FinTech Global FS Regulatory Round-up - w/e 30 May 2025

UK

FCA: Research note on two LLM pilots on consumer guidance

The FCA has published a research note entitled Money Talks: Lessons from Two LLM Pilots on Consumer Guidance. The research examines the potential usefulness and limitations of large language models (LLMs), such as OpenAI’s GPT series, in consumer-facing financial services. The two pilot projects conducted were:

• Simplifying financial concepts: GPT-3.5 and GPT-4 were asked to generate simplified definitions of complex financial terms, tailored to lower reading ages and supported by relevant examples.
• Providing consumer guidance: This compared the effectiveness of LLM-generated responses in a fixed chatbot for cash savings queries with a traditional website-based Q&A format.

The main lessons learned from running the pilots were:

• LLMs demonstrate strong potential in simplifying complex information, enhancing readability and accessibility. However, validating their outputs requires a robust evaluation framework that combines human judgement with automated tools.
• The effectiveness of LLMs is context-dependent. Outcomes such as user comprehension and engagement are influenced by how the model is embedded within the customer journey, including content design and delivery.
• There is a clear appetite for AI-driven assistance. Many users responded positively to automated support, indicating a readiness to engage with intelligent systems in decision-making processes.

Alongside this research, the FCA references its 29 April 2025 engagement paper, Proposal for AI Live Testing, which outlines proposals for live AI model testing pilots, which the FCA plans to launch in early Summer 2025. The paper remains open for comment until 10 June 2025. [30 May 2025]  #LLM #AI

FCA: Advice from CBA Panel on draft CBA of 'Regulating Stablecoin Issuance and Cryptoasset Custody'

The FCA has published the advice from its Cost Benefit Analysis (CBA) Panel on the draft CBA of 'Regulating Stablecoin Issuance and Cryptoasset Custody'. The panel has provided high-level recommendations in relation to:

• Treatment of uncertainty – the panel recommends that the analysis would benefit significantly from including explicit sensitivity analysis under suitably broad ranges of assumptions for both: the growth of the markets accessed by UK consumers under the proposed and counterfactual (no regulation) scenarios; and the costs and benefits of particular regulatory options themselves.
• Assessment of costs and benefits – the panel recommends that the analysis would benefit from a more comprehensive assessment of the costs and benefits generated by the proposals.
• Options analysis – the panel recommends that the analysis would benefit from an explicit quantitative evaluation of the costs and benefits of introducing alternative sets of rules, in addition to the useful qualitative assessment of different regulatory approaches currently included. [30 May 2025]  #Stablecoin #Crypto

LSB research finds that financial services providers’ webchats are inconsistent in meeting customer needs

The Lending Standards Board (LSB) has published new research that reveals significant disparities in customers’ experiences across financial services providers’ ‘webchat’ services – including key differences in experiences between webchats supported by AI tools and by humans.

The research shows that 59% of customers found their interaction with an AI-driven chatbot unhelpful or very unhelpful. Nearly half (46%) of customers using a chatbot said they were not confident in the next steps or support available to them. In contrast, 82% of customers who spoke to a ‘live’ agent said they felt confident following their interaction, while 77% described their experience as helpful or very helpful.

The LSB comments that chatbots were also felt to be less effective at picking up on particular customer circumstances. 74% of live chat users felt that their circumstances were understood, compared to 35% of chatbot users. 50% of customers using live chat felt that indicators of vulnerability were addressed, compared to 31% for chatbot users.

In light of this research, the LSB has set out six features that drive effective webchat communication. These include: flexible communication; the need to be understood; prompt access to the right help; consumer knowledge of what to expect from webchat interactions; the right support; and services that are easy to find. [29 May 2025]  #AI #Chatbot

FCA consults on stablecoins and crypto custody and prudential requirements

The FCA has published CP25/14 – Stablecoin issuance and cryptoasset custody (CP25/14) and CP25/15 – A prudential regime for cryptoasset firms (CP25/15).

CP25/14 covers proposed rules and guidance for the activities of issuing a qualifying stablecoin and safeguarding qualifying cryptoassets, including qualifying stablecoins. Qualifying stablecoins are cryptoassets that aim to maintain a stable value by referencing one or more fiat currencies. The rules aim to ensure regulated stablecoins maintain their value. They also mean that customers should be provided with clear information on how the backing assets are being managed.

CP25/15 sets out proposed prudential requirements for qualifying stablecoin issuers and cryptoasset custodians. It outlines the risks the FCA wants to prevent as well as the desired consumer and market outcomes.

Feedback on both consultations is requested by 31 July 2025. The FCA expects to publish final rules in 2026.  [28 May 2025]  #Stablecoin #Crypto

Europe

ESMA urges social media companies to tackle unauthorised financial ads

The European Securities and Markets Authority (ESMA) has written to several social media and platform companies encouraging them to take proactive steps to prevent the promotion of unauthorised financial services.  [28 May 2025]  #SocialMedia

EBA: Finalised 4.1 reporting framework – identification and assessment of cryptoasset providers and Pillar 3 data hub

The European Banking Authority (EBA) has published the final technical package for version 4.1 of its reporting framework. The package aims to support the assessment and identification of significant crypto asset providers as well as the centralisation of institutions’ prudential disclosures in the EBA Pillar 3 data hub. The reporting framework will apply as of the second half of 2025.  [28 May 2025]  #Crypto

India

RBI: Annual report 2024/25 – framework for AI

The Reserve Bank of India (RBI) has published its annual report for 2024/25. The report is divided into two parts: (i) The Economy: Review and Prospects, and (ii) The Working and Operations of the RBI. The report makes reference to the RBI's plans to prepare a framework for responsible and ethical adoption of AI in the financial sector. [29 May 2025]  #AI

Thailand

SECT consults on draft G-Token regulations

SECT has published a consultation on proposed principles and draft regulations regarding the offering of Government Token (G-Token) in the primary market as well as other related regulations in respect of operators providing G-Token services in the secondary market.

The regulations aim to leverage financial technology in expanding saving and investment opportunities and promoting greater financial inclusion, with appropriate regulatory oversight, a level-playing field for fair competition, and sufficient mechanisms for investor protection.

Responses to the consultation are requested by 10 June 2025. [27 May 2025]  #DigitalAsset

Taiwan

FSC launches 2025 fintech-based thematic promotion focused on financial inclusion

The Financial Supervisory Commission (FSC) has announced that it has launched the 2025 fintech-based thematic promotion centred around financial inclusion. The initiative aims to foster cross-sector collaboration between financial institutions and technology companies, thereby making financial services more accessible, creating new opportunities for participation by individuals and enterprises, and fostering a more equitable, inclusive, and sustainable financial environment. [26 May 2025] #Fintech 

US

Treasury releases request for information on transition to digital payments

The U.S. Department of the Treasury has released a request for information regarding the Treasury's implementation of Executive Order 14247 "Modernizing Payments To and From America’s Bank Account," which transitions federal disbursements to electronic payments.  From September 30, 2025, all federal payments that are currently made by paper check are to be made electronically.

Responses to the request for information are to be provided within 30 days.  [30 May 2025]  #Payments

SEC Division of Corporate Finance issues statement on certain protocol staking activities

The SEC Division of Corporate Finance has issued a statement clarifying its view that certain activities known as "staking" on networks that use proof-of-stake as a consensus mechanism are not securities transactions within the scope of federal securities laws. The statement addresses the staking of crypto that are intrinsically linked to the programmatic functioning of a public, permissionless network, and are used to participate in and/or earned for participating in such network’s consensus mechanism or otherwise used to maintain and/or earned for maintaining the technological operation and security of such network.  [29 May 2025]  #Crypto

SEC announces agenda, panelists for roundtable on crypto DeFi

The SEC Crypto Task Force has announced the agenda and panelists for its June 9 roundtable, “DeFi and the American Spirit.”

The roundtable, part of a series, will be held at the SEC's headquarters in Washington, D.C. from 1 p.m. to 5 p.m. The event will be open to the public and webcast live on the SEC’s website.  [28 May 2025]  #Crypto #DeFi