Global Fintech & Digital Assets Blog

Hong Kong Launches International Carbon Marketplace, Singapore Introduces ESG Hub

Posted in Investing in Fintech

Hong Kong’s Core Climate aims to facilitate trading of carbon credits, while the Hub plans to expedite Singapore’s ESG ecosystem growth.

By Farhana Sharmeen, Paul A. Davies, and James Bee

On 28 October 2022, the Hong Kong Exchange and Clearing Limited (HKEX) launched Core Climate, Hong Kong’s International Carbon Marketplace. The birth of Core Climate is a further step toward the growth of ESG initiatives in Asia, which are gaining particular traction among the continent’s stock exchanges.

HKEX hopes that Core Climate will support the global energy transition by facilitating an effective and transparent trading of carbon credits. Participants on the Core Climate platform will be able to trade, hold, settle, source, and retire voluntary carbon credits, and the platform’s carbon credits will come from internationally certified projects around the world, including carbon avoidance, reduction, and removal projects. All projects listed on Core Climate are verified against international standards, but whether HKEX will publish a specific list of international standards acceptable for this purpose is not clear at this stage.

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Hong Kong Continues Developing Its Virtual Asset Framework

Posted in Cryptoassets

The latest statements from the government and regulators indicate that Hong Kong is moving forward with enhancing its virtual asset regulatory and legal regime.

By Simon Hawkins and Adrian Fong

The Hong Kong government and the Securities and Futures Commission (SFC) announced their policy stances and further measures to support the development of virtual assets (VA) in Hong Kong at the Hong Kong Fintech Week 2022. Senior government officials and regulators expressed support for Hong Kong to continue to establish a responsible legal and regulatory framework to develop its VA industry.

The Financial Services and the Treasury Bureau (FSTB) published a policy statement recognizing that VAs were “here to stay” and would create opportunities in finance, e-commerce, Web3, and the Metaverse for Hong Kong. Consistent with the policy approach that Hong Kong’s financial services regulators previously mentioned, the government intends to adopt the “same activity, same risks, same regulation” principle to manage risks alongside innovation.

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Antitrust Matters: What Digital Asset Innovators Need to Know

Posted in Blockchain, Cryptoassets, Fintech Regulation, Uncategorized

Unpacking three key competition issues for digital asset innovators and investors: M&A, interlocking directorates, and interoperability.

By Kelly Fayne, Anna Rathbun, and Evan Omi

In a sea of regulatory hurdles and issues, antitrust and competition laws may be low on the list of concerns of digital asset innovators and investors. But competition in the digital asset space is front of mind for key industry regulators. On October 24, 2022, SEC Chair Gary Gensler noted in a speech at the SIFMA Annual Meeting:

“We’ve [] seen centralization in the crypto market, which was founded on the idea of decentralization. The field actually has significant concentration among intermediaries in the middle of the market. Thus, we must remain vigilant to areas where concentration and potential economic rents have built up; or may do so in the future.” (emphasis added)

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White House Issues Digital Asset Framework

Posted in Cryptoassets

The comprehensive framework, which spans multiple reports, aims to spur risk mitigation efforts and potentially a US central bank digital currency.

By Alan W. Avery, Arthur S. Long, Yvette D. Valdez, Stephen P. Wink, Douglas K. Yatter, Pia Naib, Adam Bruce Fovent, and Deric Behar

On September 16, 2022, the White House published a fact sheet described as the first-ever “Comprehensive Framework for Responsible Development of Digital Assets” (the Framework). The Framework articulates the Biden Administration’s intended approach to the responsible development of the digital asset space and comes in response to a range of reports from various financial services regulators that were released over the previous few months. These reports include three that the Department of the Treasury published on the same day as the Framework, addressing the future of money and payment systems, consumer and investor protection, and illicit finance risks. Continue Reading

The Book of Jargon® — Blockchain, Crypto & Web3 Now Available

Posted in Blockchain, Cryptoassets, Non-Fungible Tokens

Mobile and desktop reference tool defines nearly 600 industry terms.

Latham & Watkins has published the second edition of The Book of Jargon® — Blockchain, Crypto & Web3, a comprehensive digital glossary developed for the business, academic, and legal communities. The resource renders the often complex vocabulary, acronyms, and slang of the blockchain, cryptocurrency, and Web3 sector more accessible and understandable to all.

With nearly 600 terms, the user-friendly glossary is roughly double the size of the first edition, incorporating hundreds of new terms to reflect developments in key areas such as decentralized finance (DeFi), non-fungible tokens (NFTs), and the metaverse.

The Book of Jargon® — Blockchain, Crypto & Web3 is available as an online resource, a PDF, and a free mobile app in the App Store and on Google Play. It can also be accessed on the firm’s website under the Digital Assets & Web3 practice page.

See Latham’s entire Book of Jargon® series here.

UK to Open Up Text and Data Mining Under New Copyright and Database Rules

Posted in Data Privacy, Cybersecurity, and AI

A proposed broad copyright exception for text and data mining that favours AI developers is unlikely to be welcome news for rightholders.

By Deborah Kirk, and Brett Shandler

On 28 June 2022, the UK government published its response to its consultation on “Artificial Intelligence and IP: Copyright and Patents”, which commenced in October 2021 (Response).

Among other points,[1] the government has indicated its intention to introduce a new copyright and database exception that allows text and data mining (TDM) for any purpose, provided that the party employing TDM obtains lawful access to the material. Continue Reading

SEC Unveils Strategic Plan With Renewed Focus on Technology

Posted in Cryptoassets

The plan directs the agency to develop a robust regulatory framework to prevent market misconduct, as SEC officials’ public comments keep advancements in technology high on the agenda.

By Marlon Q. Paz, Stephen P. Wink, Donald Thompson, and Deric Behar

On August 25, 2022, the Securities and Exchange Commission (SEC) published a draft Strategic Plan (the Plan) for fiscal years 2022–2026. The Plan focuses on three goals that, according to SEC Chairman Gary Gensler, advance the SEC’s mission to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The Plan is open for public comment until September 29, 2022. Continue Reading

Webcast: Navigating the Impact of Counterparty Insolvency and Negative Market Conditions in the Crypto Space

Posted in Cryptoassets

Latham lawyers discuss the state of the crypto industry and the challenges for companies.

Turbulent market conditions are presenting novel challenges for companies in the cryptocurrency space. What are the factors contributing to the downturn, the implications for companies, and the legal rights and remedies that companies may have?

Restructuring & Special Situations Practice partners George Klidonas, Andrew Sorkin, and Suzzanne Uhland, together with Digital Assets & Web3 Practice Co-Chair and partner Yvette Valdez, recently hosted an in-depth discussion on these topics, including:

  • Understanding the current crypto environment and implications of the decline in cryptoasset values
  • Counterparty insolvency risks and remedies
  • The emerging trends in the crypto industry and the market impacts

You can watch the webcast here, where you can also download slides and submit for MCLE credits, as well as watch below.

Legal Implications of the Ethereum Merge and Potential Ethereum Proof-of-Work Fork

Posted in Blockchain, Cryptoassets

Ethereum’s transition to proof of stake presents opportunities and pitfalls for certain digital assets and tokens built on the network.

By Jenny Cieplak, Ghaith Mahmood, Yvette D. Valdez, Stephen P. Wink, Adam Fovent, and Justin Tzeng

After years of development, the Ethereum blockchain appears poised to make its much-anticipated transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) model. This change has been described as one of the most significant upgrades in the history of blockchain. Barring unexpected technical hurdles, the Ethereum Mainnet, upon which transactions are executed and recorded, is expected to merge in September 2022 with the PoS Beacon Chain consensus layer that has been under development for several years (the Merge). Continue Reading

UAE Central Bank Issues Guidance on Anti-Money Laundering Risks in the Payment Sector

Posted in Payments

The guidance is part of the rapidly evolving rules on anti-money laundering and aims to promote UAE as a jurisdiction compliant with best practices.

By Brian Meenagh, Ksenia Koroleva, and Matthew Rodwell

On August 1, 2022, the UAE Central Bank (CBUAE) issued the Guidance for Licensed Financial Institutions on the Risks Relating to Payments.[1]

The guidance was issued to implement the requirements of Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Illegal Organisations. It sets out the CBUAE’s expectations as to the appropriate compliance measures to be adopted within payments ecosystems. The guidance is not intended to amend or replace existing CBUAE requirements and should be read in conjunction with the CBUAE’s existing rules[2] and guidance materials[3]. Continue Reading