Fintech Regulation

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FINRA begins a dialogue with financial market participants about the metaverse’s potential opportunities, applications, and risks.

By Jenny Cieplak, Ghaith Mahmood, Stephen P. Wink, Naim Culhaci, and Deric Behar

On October 24, 2024, the Office of Financial Innovation (OFI) of the Financial Industry Regulatory Authority, Inc. (FINRA) published “The Metaverse and the Implications for the Securities Industry” (the Report).

FINRA cited current estimates that around 37.6 million users spend over $28 billion a year in metaverse platforms, with economic growth projected to reach $5 trillion by 2030. OFI therefore consulted with securities firms and other financial institutions, hardware and software providers, academics, industry observers, and government entities to better understand the opportunities and risks that metaverse platforms may present for the US financial industry. The Report outlines OFI’s findings and covers an overview of how it defines “the metaverse,” market trends, potential applications for metaverse platforms that the securities industry is exploring, potential use cases, challenges and related factors associated with metaverse platforms, and potential regulatory considerations.

The rule aims to reduce market concentration by guaranteeing consumer access to personal financial data, but faces strident criticism and immediate legal challenge.

By Arthur S. Long, Parag Patel, Barrie VanBrackle, Pia Naib, Mik Bushinski, and Deric Behar

On October 22, 2024, the Consumer Financial Protection Bureau (CFPB) finalized the Personal Financial Data Rights rule (the Rule) under Section 1033 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Rule requires…

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The deadline is fast approaching for in-scope financial entities and their ICT service providers to conform to the EU’s new digital operational resilience regulation.

By Christian F. McDermott and Alain Traill

With effect from 17 January 2025, a broad range of EU financial entities will be subject to the new EU regulation on digital operational resilience for the financial sector (DORA), with significant impact for firms and their third-party ICT service providers. As the new landscape takes shape, below is an overview of some of the key changes and steps that impacted financial entities and providers should be taking ahead of the deadline.

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The government will enact the new legislation to bring issuers of fiat-referencing stablecoins into the regulatory perimeter.

By Simon Hawkins, Adrian Fong, and Sam Maxson

On 17 July 2024, the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority (HKMA) released the consultation conclusions on their legislative proposal for a regulatory regime governing stablecoin issuers in Hong Kong (Consultation Conclusions). The next day, the HKMA followed with its own press release announcing the first batch…

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Recent Supreme Court administrative law rulings change the power dynamic between the executive and the judiciary in critical areas of statutory interpretation, enforcement, and immunity from legal challenge.

By Jenny Cieplak, Arthur S. Long, Nima H. Mohebbi, Benjamin A. Naftalis, Marlon Q. Paz, Yvette D. Valdez, Stephen P. Wink, Douglas K. Yatter, Adam Fovent, and Deric Behar

The 2023-2024 US Supreme Court session has concluded the term with a series of…

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Professional investors will benefit from increased exposure to cryptoassets via traditional financial instruments, though retail investors’ exposure remains limited.

By Stuart Davis, Gabriel Lakeman, and Ivan Pizeta*

In the fast-paced world of cryptocurrency, regulatory clarity is essential for both investors and market participants. In March this year, the Financial Conduct Authority (FCA) made a significant announcement regarding listing cryptoasset-backed Exchange Traded Notes (cETNs) in the UK. This decision marks an important step towards greater regulatory clarity in…

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The preliminary injunction was granted pursuant to Fifth Circuit precedent that the CFPB’s independent funding structure is unconstitutional.

By Barrie VanBrackle and Deric Behar

On May 10, 2024, the US District Court for the Northern District of Texas blocked the Consumer Financial Protection Bureau’s (CFPB) final rule (the Rule) amending Regulation Z to limit credit card late fees. The Rule was initially proposed in February 2023, finalized on March 5, 2024, and was set to go into effect on May 14, 2024.

The Rule aims to ensure that credit card late fees are “reasonable and proportional” to the costs that issuers incur in collecting late payments, as required by TILA. The Rule, however, faced immediate and intense criticism from market participants and trade groups representing banks and credit unions (for more information, see this Latham blog post).

The decision, which addresses a broad range of market activity by Coinbase relating to 13 third-party tokens, could have significant implications for market participants.

By Latham & Watkins’ Litigation & Trial Practice

On March 27, 2024, Judge Katherine Failla of the US District Court for the Southern District of New York (SDNY) ruled[i] (the Ruling) in favor of the Securities and Exchange Commission (SEC) on all but one argument raised in Coinbase’s motion for judgment on the pleadings, finding that the Commission adequately alleged the tokens at issue and Coinbase’s staking services are securities and that Coinbase has been operating as an unregistered broker, exchange, and clearing agency.  

The Ruling followed significant recent decisions in two other high-profile SEC enforcement actions regarding cryptocurrencies: SEC v. Ripple Labs, Inc., No. 1:20-Civ-10832 (SDNY), and SEC v. Terraform Labs Pte. Ltd., No. 1:23-cv-01346 (SDNY). The Coinbase decision, however, may be the most significant among the three decisions because (1) it addresses a broader range of market activity by a token exchange (as opposed to an issuer) and 13 third-party tokens (as opposed to fewer tokens from a single issuer), and (2) Judge Failla’s Ruling addresses the prior decisions in Ripple and Terraform and thus serves as the latest, most comprehensive opinion to date in the canon of case law on the issues.

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The rule targets a statutory loophole that the CFPB asserts large credit card issuers exploited to exact excessive late fees from consumers.

By Barrie VanBrackle and Deric Behar

On March 5, 2024, the Consumer Financial Protection Bureau (CFPB) finalized a rule (the Rule) to amend Regulation Z, which implements the Truth in Lending Act (TILA) to limit credit card late fees. The Rule was initially proposed in February 2023 and was intended to go into effect in October 2023 (for…