Payments, Banking & FinTech roundup: January 2023

The start of 2023 began with delays to both crypto and BNPL regulation, and data being released that reported record-breaking fines for firms that failed to prevent financial crime.

At Banking Circle, we took a look at what the EU’s MiCA regulation means for companies operating in the crypto space.

Our Chief Business Officer, Livia Benisty, spoke with Treasury Management International about how banks and PSPs can optimise their FX and cross-border offerings, and Daniel Lee, Head of Web3, explained how banks can fast-track crypto engagement by working with third parties in an article for The Paypers.

Here are some other important stories from the industry you may have missed in January:

Bank of England publishes questions asked in response to its request for a CBDC wallet

After publishing a request for applications to deliver a proof of concept for a wallet that would be able to hold Central Bank Digital Currency (CBDC), the Bank of England (BoE) responded to a list of questions asked by applicants.

As reported by City A.M., the answers given to the 70+ questions provide an insight into the way in which the BoE envisages how a CBDC would work, but perhaps also highlighted a lack of clarity around what was actually required from the brief to begin with. The contract is due to be awarded on 31 January.

Read the full list of questions, and responses for the BoE here.

CMA confirms completion of Open Banking roadmap

The Competition and Markets Authority (CMA) announced that Open Banking in the UK is moving into a new phase, following the completion of its roadmap. This means that the six largest banking providers in the UK have implemented all the requirements laid out, leaving just Allied Irish Bank, Bank of Ireland and Danske to catch up, or risk enforcement action by the CMA.

As reported last month, HM Treasury, Competition and Markets Authority (CMA), the Financial Conduct Authority (FCA), and the Payment Systems Regulator (PSR) will be responsible for delivering on this next phase, which aims to build “the best environment for Open Banking to reach its full potential.” However, what exactly this looks like is yet to be set in stone, though these recommendations are due to be published before the end of Q1 2023.

UK crypto and payments bodies form industry alliance

Five UK-based associations with a wealth of expertise in crypto, payments and finance have come together to develop better policies, practices and regulation around digital currencies. The City of London Corporation, Digital Pound Foundation, The Payments Association, TheCityUK and UK Finance will combine their knowledge and resources to help the UK become a world crypto hub.

Read more here.

Banking experts highlight concerns around lack of regulation in crypto markets

During Davos, a panel of global banking experts voiced their concerns about the lack of regulation in ‘crazy’ crypto markets, suggesting that as well as there being some form of base regulatory requirements, there should also be bank-level regulation for any blockchain-based innovation that aims to offer an alternative to traditional banking products and services.

Watch the full session here.

Delays to vote on MiCA EU crypto regulation

The European Union has postponed the vote on the Markets in Crypto Assets Regulation (MiCA) bill until April 2023 due to a technical delay relating to the translation of the 400 page document into the 24 official languages that make up the member states of the EU.

This is the second time that the bill has been delayed.

Meanwhile, French National Assembly members have given crypto companies an additional 3 months to obtain authorisation from regulators to operate in France. By January 2024, crypto providers will need to be authorised, which requires more stringent checks on financial resources and business conduct than the current laws, which only require a business to be registered.

BNPL regulations delayed in the UK

It’s not only the EU where the rollout of new regulations has been delayed.

Despite having a deadline of the end of 2022 to open a consultation on draft legislation for Buy Now, Pay Later (BNPL), and highlighting the need for providers to be ‘urgently’ regulated more than two years ago, the UK Treasury is still yet to act.

Tory peer Chris Holmes, co-chair of the parliamentary group for FinTech, highlighted his concerns, stating that this inaction is putting business confidence in the UK at risk.

Croatia adopts the Euro

Croatia dropped the Kuna and adopted the Euro as its currency on 1 January 2023, making it the 20th member of the Euro area.

While the move was designed to benefit Croatian consumers and businesses alike, there have been complaints of merchants inflating pricing by rounding up to the nearest Euro. This has resulted in the government handing out fines to traders who have been caught unjustifiably increasing their prices.

On a more positive note, the adoption of the Euro is expected to benefit the Croatian economy by eliminating currency risk, as well as lowering transaction and borrowing costs.

Global fines for AML surge during 2022

Fines issued to businesses that failed to prevent anti-money laundering (AML) and other associated financial crimes surged by 53% during 2022. Firms were fined a total of $5bn, though much of this figure was made up of the record-breaking $2.1bn fine issued to Danske Bank imposed by the US Department of Justice.

Another factor that contributed to the increase was the multiple fines issued to businesses operating in the crypto industry, which rose by 92% year on year.

Read a full breakdown of the data here.

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