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1. PAYMENTS
1.1 Commission Delegated Regulation amending the regulatory
technical standards laid down in Delegated Regulation (EU) 2018/389
as regards the 90-day exemption for account access
On 3 August 2022, the European Commission adopted a delegated
regulation amending the regulatory technical standards
(RTS) as regards the 90-day exemption for account
access under Directive (EU) 2015/2366 (PSD2).
The amendments include:
- A new mandatory exemption from the strong customer
authentication (SCA) requirement mandating that SCA will not be
applied when customers use an account information service provider
(AISP) to access their payment account information (subject to
certain conditions being met); - The voluntary exemption in Article 10 of the RTS will be
limited to instances where the customer accesses the account
information directly; and - Where the above exemptions apply, the renewal date of the SCA
will be extended from 90 days to 180 days.
The draft delegated regulation is currently under scrutiny and
will enter into force if the European Parliament or the Council of
the EU do not object to it.
A copy of the draft delegated regulation can be accessed here.
2. DIGITAL FINANCE & CRYPTO-ASSETS
2.1 Application of the Principles for Financial Market
Infrastructures to stablecoin arrangements
On 13 July 2022, the Bank for International Settlements’
Committee on Payments and Market Infrastructures (CPMI) and the
International Organisation of Securities Commissions
(IOSCO) published joint guidance on the
application of Principles for Financial Market Infrastructures
(PFMI) to stablecoin arrangements (SA) that are considered
systemically important financial market infrastructures (FMI). The
guidance note does not cover issues specific to stablecoins
denominated in or pegged to a basket of fiat currencies
(multicurrency SAs). They will be covered in future
reports.
The Guidance does not provide comprehensive guidance on PFMI but
covers the following subset of principles:
- Governance – Requires clear and direct lines of
responsibility and accountability, allowance for timely human
intervention, and the SA’s ownership structure and operation
must allow it to observe the PFMI irrespective of the arrangements
of other independent functions. - Comprehensive risk management – Regular reviews of
material risks that the FMI function bears and that pose risks to
other SA functions and the entities that perform them should be
exercised by systemically important SAs. The SA should develop
appropriate risk-management frameworks paying particular focus to
implementing appropriate mitigations. - Settlement finality – Clear and certain final settlement
should be provided by a systemically important SA by the end of the
value date, at a minimum, regardless of the settlement method used.
The point at which a transfer of a stablecoin through the
operational method becomes irrevocable should be defined, there
should be clear basis acknowledging the finality of a transfer and
mechanisms should be in place to prevent misalignment between the
state of the ledger and legal finality. - Money settlements – A stablecoin used by a systemically
important SA for money settlements should have minimal credit or
liquidity risk. When assessing risk the SA should consider whether
the stablecoin provides its holders with a direct legal claim on
the issuer and or on the title to or interest in the reserve
assets. An SA should ensure clarity and enforceability of claims,
the nature and sufficiency of its reserve assets, the clarity,
robustness and timeliness of converting the stablecoin into
other liquid assets, the sufficiency of the regulatory and
supervisory framework that applies to the issuer and the existence
of risk controls that could reduce credit and/or liquidity
risks.
2.2 European Union (Markets in Financial Instruments)
(Amendment) (No. 4) Regulations 2022 [S.I. No. 443 of
2022]
On 6 September 2022, Minister Paschal Donohue signed the
European Union (Markets in Financial Instruments) (Amendment)
(No.4) Regulations into Irish law.
The definition of ‘financial instrument’ in Regulation 3
of the principal regulations has been updated to specifically
include securities issued by means of distributed ledger technology
(DLT). This update clarifies that the scope of the
regime under Directive (EU) 2014/65 (MiFID
II) applies to tokenised securities.
A copy of the amendment regulations can be accessed here.
2.3 Report on the DLT Pilot Regime
On 27 September 2022, the European Securities and Markets
Authority (ESMA) published a report on the DLT
pilot regime (the “DLT Pilot”). The DLT Pilot aims to
develop the trading and settlement for “tokenised
securities”. The DLT Pilot entered into force
on 23 June 2022 and will start to apply from 23 March
2023.
On review of ESMA’s call for evidence on the DLT Pilot from
January 2022, ESMA has clarified that it does not consider it
necessary to amend the RTS on transparency and data reporting
requirements under Regulation (EU) 600/2014 (MiFIR). ESMA
restricted their recommendations to compensatory measures that
National Competent Authorities should request to ensure the
integrity, completeness, consistency, usability, and comparability
of the supervisory data collected from DLT Market
Infrastructures.
ESMA stated that the next steps are to are to work supervisory
guidance to clarify elements of the RTS on transparency and data
reporting requirements. ESMA will also issue guidance on questions
received by various stakeholders on the DLT Pilot to contribute to
the convergent application of the DLT Pilot.
Please see attached report here.
3. CENTRAL BANK OF IRELAND
3.1 Guidance Note for the Electronic Money Institution
Supplementary Return XBRL
On 1 July 2022, the Central Bank of Ireland
(Central Bank) published a
guidance note for the electronic money institution supplementary
return XBRL (EIS XBRL) relevant
for all electronic money institutions (EMI)
authorised under the European Communities (Electronic Money)
Regulations, 2011 (as amended) (Electronic Money
Regulations 2011) transposing Directive 2009/110/EC
(EMD2).
This new EIS XBRL return replaces the previous Supplementary
Return and the format of reporting is changing from web-form to
XBRL for the quarterly E-Money Institution Accounts returns and
Supplementary Returns from the reporting period ending 30 September
2022.
The guidance note provides instruction on how to complete the
EIS XBRL return which is comprised of the following sections;
statement of capital adequacy; analysis of own funds; user’s
funds and safeguarded user’s funds; safeguarded fund’s
detail; transaction volume; agency appointments; distributor
appointments; general; ownership structure (three parts);
qualifying shareholders, and; conduct of business.
The guidance note can be accessed here.
3.2 Central Bank register first VASP
On 19 July 2022, the Central Bank registered Gemini
Digital Asset Limited as a Virtual Asset Service Provider
(VASP) for anti-money laundering
(AML) purposes.
This is the first registration of its kind following the coming
into force of the Criminal Justice (Money Laundering and Terrorist
Financing) (Amendment) Act 2021 in April 2021, which amended Irish
AML Legislation to include VASPs within the definition of a
“designated person” and consequently within the scope of
AML and countering the financing of terrorism
(CFT) obligations.
The Central Bank has since registered a second entity as a VASP,
Zodia Custody Ireland Limited.
The Central Bank’s VASP register can be accessed here.
3.3 Publication of the Central Bank (Individual
Accountability Framework) Bill 2022
On 28 July 2022, the Central Bank (Individual Accountability
Framework) Bill 2022 (Bill) was published by the Department of
Finance. The Bill’s principal purpose is to confer powers on
the Central Bank to strengthen and enhance individual
accountability in the Irish financial services industry by
prescribing responsibilities and providing for the allocation of
responsibility and accountability for the management and operation
of firms regulated by the Central Bank.
The new Senior Executive Accountability Regime
(SEAR):
- ” introduces new conduct standards for regulated firms and
their management and staff; - makes enhancements to the existing Fitness and Probity Regime;
and - strengthens the Central Bank’s Administrative Sanctions
Procedure
While it is not yet clear when the Bill will be enacted, the
Central Bank has indicated that it will consult key stakeholders on
implementation and operation of the framework once the Bill has
been enacted through the publication of draft implementing
regulations and guidance for public consultation.
A copy of the Bill can be accessed here and the explanatory
memorandum can be accessed here.
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