Of the many points made by ESMA in its letter, the following ones caught our eye.

 

1. NCAs (national competent authorities) need to establish as early as possible their supervisory procedures related to the authorisation regimes set out in the MiCA Regulation, including simplified authorisation procedures for entities already authorised to provide crypto-asset services under national law.
2. each Member State to designate without delay the NCAs responsible for carrying out the functions and duties provided for in the MiCA Regulation.
3. that NCAs are granted adequate powers and resources to exercise their supervisory, investigative and enforcement responsibilities.
4. ESMA is concerned that an extensive use of the grand-fathering clause for entities already providing crypto-asset services would weaken the effectiveness of the MiCA rulebook. This is because the clause may allow these entities to continue operating for up to 18 months in accordance with applicable national laws.

• Copy of ESMA 17 October 2023 letter - HERE
  
• Linkedin Post - HERE

Australia to regulate digital asset platforms

Regulating digital asset platforms - Australia
​
What is this about?
The Australian government intends to introduce a regulatory framework to address consumer harms in the crypto ecosystem while supporting innovation.

The introduction of a regulatory framework for entities providing access to digital assets and holding them for Australians and Australian businesses is an important step in the government’s approach to crypto reform in the Australian context.

The proposed regulatory framework would apply to digital asset platforms that present similar risks to entities that operate in the traditional financial system. It proposes to leverage the Australian financial services framework to regulate digital asset platforms to ensure consistent oversight and safeguards for consumers.

The government seeks views from interested parties on the proposed framework for regulating digital asset platforms. Specific consultation questions are outlined within the paper.

Responding
You can submit responses to this consultation up until 01 December 2023. Interested parties are invited to comment on this consultation.
While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.


All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.

Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.

Key Documents

• Proposal paper:  PDF Format - WORD Format 
• Factsheet:  PDF Format - WORD Format 

How To Respond

• Email - crypto@treasury.gov.au

 

• Post - Address written submissions to:

Director, Crypto Policy Unit
Financial System Division
Treasury
Langton Cres
Parkes ACT 2600

Further Reading: https://treasury.gov.au/consultation/c2023-427004

STARTS:

Background
In January 2022, we outlined Bitcoin’s unique characteristics, why they make Bitcoin fundamentally different from other digital assets, and why this is important for investors to consider. Over a year and a half later, Bitcoin continues to gain adoption and market share in the digital asset space, while other digital assets have faced separate headwinds. While we encourage those seeking a detailed understanding of Bitcoin’s unique value propositions to read the earlier overview, we aim to reiterate many of Bitcoin’s fundamental advantages below while contextualizing Bitcoin’s progress and position within today’s current digital asset market. 

Executive Summary 
Once investors have decided to invest in digital assets, the next question becomes, “Which one?” Of course, bitcoin is the most recognized, first-ever digital asset, but there are hundreds—even thousands of other digital assets in the ecosystem. 
One of the first concerns investors have regarding bitcoin is, as the first digital asset, it may be vulnerable to innovative destruction from competitors (such as the story of MySpace and Facebook). Another common consideration surrounding bitcoin is whether it offers the same potential reward or upside as some of the newer and smaller digital assets that have emerged. 

In this paper, we propose: 

1. Bitcoin is best understood as a monetary good and one of the primary investment theses for bitcoin is as the store of value asset in an increasingly digital world. 
2. Bitcoin is fundamentally different from any other digital asset. No other digital asset is likely to improve upon bitcoin as a monetary good because bitcoin is the most (relative to other digital assets) secure, decentralized, sound digital money and any “improvement” will potentially face trade-offs. 
3. There is not necessarily mutual exclusivity between the success of the Bitcoin network and all other digital asset networks. Rather, the rest of the digital asset ecosystem can fulfill different needs or solve other problems that bitcoin simply does not. 
4. Other non-bitcoin projects should be evaluated from a different perspective than bitcoin. 
5. Bitcoin should be considered an entry point for traditional allocators looking to gain exposure to digital assets. 
6. Investors should hold two distinctly separate frameworks for considering investment in this digital asset ecosystem. The first framework examines the inclusion of bitcoin as an emerging monetary good, and the second considers the addition of other digital assets that exhibit venture capital-like properties. 

ENDS

DOWNLOAD HERE

The copyright in the report [and this blog] belongs to by Chris Kuiper and Jack Neureuter and Fidelity Digital Assets.

One for #emoney firms to take note of whether authorised in the UK or Ireland, and indeed throughout the EU.

This relates to the UK FCA finding that, in order to protect consumers, three clauses in an authorised and regulated regulated #fintech company's T&Cs (in the EU referred to as the Framework Contract) fell short of the Consumer Rights Act 2015.
 
On 4 October 2023, the FCA published a Notice of Undertaking (the “Undertaking”) agreed with Wirex Limited (FRA #902025), citing the following T&Cs with:
 
1) Excluding liability as a result of account suspension. This provision excluded the firm’s liability for any losses suffered by consumers, should the firm suspend their account in accordance with the provision, irrespective of the circumstances. The FCA considered this to be unfair under the Act as it permitted the firm to deny consumers compensation to which they may otherwise be entitled due to such a suspension, even if the firm had caused the relevant loss.
 
2) Limitation of compensation available to consumers. The T&Cs purported to limit the sum of compensation a consumer was entitled to receive in the event of a loss to the sum the consumer had paid to the firm in the year prior to making the claim. The FCA considered that this term derogated from the position under national law, as it limited a consumer’s right to obtain the proper amount of compensation in the event of a contractual breach by the firm. The FCA considered that the firm could not reasonably assume a consumer would have agreed to such a term in individual negotiations, because a consumer would most likely expect that if the firm had done something wrong and caused them loss, they would be entitled to commensurate compensation regardless of what they had paid to the firm.
 
3) Exclusion of commitments that may be implied by law. The T&Cs included a term that enabled the firm to exclude any commitments that may be implied by law, to the extent that it was permitted to do so. The FCA was concerned that this provision lacked adequate transparency, as consumers were unlikely to be aware of the extent to which the firm would be able to exclude their liability under obligations implied by law.
 
Wirex Limited has:

• agreed to remove all 3 terms from its e-money contracts with consumers from 1 January 2024;
• agreed to not use these 3 terms (or similar terms with the same effect) in its future contracts with consumers;
• told the FCA that the terms have been in use since October 2021;
• told the FCA that it has not relied on the 3 terms in an unfair way in practice;
• fully cooperated with the FCA in resolving its concerns.

According the FCA's register, Wirex Limited has been an "Authorised Electronic Money Institution" since 17/08/2018.

Further reading:

• FCA published a Notice of Undertaking agreed with Wirex Limited
• Peter Oakes Linkedin Post