Regulatory News
European Union (EU)
ESAs recommend enhancements for innovation facilitators in the European Economic Area - On December 11, the European Supervisory Authorities (EBA, EIOPA, and ESMA) have released a report on innovation facilitators, encompassing innovation hubs and regulatory sandboxes. The report recognizes the benefits and challenges associated with these facilitators and offers recommendations for national competent authorities (NCAs), the ESAs, and the European Commission. Suggestions include improving NCA understanding of firms' concerns, broadening the scope of innovations, fostering effective collaboration among NCAs, and continuous evaluation of innovation hubs and sandboxes. The ESAs propose a comprehensive reflection by the European Commission on an EU-wide strategy to support financial innovation and the operation of innovation facilitators, particularly regulatory sandboxes.
ESAs seek public input on key standards under DORA - On December 8, the European Supervisory Authorities (ESAs) – EBA, EIOPA, and ESMA – have initiated a public consultation on the second set of policy mandates under the Digital Operational Resilience Act (DORA). This package includes regulatory technical standards (RTS) and implementing technical standards (ITS) related to major ICT-related incident reporting, digital operational resilience testing, ICT third-party risk management, and oversight over critical ICT third-party providers. The consultation period runs until March 4, 2024, and a public hearing is scheduled for 23 January.
United Kingdom (UK)
UK´s independent public watchdog issues report about FCA´s response to financial services changes - The National Audit Office´s report, issued on December 8, evaluates the Financial Conduct Authority (FCA) on its ability to respond to changes in regulatory powers, remit, and broader financial services sector developments. The assessment is based on good-practice principles and regulatory performance measurement criteria. The report focuses on key processes and enablers for managing change, with insights drawn from previous work on regulators facing transformations. It explores the FCA's adaptation to the evolving financial services landscape, assesses its tools and resources for addressing change, and examines how the FCA measures, reports, and learns from its performance. The report does not assess the overall effectiveness of the FCA's routine operations or review specific regulatory decisions or cases.
LATAM
Brazil's Central Bank President foresees Drex shaking up traditional banking systems - Roberto Campos Neto, the President of Brazil's Central Bank, anticipates that Drex, the digital version of the Brazilian currency, will disrupt the current systems employed by major banks. Speaking at the "Annual Drex 2023 Meeting," Campos Neto emphasized the need to shake off outdated legacy systems within banks and highlighted the challenge of implementing significant technological changes. He sees Drex as a solution, bringing three key benefits to the economy. These include the adoption of tokenized deposits, offering a regulatory framework for deposits, and addressing significant challenges in existing systems.
The Central Bank has delayed its public consultation on digital asset regulation to early 2024, originally planned for Q4 2023 - According to Cointelegraph, Fabio Araujo, the consultation will deviate from the norm, using questions to seek market input due to the disruptive nature of the topic. Despite the delay, the bank aims to conclude the initial stage of VASP regulation by mid-2024. This move reflects the Central Bank's cautious approach to navigating the complexities of regulating digital assets in the evolving financial landscape.
Industry News
European Union (EU)
DWS, Flow Traders, and Galaxy unveil AllUnity to pioneer EUR-denominated stablecoin - DWS Group, Flow Traders, and Galaxy have jointly announced the creation of AllUnity, a venture aimed at revolutionizing the on-chain economy by introducing a fully collateralized EUR-denominated stablecoin. The collaborative effort, regulated by Germany's financial supervisory authority, BaFin, brings together DWS's portfolio management, Flow Traders' liquidity provisioning expertise, and Galaxy's technological infrastructure. AllUnity's mission extends beyond stablecoins, with a long-term focus on expediting mass market adoption of digital assets and tokenization, poised to launch amidst improving regulatory clarity in the EU.
German development Bank KfW plans tokenized bond in 2024 - German state-owned development bank KfW intends to issue a tokenized bond in early 2024, leveraging Germany's eWpG legislation that supports both centralized and decentralized digital depositories. While KfW issued a digital bond this year using Clearstream's D7 platform, the upcoming tokenized bond will explore decentralized storage on blockchain, referred to as crypto securities. Union Investment, a prominent German asset manager, is expected to be a key investor, with KfW emphasizing the learning experience in navigating legal considerations for this innovative financial instrument.
United Kingdom (UK)
GFO-X Secures $30M in series B Funding led by M&G Investments for digital asset derivatives trading - Global Futures and Options Ltd (GFO-X) has raised $30 million in a Series B funding round led by M&G Investments, with M&G joining the board of GFO-X Holdings. GFO-X, in partnership with LCH SA, is the UK's first regulated trading venue for digital asset derivatives. The investment will support GFO-X's launch and foster innovation in the regulated digital asset sector, aiming to establish a global hub for trading and clearing digital asset derivatives.
MENA
Coinbase launches Project Diamond, an Institutional Tokenization Platform in Abu Dhabi - The project developed by Coinbase Asset Management, leverages technologies like the Coinbase blockchain Base, USDC stablecoin, Coinbase Web3 wallet, and Coinbase Prime custody. Initial use cases focus on non-U.S. registered institutions, with approval to participate in ADGM RegLab. The move aligns with Coinbase's focus on natively digital assets, hinting at potential collaboration with traditional finance (TradFi). The announcement acknowledges U.S. regulatory challenges, including the Basel Committee's upcoming crypto rules consultation. BIS's interest in tokenization is noted, stressing the importance of permissioned blockchains.
Fasset secures VASP license in Dubai and announces investment round for global expansion - UAE-based Fasset has obtained a Virtual Asset Service Provider (VASP) license from Dubai's Virtual Asset Regulatory Authority (VARA), allowing it to offer broker-dealer services in virtual assets worldwide. The company focuses on secure cryptocurrencies and practical blockchain applications, working with corporate entities to enhance accessibility. Fasset plans to launch a beta version soon, with a full customer rollout scheduled for January 2024.
Binance withdraws Abu Dhabi license application amid regulatory challenges - Binance has withdrawn its application for a license in Abu Dhabi, citing growing regulatory challenges. The application, initially submitted by Binance's BV Investment Management a year ago, was intended for managing a collective investment fund, according to Abu Dhabi's financial regulator.
Global News
SDX successfully tokenizes Aktionariat share tokens on regulated CSD - SDX successfully tokenized Aktionariat's private shares on its regulated blockchain-based CSD, transforming Ethereum-based ledger securities into bankable assets. Berner Kantonalbank (BEKB) acted as the issuer agent and custodian, showcasing enhanced custody and transferability for digital securities. SDX's CSD ensures secure bank custody, simplifying shareholder management without the need for private key management. This success marks a significant step in integrating open blockchain assets into traditional finance. The collaboration with BEKB and Aktionariat aims to further develop the solution and bridge the gap between decentralized and traditional finance.
Daiwa Securities teams up with Progmat and SBI R3 for tokenized bond issuance - Daiwa Securities, in partnership with Progmat and SBI R3, is leveraging R3's Corda blockchain for an end-to-end tokenized bond issuance experience. The collaboration automates the manual bond marketing process through Daiwa's Bianca solution. Progmat, supported by MUFG and other major players, integrates with Corda to enhance the tokenization platform.
