance Forum tomorrow. We will discuss this CP as part of that forum, with a focus on what it means for the derivatives (crypto and TradFi) sectors. 💱 ‼️ Click here to register: https://lnkd.in/gnQdTGj6

BoE, FCA seek feedback on digital securities sandbox proposal The Bank of England (BoE) and Financial Conduct Authority (FCA) have released a consultation paper on the mooted Digital Securities Sandbox (DSS) – an initiative to explore the trading and settlement of digital securities. #BoE #FCA #digital #DSS #trading #equities #BestExecution https://hubs.li/Q02rPMZ50

The Financial Conduct Authority (FCA) recently released data covering actions taken against firms for breaching financial promotion rules and investigations into unregulated activities from October to December 2023. Experts emphasize that firms must align financial promotions with consumer duty principles, ensuring clarity, fairness, and accuracy. Compliance entails understanding product suitability and adhering to sector-specific regulations, particularly concerning cryptoasset promotions. The FCA is expected to increase its use of supervisory powers and enforcement actions against repeat offenders. Case studies highlight instances where firms misled consumers, emphasizing the importance of robust compliance measures, including across social media and influencer marketing channels. Proactive compliance measures, such as thorough due diligence and prompt issue resolution, are crucial for firms navigating regulatory complexities and maintaining client trust. Overall, the data underscores the evolving regulatory landscape and the necessity for firms to prioritize compliance and consumer protection in financial promotions. More - in the new W&A Law article

Is time the hidden currency of the financial world? Six years after MiFID II, we take a look at the impact of the regulations, how precision timing has become an essential component of the digital ecosystem that financial services rely on, and how Smart Timing continues to be the compliance solution you are looking for.  https://lnkd.in/eyrpSR46 #mifidii #ttaas #smarttiming #precisiontiming #timesynchronisation #financialservices

Some interesting points coming out of the FCA's latest Market Watch newsletter: There is a renewed emphasis on authorised firms to ensure that they have adequate policies and procedures sufficient that its managers and employees can (1) ensure compliance with firms' obligations under the regulatory system; and (2) counter the risk of financial crime. The newsletter also points readers towards the FCA's Financial Crime Guide for guidance on how firms can reduce the risk of financial crime. It may be that the background to this was the ~£29million fine imposed on Starling Bank at the end of September for financial crime failings arising from its insufficient financial sanctions screenings and breach of a requirement to not open accounts for high-risk customers. Although speculation, it could be that the FCA is seeing these tell-tale signs of insufficient financial crime-related policies and procedures with other authorised firms and wants to show the market that it is watching closely. https://lnkd.in/erpXYFCV

Today marks a major milestone with the US Treasury’s Finalized Regulations on information reporting obligations for digital asset brokers. At @TaxBit, we’re dedicated to guiding our clients through this evolving landscape with expert compliance solutions. 👉 Read more here: https://bit.ly/3L0TDcO

Today marks a major milestone with the US Treasury’s Finalized Regulations on information reporting obligations for digital asset brokers. At @TaxBit, we’re dedicated to guiding our clients through this evolving landscape with expert compliance solutions. 👉 Read more here: https://bit.ly/3L0TDcO