FinTech Global FS Regulatory Round-up - w/e 2 May 2025

ICYMI

• Searchlight AI – Tracking AI law and policy globally

---

UK

FCA: DP – Regulating Cryptoasset Activities

The FCA has published Discussion Paper 25/1: Regulating Cryptoasset Activities (DP 25/1). DP25/1 seeks views on the FCA's approach to regulating cryptoasset trading platforms, intermediaries, cryptoasset lending and borrowing, staking and decentralised finance, and the use of credit to purchase cryptoassets.

The proposals in DP25/1 have been informed by engagement with the cryptoasset industry, consumers, traditional finance participants, other regulatory regimes and input from policy roundtables held in April and May 2024; they also reflect feedback from the consultation undertaken by HM Treasury (HMT) in 2023.    The DP follows on from HMT's publication of a draft of forthcoming statutory provisions to create new regulated activities for cryptoassets, and an explainer document detailing the intended policy outcomes of these provisions.

Responses are requested by 13 June 2025. [2 May 2025]  #Crypto

BoE: AI consortium

The Bank of England (BoE) has announced the launch (with accompanying terms of reference) of a new AI consortium. Its purpose is to provide a platform for public-private engagement to gather input from stakeholders on the capabilities, development, deployment and use of AI in UK financial services. Its specific aims are:

• to identify how AI is or could be used in financial services, for example, by considering new capabilities, deployments and use cases as well as technical developments where relevant;
• to discuss the benefits, risks and challenges arising from the use of AI, e.g. with respect to financial services firms or the wider financial system; and
• to inform the BoE's approach to addressing risks and challenges and promoting the safe adoption of AI. [2 May 2025]  #AI

HMT: Chancellor's speech at Innovate Finance Global Summit 2025

HM Treasury (HMT) has published the keynote speech by Chancellor Rachel Reeves, delivered at the Global Innovate Summit 2025. The Chancellor highlighted several initiatives as she illustrated the UK's 'history of breaking ground', including the publication of draft legislation for a comprehensive regulatory regime for cryptoassets, the development of Open Banking standards, and plans to issue a Digital Gilt Instrument.

She emphasised the importance of international cooperation as the UK seeks to become a 'world-leader in digital assets', and also of regulation supporting business and not holding it back.

Towards the end of her address, the Chancellor confirmed that her Mansion House speech would take place on 15 July 2024; the UK's first Financial Services Growth and Competitiveness Strategy will be published at the same time. [30 Apr 2025]  #Crypto #OpenBanking

FCA: Engagement Paper – Proposal for AI Live Testing

The FCA has published an engagement paper seeking views from firms about how its live AI testing service can help them to deploy safe and responsible AI. The live testing initiative was announced in a speech by Jessica Rusu, FCA chief data, information and intelligence officer, delivered at the Innovate Finance Global Summit 2025. The FCA welcomes views from all stakeholders but is particularly interested on hearing from chief information officers; chief AI officers; chief data officers; and AI solution providers.

The live testing service would be a new component of the FCA’s AI Lab, and will provide regulatory support to firms that are ready to deploy consumer or market-facing AI models. It is intended to run for 12 to 18 months, with plans to launch in September 2025.

The proposal builds on the FCA’s new 5-year strategy which sets out how the regulator will support growth by enabling innovation and ensuring the continued competitiveness of the UK’s world-leading financial services through a tech-positive approach.

Responses are requested by 10 June 2025. [29 Apr 2025]  #AI

BoE: Speech – Renewed RTGS

The Bank of England (BoE) has published a speech by Dave Ramsden, Deputy Governor, Markets and Banking, delivered at the Innovate Finance Global Summit 2025.

Mr Ramsden discussed the beginning phases of the changeover to the renewed real time gross settlement system (RTGS), noting that, on the first day of operation, the new system settled payments totalling £778 billion. He also discussed the opportunities for the system to innovate in the wholesale payments space, in particular enabling wider interoperability, and highlighted the BoE's vision for the renewed RTGS to act as an open platform to enable competition and drive innovation across the financial sector.

Mr Ramsden outlined next steps, including the BoE's plans to consult on whether to extend settlement hours for RTGS, and to expand further access to RTGS accounts for settlement. He highlighted that the next stage in the BoE's work will be to explore the introduction of a synchronised settlement interface to allow the RTGS platform to interoperate with other ledgers, including tokenised asset ledgers, to achieve atomic settlement. [29 Apr 2025]  #Payments

HMT policy note: Future financial services regulatory regime for cryptoassets

HMT has announced new rules for firms offering cryptoasset services. Under new draft legislation, crypto exchanges, dealers and agents will be brought into the regulatory perimeter. Crypto firms with UK customers will also have to meet clear standards on transparency, consumer protection, and operational resilience in the same way that firms in traditional finance do.  

Additionally, the Chancellor has announced that the government will publish the first ever Financial Services Growth and Competitiveness Strategy on 15 July 2025, alongside her Mansion House speech. [29 Apr 2025]  #Crypto #OpRes

---

Europe

EC: RTS on market abuse under MiCAR

The European Commission (EC) has added to its register of documents the RTS specifying the arrangements, systems and procedures to prevent, detect and report market abuse, the templates to be used for reporting suspected market abuse, and the coordination procedures between the competent authorities for the detection and sanctioning of market abuse in cross-border market abuse situations under the Market in Cryptoassets Regulation (MiCAR)

The regulation shall enter into force on the twentieth day following that of its publication in the Official Journal (OJ) of the EU. [30 Apr 2025]  #Crypto #MiCAR

ESMA: Guidelines on market abuse under MiCAR

The European Securities and Markets Authority (ESMA) has published its Final Report on guidelines on supervisory practices to prevent and detect market abuse under the Market in Cryptoassets Regulation (MiCAR).

Based on ESMA's experience under the Market Abuse Regulation (MAR), the guidelines intended for National Competent Authorities (NCAs), include general principles for effective supervision and specific practices for detecting and preventing market abuse in cryptoassets.  The guidelines require supervisory activity to be risk-based and proportionate, and set the objective for NCAs to build a common supervisory culture specific for cryptoassets through an open dialogue with the industry and interactions with other NCAs.

The Guidelines will be translated into all EU languages and published on ESMA’s website and will start applying three months after that date. [29 Apr 2025]  #Crypto #MiCAR

EBA: Draft RTS on central contact points for CASPs – MLD4

The European Banking Authority (EBA) has published new draft Regulatory Technical Standards (RTS) under the Fourth Money Laundering Directive (MLD4) that define when cryptoasset service providers (CASPs) have to appoint a central contact point. The EBA explains that a central contact point can be an important tool in the fight against financial crime.

CASPs established in one EU Member State can provide services in another. In some cases, where they have a local ‘establishment’ (e.g. a crypto ATM) they must comply with local anti-money laundering and countering the financing of terrorism (AML/CFT) obligations as well as those that apply in the home Member State. In those situations, central contact points can help mitigate the money laundering and terrorist financing (ML/TF) risks associated with the cross-border provision of cryptoasset services and facilitate adequate AML/CFT supervision and oversight.

The draft RTS set out the conditions under which CASPs should appoint a central contact point, and the roles and responsibilities of that central contact point. The draft RTS do not define the form that a central contact point should take, or where in the EU it should be based. [28 Apr 2025]  #Crypto

---

Hong Kong

HKMA and Cyberport launch second cohort of GenA.I. Sandbox to accelerate A.I. innovation in financial sector

The HKMA, in collaboration with the Hong Kong Cyberport Management Company Limited (Cyberport), has announced the launch of the second cohort of the Generative Artificial Intelligence Sandbox (GenA.I. Sandbox) initiative.  The sandbox aims to provide a risk-controlled environment for banks to develop and test innovative solutions using artificial intelligence (AI), further advancing the adoption of AI technology in the financial sector. 

Ms Carmen Chu, Executive Director (Banking Supervision) of the HKMA, made the announcement in her opening remarks at FiNETech5, the fifth edition of the FiNETech series (see our previous update regarding the fourth edition of the series).

In light of the positive responses received in the first cohort started in January 2025 (see our previous update), the second cohort will continue to focus on use cases that further enhance risk management, anti-fraud measures and customer experience.

A key addition to the second cohort is the introduction of the GenA.I. Sandbox Collaboratory, a platform comprising a series of practical workshops that facilitates early engagements between banks and technology providers.  These workshops are designed to drive the conversion of problem statements into practical use cases, which can then be trialed in the GenA.I. Sandbox.  In response to the growing threat of deepfake scams, a dedicated workshop on combatting deepfake attacks with AI will be held in the coming weeks.

In its circular, the HKMA invited authorised institutions to apply for the second cohort of the sandbox.  The HKMA stated that given the growing importance of managing risks associated with AI adoption, all use cases in the second cohort are expected to incorporate robust AI safety validation into their technical trials and valuations.  The HKMA encourages the development of use cases with a component of AI-assisted second and third lines of defence to enhance AI governance.

Applications for the second cohort are open until 31 August 2025.  Similar to the first cohort, applications will be prioritised based on various factors (see annex for details).  Selected projects will tentatively be announced in the fourth quarter of 2025.  [28 Apr 2025]  #AI #GenAI #Deepfake

HKMA publishes presentation materials for upcoming briefing to LegCo Panel on Financial Affairs on 6 May 2025

The HKMA has published presentation materials for its upcoming briefing to the Legislative Council (LegCo) Panel on Financial Affairs on 6 May 2025.  Areas of the HKMA's work include (among others):

Banking Stability

• Prudential treatment of cryptoasset exposure – Pursuant to the industry's feedback on the initial proposals for the local implementation of the prudential treatment, the HKMA is now in the process of conducting statutory consultations on the draft amendments to the relevant rules.  The HKMA plans to submit the legislative amendments to LegCo for negative vetting in July 2025, with a target implementation date of 1 January 2026 (slide 55).
• Banking investor protection – Among other things, the HKMA issued a joint circular with the Insurance Authority on sale of index universal life insurance products, commenced a joint consultation with the Insurance Authority on the proposal to rename insurance products with saving features, and issued guidance to banks on the provision of staking services for virtual assets from custodial services (slide 62).

Financial Infrastructure

• Fintech initiatives – The HKMA is progressing with various central bank digital currency projects (including Project mBridge, Project Ensemble, and Project e-HKD+) and the Commercial Data Interchange (slides 68 and 69).

Hong Kong as an International Financial Centre

• The HKMA and the Financial Services and the Treasury Bureau introduced the Stablecoins Bill into the LegCo in December 2024 (see our previous update).  The HKMA has also continued to maintain dialogue with the participants of the stablecoin issuer sandbox (slide 84).  [28 Apr 2025]  #Crypto #CBDC #Stablecoin

HKMA publishes Annual Report 2024 and Sustainability Report 2024

The HKMA published its Annual Report 2024, which contains an overview of the HKMA's work in 2024 and priorities and plans for 2025 and beyond.  

The priorities for 2025 and beyond include (among others):

• Future-proofing the banking sector – This includes conducting a comprehensive review of the evolution of banks’ fintech adoption and their future fintech strategies, embarking on a strategic transformation programme for its core supervisory functions, implementing a data-driven and technology empowered supervision framework, and leading a collaborative study to identify potential talent gaps in the banking sector.

• Oversight of financial market infrastructures – This includes continuing active participation in the international working groups relating to cross-border payments and monitoring the implementation of new and innovative financial market infrastructure related initiatives.

• Enhancing Hong Kong's competitiveness as an international financial centre – This includes deepening connectivity between the financial markets of Hong Kong and the Mainland, enhancing Hong Kong’s role as an offshore renminbi business hub, strengthening connections within Greater Bay Area, enhancing financial platform competitiveness, reinforcing Hong Kong’s position as a fintech hub in Asia, ensuring the reliability and efficiency of Hong Kong’s critical financial infrastructure, ensuring the safety and soundness of the local retail payment industry, and implementing the licensing regime for stablecoin issuers.  [25 Apr 2025]  #Payments #Fintech #Stablecoin

 

---

India

SEBI: Clarification regarding cybersecurity framework – categorisation of REs

SEBI has issued a circular to revise the thresholds and categorisation of regulated entities (REs) for the purposes of the application of the Cybersecurity and Cyber Resilience Framework. SEBI noted that the criteria and thresholds for different categories will continue to be updated as and when required.  [30 Apr 2025]  #Cyber 

 

---

US

OCC: Acting Comptroller discusses AI

In a press release, the OCC has highlighted that the Acting Comptroller discussed the role of AI in financial services in recorded remarks at the National Fair Housing Alliance’s Responsible AI Symposium. In his remarks, Acting Comptroller Hood highlighted the OCC work to ensure AI and other technologies are used ethically and responsibly within the banking industry. He also discussed the OCC’s work to promote innovation in the banking system through Project REACh.  [25 Apr 2025]  #AI

SEC announces charges in $198m crypto and FX fraud scheme

The SEC has announced that it has charged an individual for orchestrating a fraudulent scheme that raised approximately $198m from investors worldwide and for misappropriating more than $57m.

According to the SEC’s complaint, the individual's company claimed to be a crypto and foreign exchange (FX) trading company. It offered and sold "membership” packages, which were claimed to guarantee investors high returns from crypto and FX trading, and also offered members multi-level-marketing-like referral incentives to encourage them to recruit new investors.

However, as the complaint alleges, more than $57m in investor funds was misappropriated to buy luxury goods and to cover personal expenses. The majority of the remaining investor funds were used to pay other investors their purported returns and referral rewards in a Ponzi-like scheme.

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, includes charges of violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing the individual from participating in multi-level-marketing programs involving the offer or sale of securities and offerings of crypto bought or sold as a security, disgorgement with prejudgment interest, and civil penalties. The complaint also names several relief defendants and seeks disgorgement and prejudgment interest.

In a parallel action, the individual was arraigned in U.S. District Court on criminal charges brought by the U.S. Attorney’s Office for the Eastern District of Virginia.  [22 Apr 2025]  #Crypto