In this newsletter:

• Regulatory Developments
• Payment Market Developments
• Surveys and Reports

For previous editions of the Global Payments Newsletter, please visit our Financial Services practice page.

Regulatory Developments

United Kingdom: HM Treasury announces package of crypto measures including next steps on UK regulatory approach to cryptoassets, stablecoins and DLT in financial markets

On 4 April 2022, in a keynote speech at the Innovate Finance Global Summit 2022 John Glen MP, Economic Secretary to Her Majesty's Treasury (HMT), outlined a package of measures to ensure the UK financial services sector remains at the cutting edge of technology, and the UK is seen as a global cryptoasset technology hub.

The package includes: ​

• legislative measures to bring stablecoins into the UK payments framework and the regulatory perimeter (see below on the HMT consultation response that was published on the same day as the speech);
• future work on the regulation of cryptoassets and exploration of the benefits of distributed ledger technology (DLT);​
• plans to legislate for a Financial Market Infrastructure (FMI) Sandbox to help firms innovate;​
• an FCA-led CryptoSprint; and​
• the creation by the Royal Mint of a non-fungible token to be issued by summer 2022. ​

On taxation of cryptoassets, the government will consider issues including the treatment of decentralised finance (DeFi) loans and staking (ie where crypto is leased to the blockchain whereas lending involves leasing crypto to a borrower). The establishment of a new Cryptoasset Engagement Group to help guide the government in its next steps was also announced.​

The speech also referred to the government's establishment of a Centre for Finance, Innovation and Technology Steering Committee, and the new regulatory oversight committee that will work with industry to implement the vision for the future of Open Banking in the UK.​

Also on 4 April 2022, HMT published its response to its January 2021 consultation and call for evidence on the UK regulatory approach to cryptoassets and stablecoins and its call for evidence on DLT in financial markets.

The response confirms HMT's intention to take the necessary legislative steps to bring activities that issue or facilitate the use of stablecoins as a means of payment into the UK regulatory perimeter. In addition, in view of the continued growth and uptake worldwide of cryptoasset activities, HMT intends to consult later on in 2022 on regulating a wider set of cryptoasset activities.

Following its call for evidence on the investment and wholesale uses of DLT, HMT recognises the substantial benefits and transformative impact that it could deliver when adopted in FMIs. It intends to support the industry in ensuring that regulations can accommodate tokenisation and DLT in FMIs. In particular, it is developing the FMI Sandbox mentioned above (to be up and running in 2023) to support firms wanting to innovate, including by using these technologies to provide FMI services.

For more on this development, take a look at this Engage article by members of Hogan Lovells' London office.

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Philippines: Central Bank announces digital financial marketplace model

On 27 March 2022, the Bangko Sentral ng Pilipinas (BSP) announced that it is creating rules for a "digital financial marketplace" to facilitate innovations between financial service providers (FSPs), electronic money issuers (EMIs) and banks.

The digital financial marketplace model is anchored on the Open Finance Framework, which allows the sharing of financial data of consenting customers to create innovative financial solutions that cater to their needs.

The BSP is working on rules that will allow banks and EMIs to establish a digital marketplace where they can partner with FSPs to develop and offer a wide range of financial products and services to consumers. These include retail loan products, such as mortgages and credit cards, other retail financial products such as cash cards and debit cards, retail insurance products, collective investment schemes or pooled investment funds, and other financial products or services as may be authorised by the Monetary Board. These financial products or services should be duly approved or registered by the appropriate regulatory authority, if applicable.

The BSP is coordinating with relevant stakeholders and financial regulators to ensure that the proposed digital financial marketplace model is consistent with existing laws, rules and regulations.

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United States: Treasury Secretary speech suggests U.S. is considering introducing stablecoin regulation

On 7 April 2022, U.S. Treasury Secretary Janet Yellen delivered a speech on digital asset policy, innovation and regulation. This speech follows President Biden's Executive Order on digital assets that was covered in last month's Newsletter.

In the speech, Yellen listed stablecoins as one of the major policy concerns in the digital asset space for regulators, as they are currently subject to "inconsistent and fragmented oversight." Yellen said the Treasury Department was working with Congress to advance legislation to help ensure that "stablecoins are resilient to risks" for consumers and the U.S. financial system. According to the Treasury Secretary, while stablecoins raised "policy concerns" and issues around the coins' reserve assets, many parts of the digital asset space present potential risks that could exacerbate inequality.

Yellen emphasised the need for "tech neutral" regulation, highlighting the importance of protecting Americans over promoting business. Additionally, she stated that firms that have custody over digital assets for consumers should ensure that those assets are not lost, stolen or used without authorisation.

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United Kingdom: FCA publishes notice outlining obligations of firms with exposure to cryptoassets

On 24 March 2022, the FCA published a notice to all FCA regulated firms with exposure to cryptoassets, reminding them of their existing obligations when interacting with or exposed to cryptoassets and related services.

The notice sets out an inexhaustive list of some of the areas of risk that firms must consider:

• Firms must ensure they are clear with customers about risks.
• Firms must comply with money laundering regulations.
• Although there are currently no specific prudential treatments explicitly mentioning cryptoassets, firms must ensure they comply with existing regulatory obligations in this area, including the new investment firm prudential regime.
• Firms must ensure they comply with existing obligations that relate to custody of client assets.

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United Kingdom: FCA publishes three-year Strategy and Business Plan for 2022/23

On 7 April 2022, the FCA published its three-year Strategy and Business Plan 2022/23. The FCA is changing its operating model to focus more on the (often cross-cutting) issues it encounters than on simply addressing types of firms or sectors.​

In outline, the FCA's three-year Strategy​ comprises:

• Three key areas of strategic focus: reducing and preventing serious harm, setting and testing higher standards (described by the FCA as 'fundamental to an outcomes-based approach'); and promoting competition and positive change.​
• Four overarching consumer and wholesale market outcomes the FCA expects from financial services: fair value; confidence; access; and suitability and treatment (this last outcome is only applicable to consumers).​
• A number of commitments to support the key areas of focus: joining up the FCA’s resources and tools across sectors to deliver measurable outcomes over the next three years. The commitments explain, at a high level, what the FCA aims to deliver by 2025.

The Business Plan explains in more detail the actions the FCA will take in 2022/23 to address the Strategy commitments under each key area of focus. For example, under 'Setting and testing higher standards' the commitment to 'put consumers' needs first' will include a focus on its proposed new Consumer Duty and the outcomes consumers get.​

Also in the Business Plan:

• The FCA has streamlined its work to consist of six core regulatory activities that capture 'start-to-finish' regulation of financial services markets: authorise firms and individuals; set rules and standards; support competition and innovation; empower consumers and firms; recognise and reduce harm; and take quick and effective action.​
• It points to the twice yearly Regulatory Initiatives Grid for the details of its planned regulatory programme.​
• For the first time, the FCA will hold itself accountable against published outcomes and performance metrics.​
• In another first for the FCA, it has also published a document setting out how it provides public or societal value by providing quantified estimates of the positive impact of a subset of its activities, namely its policy interventions and its enforcement work.​

Both the Strategy and the Business Plan will be kept under review so that the FCA is adapting to important changes. For example, it expects the rising cost of living and the Russian invasion of Ukraine to have a lasting impact.​

For more on this development, take a look at this Engage article by members of Hogan Lovells' London office.

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United Kingdom: FCA extends crypto registration deadline for a small number of firms

On 30 March 2022, the FCA updated its webpage on the cryptoasset anti-money laundering (AML) and counter terrorist financing (CTF) regime.

The FCA provides an update on the temporary registration regime (TRR) which was established in December 2020. The TRR allowed existing cryptoasset businesses which applied to register with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 before 16 December 2020 to continue trading while their applications were being assessed. It has now concluded the assessments.

The TRR will close on 1 April 2022 for all except a small number of cryptoasset businesses where it is strictly necessary for them to continue to have temporary registration. The FCA explains that this is necessary where a cryptoasset business may be pursuing an appeal or may have particular winding-down circumstances. Of the 100-odd crypto businesses to apply for registration since 2020, the FCA has approved 33, with the others either being rejected or withdrawing their applications.

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United Kingdom: Payment Systems Regulator publishes annual plan and budget

On 29 March 2022, the Payment Systems Regulator (PSR) published its annual plan and budget for 2022/23, together with a related factsheet.

On the whole, the PSR considers that the UK payment systems work well. However, there are issues that need to be addressed as the payments landscape evolves. These include the prevalence of authorised push payment (APP) fraud, risks to effective competition and the need to support the payments sector to deliver new and improved services. The PSR recognises that further challenges can also be expected as global events impact the cost of living.

The PSR's "ambitious" work programme for 2022/23 is guided by the following four key strategic priorities:

• Access and choice for all consumers;
• Protection so that payments can be made safely and with confidence.
• Competition that fosters innovation; and
• Unlocking account-to-account payments.

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United Kingdom: FCA call for input on synthetic data to support financial services innovation

On 30 March 2022, the FCA published a call for input on the use of "synthetic data" to support financial services innovation. Synthetic data is defined as "a privacy preserving technique that involves generating statistically realistic, but artificial data, that is readily accessible".

The call for input explains how financial data can help to drive innovation, enable automation and improve decision-making and risk management, as well as personalisation of services. In addition, the ultimate potential benefits to society are greater market efficiency, financial inclusion and the prevention of financial crime. ​

The FCA notes that there are limitations on the use of financial data, which is highly sensitive and subject to data privacy laws. This limits the ability to use or share such data in the market.

The FCA has issued the call for input as an introductory exploration of market attitudes towards synthetic data, and its potential for opening data sharing between firms, regulators and other public bodies. It wants to understand industry views on the potential for synthetic data to support innovation and the requirements to be effective, as well as potential limitations and risks.​

Responses to the call for input can be made until 22 June 2022. ​Once the call for input closes, the FCA plans to publish a feedback statement setting out its analysis, findings and any next steps.​

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United Kingdom: Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2022 come into force

On 29 March 2022, the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2022 (Amendment Regulations) were made and came into force. Under the changes introduced by the Amendment Regulations, Zimbabwe is no longer classed as a high-risk third country for the purposes of enhanced customer due diligence requirements, but the United Arab Emirates is now classed as a high-risk third country for these purposes.

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United Kingdom: FCA speech on building a digital regulator

On 4 April 2022, the FCA published a speech given by the FCA's Chief Data, Information and Intelligence Officer on building a digital regulator and how the FCA is riding the innovation wave.

Points of interest in the speech include that the FCA:​

• is currently reviewing the findings from the pilots of its "early oversight" and "high-growth oversight" initiatives (in response to the Kalifa Review), which extend supervision support to firms that are scaling at speed, as well as those that are new to regulation;
• will continue to explore the concepts of ethics and bias in algorithms and AI;
• has launched a call for input on synthetic data (see the separate item on this); and​
• will publish its evaluation report on the learnings from the sustainability cohort of its digital sandbox in May 2022, which will help shape the next stage of the digital sandbox concept.

The FCA also announced two new initiatives:

• CryptoSprint: In May 2022, the FCA will host its first ever CryptoSprint which it intends to be the start of a programme of industry engagement as it works to develop a dynamic framework that supports innovation while protecting consumers.
• TechSprint​: In September 2022, the FCA will be holding a joint TechSprint with the Payment Systems Regulator on authorised push payment fraud (APP), which will focus on exploring solutions to identify and prevent APP fraud.​

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United Kingdom: OBIE and CMA publish Open Banking implementation roadmap updates

On 23 March 2022, the Competition and Markets Authority (CMA) published a letter sent to the OBIE following an update from the OBIE on the status of items in the Roadmap for the final stages of Open Banking implementation.

The CMA noted that the UK's nine largest current account providers (the CMA9) have three remaining items that require implementation:

• Variable Recurring Payments (VRPs) for sweeping (due for completion by July 2022).
• Consent and access dashboards as part of version 3.1.10 of the Open Banking standard (due for completion by September 2022).
• Delivery of the enhanced management information submission mechanism (due for completion by July 2022).

The CMA requested the OBIE to continue to monitor progress and to keep the CMA updated. It noted that progress with implementation of the Roadmap may vary among the CMA9 and it will take a reasonable and pragmatic approach to determining completion of the implementation phase of the Roadmap. However, it expects to be able to determine that the Roadmap has been completed later in 2022.

On 14 April 2022, the CMA published a further letter sent to the OBIE in response to a letter from the OBIE providing a further update on the status of items in the Roadmap for the final stages of Open Banking implementation. This follows the above exchange of letters and status update in March 2022. The CMA welcomes this update which reflects progress made following publication of the final version 3.1.10 of the Open Banking standard within the final Roadmap. The CMA also notes that OBIE has clarified the status of the delivery of the enhanced management information (MI) submission mechanism within the Roadmap. While not a mandatory item with implementation requirements for the CMA9, given the benefits of automated MI the CMA encourages the CMA9 to continue to work to deliver this.

The CMA’s position on determining completion of the Roadmap remains unchanged, with the exception that delivery of the enhanced MI submission mechanism will not be considered as a requirement for the CMA9. The Roadmap's completion will have implications for the timing of the transition to future arrangements for Open Banking.

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United Kingdom: CMA recommendations on future oversight of Open Banking remedies

On 25 March 2022, the CMA published its recommendations on the future oversight of its Open Banking remedies.

The CMA notes that it cannot require the nine largest banks and building societies, whether directly or through the Opening Banking Implementation Entities (OBIE) or any future entity, to take action to develop Open Banking beyond the scope of the 2017 Retail Banking Market Investigation Order or expand its application to markets or financial services sectors beyond retail banking.

The CMA considers that the future entity should:

• Have effective regulatory oversight.
• Have a clear purpose.
• Have independent and accountable leadership.
• Be adequately resourced to carry out its functions.
• Effectively serve the interests of consumers and small and medium sized enterprises (SMEs).
• Be sustainable and adaptable to the future needs of the ecosystem.
• Be able to support an appropriate monitoring function to enable effective ongoing monitoring and enforcement of the Order.

The CMA expects the OBIE to develop a detailed plan for transition and an appropriate governance process for the planning and execution of transition, which should include consultation with industry and other key stakeholders, including consumer and SME representatives.

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United Kingdom: IMF reports on UK financial sector

On 8 April 2022, the International Monetary Fund (IMF) published a number of reports focused on the UK under its Financial Sector Assessment Program (FSAP).

Among the reports were:

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United Kingdom: Digital Regulation Cooperation Forum's new digital markets research portal launched

On 25 March 2022, the Competition and Markets Authority (CMA) announced that the Digital Regulation Cooperation Forum's (DRCF) new digital regulation research portal has been launched.

The DRCF digital regulation research portal brings together over 80 pieces of recent research on emerging and future digital developments from eight regulatory bodies, including the DRCF members and the Intellectual Property Office, the Bank of England, the Advertising Standards Authority and the Gambling Commission.

By ensuring that this body of knowledge is publicly available, fully accessible and easily discoverable, the DRCF hopes to better equip all who are interested in contributing to the shape of digital regulation in the UK.

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United Kingdom: Steering Committee established to develop new Centre for Finance, Innovation and Technology

On 4 April 2022, HM Treasury published the terms of reference for the Centre for Finance, Innovation and Technology (CFIT) Steering Committee.

The Kalifa Review of UK FinTech recommended the establishment of a new private sector-led organisation focused on driving forward financial innovation (that is, CFIT). The purpose of CFIT is to bring together experts from across the ecosystem, including finance and tech, to identify and address barriers and opportunities for UK FinTech.

The Steering Committee is chaired by Ron Kalifa OBE and its membership comprises a range of industry experts, including representatives nominated on behalf of the UK's regional and national FinTech hubs. HM Treasury, the FCA and the City of London Corporation are also represented.

The Committee will meet monthly over the spring and summer of 2022 to develop a comprehensive proposition for CFIT. This will include making non-binding recommendations on key strategic points, which will then be considered by the permanent CFIT board and executive once established.

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Europe: European Parliament agrees negotiating mandate on proposed Regulation on information accompanying transfers of funds and certain cryptoassets

On 7 April 2022, the European Parliament published a press release announcing that it has agreed its negotiating mandate on the proposed Regulation on information accompanying transfers of funds and certain cryptoassets (2021/0241(COD)) and has agreed to start negotiations with the Council of the EU on the proposed Regulation. The Council adopted its negotiating mandate for the proposed Regulation in December 2021.

The proposed Regulation, which is intended to revise and recast the revised Wire Transfer Regulation ((EU) 2015/847), was adopted by the Commission in July 2021 as part of a package of measures to reform the EU anti-money laundering and counter-terrorist financing regime.

In March 2022, the Parliament's Economic and Monetary Affairs Committee (ECON) voted to adopt a report containing suggested amendments to the proposed Regulation, the text of which was published on 1 April 2022. The minutes for the plenary session of the Parliament on 4 April 2022 and 6 April 2022 confirm that ECON and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) have been permitted to commence negotiations on the basis of the report.

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Europe: European Parliament approves the EU Data Governance Act

On 6 April 2022, the European Parliament plenary session adopted its first-reading position on the European Commission's proposal for a new Regulation on European data governance (Data Governance Act).

The draft Data Governance Act (DGA) was first proposed in November 2020 and seeks to increase trust in data sharing, create new rules on the neutrality of data marketplaces and facilitate the use of public sector data.

The next steps are for the DGA to be formally adopted by the Council before it is published in the Official Journal of the EU and enters into force.

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Europe: European Commission launches targeted consultation on a digital euro and ECB publishes report on new digital payment methods

On 5 April 2022, the European Commission published a targeted consultation on a digital euro. The consultation follows on from the ECB’s October 2020 consultation which sought views on the benefits and challenges of issuing a digital euro and on its possible design.

The Commission’s consultation aims to collect further information from relevant authorities and experts including payment service providers, payment infrastructure providers, developers of payment solutions, merchants, retail payments regulators and AML supervisors. The issues on which the Commission would like feedback are: users’ needs and expectations for a digital euro; the digital euro’s role for the EU’s retail payments and the digital economy; making the digital euro available for retail use while continuing to safeguard the legal tender status of euro cash; the digital euro’s impact on the financial sector and financial stability; application of AML/CFT rules; the privacy and data protection aspects; and international payments with a digital euro. The consultation closes on 14 June 2022.

In a related development, on 30 March 2022 the ECB published the findings of its commissioned research on citizens' payment habits and their attitudes towards digital payments in order to gain a deeper understanding of user preferences as part of the digital euro project.

Among other things, the findings showed a strong preference for payment methods with pan-European reach and universal acceptance in physical shops and online. Participants demonstrated little knowledge of the digital euro, but they generally agreed that banks and/or central banks would be the safest and most reliable providers. They also expressed the view that a digital euro should not undermine cash.

The report's findings will feed into the ongoing digital euro investigation phase, which is expected to conclude in October 2023.

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Europe: European Commission launches EU Digital Finance Platform

On 8 April 2022, the European Commission launched the EU Digital Finance Platform.

The Platform is a new website designed to build better dialogue between innovative financial firms and supervisors. Its aims are to overcome fragmentation and support the scaling up of digital financial services. The Platform consists of:

• An observatory that offers interactive features such as a FinTech map, events and a section where users will be able to share relevant research material.
• A gateway that acts as a single access point to supervisors, with information about national innovation hubs, regulatory sandboxes, licensing requirements and updates on the work of the European Forum for Innovation Facilitators. It also hosts functionalities linked to cross-border testing.

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Ireland: Changes to the Central Bank of Ireland’s preapproval controlled functions roles

On 5 April 2022, the Central Bank of Ireland (CBI) set out a number of amendments to the list of pre-approval controlled functions (PCF).

The key changes likely to impact Irish e-money and payments firms are that:

• The current non-executive director role (PCF-2) is being split into PCF-2A (non-executive director) and PCF-2B (independent non-executive director);
• A new stand-alone role, head of anti-money laundering and counter terrorist financing compliance (PCF-52) has been created, with the current combined compliance/AML role PCF-15 being removed.

Firms should notify the CBI which of their directors is a PCF-2B independent non-executive director by 3 June 2022.

Noting the importance of diversity and inclusion, the CBI has also amended the PCF roles titled ‘Chairman’ to ‘Chair’.

Certain other amendments have also been made, including removing PCF-31 head of investment and expanding PCF 16 branch managers in other EEA countries to include branch managers in third countries.

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India: Reserve Bank of India to allow banks to open digital banking units

On 7 April 2022, the Reserve Bank of India (RBI) issued guidelines allowing scheduled commercial banks to open digital banking units (DBUs). These will be specialised fixed point business units to deliver digital banking products and services to customers.

The guidelines are based on the recommendations of a working group set up by the regulator, which included representation from banks and the Indian Banks' Association. With the exception of regional rural banks, local area banks and payments banks, all scheduled commercial banks with past digital banking experience are allowed to open DBUs without prior approval of the RBI.

The aim of DBUs is to enable customers to have cost-effective and convenient access to products and services and an improved digital experience.

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United Arab Emirates: UAE Instant Payment Platform set to launch in Q4 2022

The drive towards real-time digital payments in the UAE is set to accelerate this year with the introduction of a scheme that is due to launch in the fourth quarter of 2022. The UAE Instant Payments Platform (IPP) will enable transfers between bank accounts on a 24x7x365 basis.

As part of the country's National Payments Systems Strategy, the IPP aims to provide best-in-class services, promote financial inclusion, and increase financial stability. Participation in the IPP scheme is mandatory for all financial institutions and banks.

The Central Bank of the UAE has published the below timetable for the real-time payments scheme:

• Q4 2022: Pilot launch of phase 1 (including Credit Transfer and Request to Pay)
• Q2 2023: Phase 2 (planned other functionalities such as direct debit and overlays like eCheque clearing; this would apply to both phases 2 and 3)
• Q4 2023: Phase 3 (planned to enable more digital payment services like eCheque, eBills, etc).

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Singapore: Parliament passes new legislation to strengthen cryptocurrency regulation

On 5 April 2022, the Parliament of Singapore passed a new cryptoasset law that requires crypto businesses based in the city-state operating on foreign soil to comply with anti-money laundering and anti-terrorism measures. The new law is aimed at expanding the powers of the Monetary Authority of Singapore (MAS) and addressing regulatory weaknesses in the cryptoasset space. It was passed as part of the Financial Services and Markets Bill, which states that domestic virtual asset service providers operating overseas will be required to obtain a licence.

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Africa: Cameroon, the DRC and the Republic of the Congo announce intention to adopt cryptocurrency and blockchain based solutions

In April 2022, Cameroon, the Democratic Republic of the Congo (the DRC) and the Republic of the Congo announced their intention to adopt cryptocurrency and blockchain based solutions to drive future economic progress.

The three countries recently published separate press releases in which they outlined their initial thoughts on cryptocurrency and how they plan to integrate it into their respective economies. The countries mentioned that they are in discussions with The Open Network (TON) to help launch their first crypto initiatives.

TON has been engaging with all three countries independently for some time and has taken the lead in delivering cryptocurrency and blockchain solutions for each nation. These countries will each undertake a phased transition to adopting cryptocurrency as a central pillar of their economic structures.

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Global: Financial Stability Board publishes work programme for 2022

On 31 March 2022, the Financial Stability Board (FSB) published its 2022 work programme.

The FSB's work priorities reflect the fact that financial challenges are global in nature and affect the financial system as a whole. These challenges include digitalisation, climate change and potentially also shifts in the macroeconomic and interest rate environment.

Priority areas of work and new initiatives include the following:

• Enhancing cross-border payments: The FSB has committed to complete a number of actions under its roadmap to enhance cross-border payments. It will deliver a progress report to the G20 and develop key performance indicators to monitor progress towards the quantitative targets for the roadmap.
• Harnessing the benefits of digital innovation while containing risks: The FSB will continue work on the financial stability and regulatory and supervisory implications of technological innovation, with a particular focus on various forms of cryptoassets, including decentralised finance. Given the increased interconnections in the financial system for cyber-attacks, enhancing operational and cyber resilience will remain important items on the agenda.

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Global: IOSCO publishes report on decentralised finance

On 24 March 2022, IOSCO published a report on decentralised finance (DeFi).

The report aims to provide a general understanding of DeFi as well as its features and protocols, including the key areas of potential regulatory concern. It observes that DeFi is quickly evolving to mirror conventional financial markets and highlights the need to understand the regulatory implications that arise from DeFi.

The report notes that lending and borrowing protocols are two of the primary DeFi products currently available. The report also notes that understanding the regulatory implications arising from DeFi requires analysing the totality of a DeFi ecosystem as it exists currently, its interrelationship with centralized cryptoasset trading platforms and service providers and traditional markets and activities, and how it may continue to develop in the future.

In response to the report, IOSCO announced the creation of a new task force that will cover the DeFi market.

IOSCO called for comment and input from the public, including cryptoasset market and DeFi participants and from any other interested party, on the issues raised in its report, as well as on any other cryptoasset or DeFi related matters. Comments can be submitted to DeFi@iosco.org.

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Australia and Singapore: FinTech Bridge Agreement signed

On 13 April 2022, the Australian Treasury and the Monetary Authority of Singapore (MAS) signed an Australia-Singapore FinTech Bridge Agreement.

The FinTech Bridge aims to build on the overarching framework for digital economy cooperation under the Australia-Singapore Digital Economy Agreement, which was signed in 2020, in order to deepen collaboration between the FinTech ecosystems of both countries.

The Australia-Singapore FinTech Bridge sets out a framework for both authorities to deepen bilateral and multilateral cooperation on fintech, so as to facilitate trade, investment and ecosystem development in the fintech sector.

The framework will also support the mutual establishment of fintech companies looking to expand in each other's markets, and encourage fintech companies to use the facilities and assistance available to explore new business opportunities and reduce barriers to entry. It will also help both authorities build on current engagements to strengthen linkages between Australia and Singapore for policy officials, regulators and industry groups.

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Europe: Council of EU adopts proposed DLT pilot regime Regulation

On 12 April 2022, the Council of the EU adopted the proposed Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT). This followed the European Parliament adopting the proposed Regulation on 24 March 2022.

The Regulation will enter into force 20 days after it is published in the Official Journal of the EU and will apply nine months after the date it has entered into force, except for certain Articles which will apply from 4 July 2023.

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United Kingdom: FPC considers financial stability risks of cryptoassets and decentralised finance

On 24 March 2022, the Financial Policy Committee (FPC) published a Financial Stability in Focus report on cryptoassets and decentralised finance (DeFi).

The report identifies the financial stability implications for cryptoassets and associated markets, sets out the risks to financial stability, outlines the FPC's approach to monitoring risks and its assessment of the risks presented by cryptoassets and DeFI, and summarises regulatory initiatives to mitigate those risks.

The FPC's views arising from the risks presented by cryptoassets and DeFI include:

• Direct risks to the stability of the UK financial system from cryptoassets and DeFi are currently limited, reflecting their limited size and interconnectedness with the wider financial system. However, if the pace of growth continues, and as these assets become more interconnected with the wider financial system, cryptoassets and DeFi will present financial stability risks.
• As cryptoassets and DeFi grow and develop, enhanced regulatory and law enforcement frameworks are needed, both domestically and at a global level.
• The existing regulatory system should be adapted to ensure that where crypto technology is performing an equivalent economic function to one performed in the traditional financial sector there is an equivalent regulatory outcome. This is likely to require the expansion of the role of existing macro and microprudential, conduct, and market integrity regulators, and close co-ordination among those regulators.

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United Kingdom: FPC publishes financial policy summary and record

On 24 March 2022, the Bank of England (BoE) published the financial policy summary and record (FPSR) of the meetings of its Financial Policy Committee (FPC) on 9 and 18 March 2022.

Announcements made in the FPSR relate to topics including:

• Ukraine conflict and market volatility: Core financial markets have continued to function notwithstanding market volatility caused by the Ukraine conflict, although further volatility could affect core financial markets. A key uncertainty is whether interconnections within the financial system might create feedback loops and amplification mechanisms across the financial system more broadly. The conflict also gives rise to a heightened risk from cyber threats.
• UK bank resilience: The FPC remains of the view that major UK banks can withstand severe market and economic disruption. Given the uncertainty related to the Ukraine conflict, and to help lenders focus on managing the associated ongoing financial markets disruptions, the FPC and the Prudential Regulation Committee will delay the launch of the 2022 annual cyclical scenario, and will announce a revised timeline during Q2 2022.
• Cryptoassets: While direct risks to UK financial stability from cryptoassets are currently limited, they will present risks if they continue their rapid growth and as they become more connected to the financial system. See the separate item on the FPC's Financial Stability in Focus report on cryptoassets and decentralised finance (DeFi).
• Systemic stablecoins: The FPC judges that a systemic stablecoin issued by a non-bank without a resolution regime and deposit guarantee scheme could meet its expectations, provided the BoE applies a regulatory framework designed to mitigate financial stability risks. However, a systemic stablecoin backed by a deposit with a commercial bank would introduce undesirable financial stability risks.

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United Kingdom: PRA publishes Dear CEO letter on existing or planned exposure to cryptoassets

On 24 March 2022, the PRA published a Dear CEO letter to banks and designated investment firms setting out how the prudential framework applies to ensure that firms engaging in cryptoasset activity manage the risks in a way that supports the firm's safety and soundness.

The letter is written in the context of the current limited existing exposures by firms to cryptoassets, and in the light of pending international regulatory updates. It aims to ensure that firms with such exposures understand the PRA's expectations around risk management and measurement against the existing prudential framework.

As no single part of the current prudential framework fully captures crypto risks, the letter expands on the combination of areas that firms will need to consider. These include strong risk controls, operational risk assessments, robust new product approval processes, Pillar 1 (the letter focuses on market risk and counterparty credit risk), Pillar 2, as well as ongoing monitoring arrangements.

Given the expansion in crypto activities being contemplated by firms, the PRA is undertaking a survey of firms covering existing crypto exposures and planned exposures for 2022, with a deadline for responses of 3 June 2022.

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United Kingdom: FCA updates webpage on operational and cyber resilience

On 24 March 2022, the FCA updated its webpage on operational and cyber resilience in the light of the conflict in Ukraine.

It notes that the National Cyber Security Centre (NCSC) has supported U.S. President Biden's call for increased cyber security vigilance in response to the situation in Ukraine, and recommends firms follow the NCSC's actionable guidance as a priority, to reduce their risk of cyber compromise.

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Europe: Council of EU publishes tables on different positions of EU institutions on proposed Regulation on markets in cryptoassets

On 1 April 2022, the Council of the EU published a note from the General Secretariat to the Delegations with a three-column table to commence trialogues, comparing the negotiating positions taken by the European Commission, the Council and the European Parliament on the proposed Regulation on markets in cryptoassets (MiCA).

This followed the European Parliament publishing the text (dated 17 March 2022) of the report adopted by its Economic and Monetary Affairs Committee (ECON) on the European Commission's legislative proposal for the MiCA Regulation.

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Global: FSB report on financial stability implications for FinTech and market structure

On 21 March 2022, the Financial Stability Board (FSB) published a report on the impact of the COVID-19 pandemic on FinTech and market structure and its implications for financial stability.

The FSB examined whether the pandemic had changed the ways in which individuals and firms engage with innovative financial service providers and traditional financial incumbents, analysing whether the market share of BigTechs and FinTechs in specific financial services changed materially compared to incumbent financial institutions during this time.

The FSB concluded that the pandemic had a significant impact on market structure in retail financial services. It believes that trends towards digitalisation of financial services have accelerated and that at least some of these changes may persist. It warns that the financial stability implications of these trends are increasing. These include greater market share by new entrants and a greater use of a partnership model between incumbents, FinTechs and BigTechs. It notes that many authorities are enacting specific entity-based rules on BigTechs intended to address issues of financial stability, competition and data governance, as well as the development of international work on third-party dependencies in the financial sector, including in relation to cloud computing.

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United Kingdom: BoE reports on responses to discussion paper on new forms of digital money

On 24 March 2022, the Bank of England (BoE) published a paper reporting on responses it has received to its June 2021 discussion paper on new forms of digital money.

Among other things, the BoE reports that:

• Respondents agreed that digital money would provide benefits but noted that any publicly provided digital money should not replace cash.
• Most respondents said that it was very important for the general public to have direct access to central bank money. They also agreed that any private sector firm issuing or intermediating payments in new forms of digital money must be fully compliant with the regulatory frameworks on data protection.
• The discussion paper set out a scenario to demonstrate how the banking system may need to adjust if a new form of digital money was introduced, and addressing the associated reduction in bank deposits. Most respondents broadly agreed with the implications of the scenario.

In terms of next steps, the BoE states that, while it has not yet made a decision on any of the topics in the discussion paper, the feedback received had shown strong support for it to continue its work in this area. However, it noted that respondents were clear about three things: access to cash should be preserved, the BoE should continue to engage with stakeholders, including the wider public, and any regulation for systemic stablecoins should be clear, proportionate, and risk-based.

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Europe: EBA letter on expert views on legislative proposals for AML and CTF action plan

On 24 March 2022, the EBA published a letter to the EU co-legislators on the views of anti-money laundering (AML) and counter-terrorist financing (CTF) experts from competent authorities on the legislative proposals adopted by the European Commission in July 2021 as part of a package of measures to strengthen the EU's AML and CTF rules.

In the note, the experts provide comments and specific proposals on aspects of the package relating to:

• Effective co-operation and information exchange: The experts call on the co-legislators to consider whether the proposals allow for effective co-operation and information exchange between the EU AML Authority (AMLA) and competent authorities, as well as between the AMLA and other EU standard-setters at all stages of the policymaking process. They also call for the key terms in the legislation to be defined unequivocally and to be used consistently across the legislative package.
• Criteria for selecting institutions for direct supervision by the AMLA: The experts call on the co-legislators to consider whether the eligibility criteria should be extended to those entities that, due to the nature of their business, may expose the internal market to significant risks but which are currently excluded from direct supervision by the AMLA, such as cryptoasset service providers.

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Europe: EBA second report on competent authorities' approaches to AML and CTF banking supervision

On 22 March 2022, the EBA published a report setting out the findings of the second round of its implementation reviews of competent authorities' approaches to the anti-money laundering (AML) and countering the financing of terrorism (CTF) supervision of banks in the EU and EEA.

The EBA found that all the competent authorities reviewed had undertaken significant work to implement a risk-based approach to AML and CTF. Supervisory staff had a good understanding of international and EU AML and CTF standards and were committed to tackling financial crime.

However, competent authorities continue to face challenges in operationalising the risk-based approach to AML and CTF. Common challenges include:

• Difficulties in identifying ML and TF risks in the banking sector and in individual banks.
• Translating ML and TF risk assessments into risk-based supervisory strategies.
• Using available resources effectively, including by ensuring sufficiently intrusive onsite and offsite supervision.
• Taking proportionate and sufficiently dissuasive enforcement measures to correct AML and CTF compliance weaknesses.

The EBA also found that co-operation with financial intelligence units was not always systematic and often ineffective.

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United Kingdom: FCA regulation round-up for March 2022

On 31 March 2022, the FCA published its regulation round-up for March 2022.

Among other things, in this edition the FCA:

• Strongly encourages account servicing payment service providers to apply exemption 10A of the regulatory technical standards on strong customer authentication and secure communication as soon as possible. If adopted, customers will not need to reauthenticate when they access their account details through a third-party provider (TPP). Instead, TPPs will need explicit consent from customers at least every 90 days. TPPs are expected to be technically ready to reconfirm customer consent.
• Announces the launch of a new unified firm support service, Innovation Pathways, that will provide bespoke tailored regulatory advice and support to firms with innovative business models that want to deliver positive innovations and customer outcomes in the market. The new service will enhance and build on the service provided by Direct Support and the Advice Unit.

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United Kingdom: FCA publishes new webpage on Innovation Hub market insights

On 28 March 2022, the FCA published a new webpage on Innovation Hub market insights, providing information on the type of firms and technology supported by the Regulatory Sandbox and Innovation Pathways, including firm sizes, sectors and locations.

The FCA's Innovation Hub has been helping firms to develop innovative products and services since launching in 2014. During this period, due to the number of firms they have supported and engaged with, they have gathered a considerable quantity of data and insights into the growing fintech market in the UK. This page is the first step in sharing these insights with the broader market, and is intended to grow over time as the FCA collects more data.

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United Kingdom and Canada: Negotiations for updated free trade agreement launched

On 24 March 2022, the UK and Canada formally launched negotiations for an updated free trade agreement (FTA), which will build on the existing UK-Canada Agreement on Trade Continuity. The UK government has also published a document setting out its objectives for the negotiations, its response to the public consultation on the negotiations and an assessment of the potential economic impact of the updated FTA. The document indicates that the government will, among other things, seek to agree to enhanced digital trade provisions, including to support the free flow of data while ensuring that protections for personal data are maintained.

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Europe: ECB annual report for 2021 published

On 31 March 2022, the ECB published its annual report for 2021.

The report includes a section on risks and the ECB's supervisory priorities for 2022. The ECB explains that in 2021, in co-operation with the national competent authorities, it assessed the main risks and vulnerabilities faced by significant institutions and identified three priorities aimed at ensuring that supervised institutions:

• Emerge from the pandemic healthy.
• Seize the opportunity to address structural weaknesses through effective digitalisation strategies and enhanced governance.
• Tackle emerging risks, including climate-related and environmental risks, IT and cyber risks.

For each priority, the ECB has developed a set of strategic objectives and work programmes for the period 2022-24, to address the most material vulnerabilities identified during its risk assessment.

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Global: Wolfsberg Group guidance on digital customer lifestyle risk management

On 29 March 2022, the Wolfsberg Group published guidance on digital customer lifestyle risk management.

The Group explains that digital approaches to customer lifecycle risk management challenge the traditional view that in-person customer engagement is necessary for firms to know their customers and assess the financial crime risk they present. Non-face-to-face customer interaction, if defined and calibrated responsibly, may be a standard or lower risk engagement channel, providing firms with an opportunity to adopt new approaches to manage customer risk, address issues of financial inclusion and address genuine financial crime threats.

The guidance explains how non-face-to-face customer interaction could be considered a standard or lower risk channel for a firm if it:

• Expands concepts of identification and verification, and increases the emphasis on the importance of authentication at the onboarding stage.
• Builds and maintains a dynamic, more holistic customer risk profile.
• Shifts to a targeted, disciplined approach to ongoing due diligence by refreshing customer data on a trigger (rather than periodic) basis, dedicating resources effectively to prioritise risks in real time.

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Europe: EBA publishes translations of revised guidelines on risk-based supervision under MLD4

On 4 April 2022, the EBA updated its webpage on its guidelines on risk-based supervision under Article 48(10) of the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) to state that the guidelines have been translated into the official languages of the EU.

The EBA published the guidelines in December 2021. National authorities now have two months to report whether they comply with the guidelines. The revised guidelines will apply three months after publication of the official language versions (that is, 4 July 2022), when they will repeal and replace the original 2016 version of the guidelines.

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Europe: EBA final report on amending RTS on SCA and CSC under PSD2

On 5 April 2022, the EBA published a final report on its amendment of the regulatory technical standards (RTS) for strong customer authentication (SCA) and common and secure open standards of communication (CSC) under PSD2.

The changes introduce a new mandatory exemption to SCA that will require account providers not to apply SCA when customers use an account information service provider (AISP) to access their payment account information, provided certain conditions are met. The amendment aims to reduce frictions for customers using such services and to mitigate the impact that the frequent application of SCA and the inconsistent application of the current exemption have on AISPs' services. The RTS also limit the scope of the voluntary exemption in Article 10 of the RTS to instances where the customer accesses the account information directly and extend the timeline for the renewal of SCA from every 90 days to every 180 days, both when the information is accessed through an AISP and when it is accessed directly by the customer.

The EBA will now submit the draft amending RTS to the European Commission for approval and scrutiny by the European Parliament and the Council of the EU before being published in the Official Journal of the EU. The amending RTS will apply seven months after entry into force.

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United Kingdom: Correspondence on CMA's plans for digital work in advance of Digital Markets Unit being placed on statutory footing

On 4 April 2022, the House of Lords Communications and Digital Committee published a letter from the Competition and Markets Authority (CMA) sent in response to a request from the Committee Chair for an update on the CMA's future digital work plans.

The CMA states that its overall strategy in digital markets involves preparing to put the government's proposed new digital markets framework into action through the Digital Markets Unit (DMU) as soon as the relevant legislation is passed, but in the meantime using its current powers to tackle problems wherever possible.

Online advertising is one of the key areas in which the CMA has gathered convincing evidence of competition problems. Consumer law investigations covering social media endorsements and fake online reviews are also a focus for the CMA. The CMA considers that its mobile ecosystems market study, due to conclude in June 2022, will provide a detailed evidence base for DMU action once the new tools are in place.

The CMA has also identified options for taking further action in digital markets ahead of the DMU receiving its powers and will further scope these potential projects with a view to launching new investigations.

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United Kingdom: DCMS Cyber Security Breaches Survey 2022 published

On 30 March 2022, the Department for Digital, Culture, Media and Sport (DCMS) published the Cyber Security Breaches Survey 2022.

The survey's key findings include that:

• In the last 12 months, 39% of UK businesses identified a cyber-attack, remaining consistent with previous years of the survey. However, the report also found that enhanced cyber security led to higher identification of attacks, suggesting that less cyber-mature organisations in this space may be underreporting.
• Of the 39% of UK businesses who identified an attack, the most common threat vector was phishing attempts (83%), with 21% identifying more sophisticated attack types such as a denial of service, malware, or ransomware attack.
• Within the group of organisations reporting cyber-attacks, 31% of businesses and 26% of charities estimated they were attacked at least once a week. One in five businesses and charities said they experienced a negative outcome as a direct consequence of a cyber-attack.

The DCMS said that the report shows that cyber-attacks are becoming more frequent, with organisations reporting more breaches over the last 12 months, although the number of businesses which experienced an attack or breach remained the same as 2021 levels. The DCMS urges businesses and charities to strengthen their cyber security practices.

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Europe: ECB publishes opinion on proposed revised NIS Directive

On 13 April 2022, the ECB published an opinion (dated 11 April 2022) on the proposed Directive on measures for a high common level of cybersecurity across the EU repealing the NIS Directive ((EU) 2016/1148) (2020/0359(COD)) (revised NIS Directive). The ECB comments specifically on the following aspects of the proposed Directive:

• Scope, including how the proposed Directive interacts with the proposed Regulation on digital operational resilience for the EU financial sector (DORA).
• European System of Central Banks (ESCB) and Eurosystem oversight competences.
• ICT third-party risk, management of large scale incidents and crises, information sharing and national cybersecurity strategy.

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Europe and United States: EU and U.S. announce new Trans-Atlantic Data Privacy Framework

On 25 March 2022, the European Commission and the United States published a joint statement on their agreement in principle to a new Trans-Atlantic Data Privacy Framework (Framework).

According to the accompanying factsheet, the Framework will include:

• A new set of rules and binding safeguards to limit access to data by U.S. intelligence authorities to what is necessary and proportionate to protect national security. Intelligence agencies will adopt procedures to ensure effective oversight.
• A new two-tier redress system to investigate and resolve complaints from Europeans about access to data by U.S. intelligence authorities. This includes a Data Protection Review Court.
• Strong obligations for companies processing data transferred from the EU. This will include the requirement to self-certify their adherence to the U.S. Department of Commerce.
• Specific monitoring and review mechanisms.

The agreement in principle now needs to be incorporated into legally binding documents. An Executive Order in the U.S. will form the basis of a draft adequacy decision by the European Commission which will then need to follow the formal adoption process under the GDPR. It may therefore be some time before organisations can rely on the Framework.

For more on this development, take a look at this Engage article by members of Hogan Lovells' London office.

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United Kingdom: Bank of England consults on outsourcing and third party risk management in FMIs

On 14 April 2022, the Bank of England (BoE) published three consultation papers on outsourcing and third party risk management in financial market infrastructures (FMIs):

For RPSOs and SSPs, the BoE is proposing to develop an outsourcing and third party risk management part to add to the Code of Practice (code) published under section 189 of the Banking Act 2009, which came into effect in June 2018. It is also consulting on a draft supervisory statement that introduces a set of supervisory expectations to complement the code. Again, these expectations are not binding, but they will provide relevant RPSOs and SSPs with guidance on how it intends to assess compliance with the outsourcing and third party risk management part of the code.

For CCPs and CSDs, the BoE is consulting on draft supervisory statements that introduce a set of supervisory expectations that are not binding but will provide these FMIs with guidance on how it intends to assess compliance with the regulatory framework on outsourcing and third party risk management.

The BoE's stated policy objective is to facilitate greater resilience and adoption of the cloud and other new technologies, as set out in its response to the Future of finance report (June 2019). The draft expectations also complement its March 2021 supervisory statements on FMI operational resilience.

The BoE will continue to monitor developments in industry practice and the international regulatory landscape to assess whether further changes are required. It refers in particular to ongoing discussions about systemic concentration risk, systemically significant third parties and their potential implications on financial stability, its expected joint discussion paper on critical third parties, and a potential consultation on detailed proposals to require FMIs to report information on their outsourcing and third party dependencies.

The deadline for responses to the consultation papers is 14 July 2022. The BoE plans to publish its final policy in the second half of 2022 and will allocate sufficient time for firms to implement this afterwards.

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United Kingdom: FCA publishes updated webpage on financial sanctions

On 12 April 2022, the FCA published an updated version of its webpage on financial sanctions.

Among other things, the FCA advises firms (including those operating under the Temporary Permissions Regime (TPR)) that, under Principle 11 of its Principles for Businesses (PRIN), it expects them to notify it without delay if they (or their appointed representatives or agents) are subject to any financial sanctions, directly or indirectly. This includes sanctions listed by the Office of Financial Sanctions Implementation (OFSI) as well as sanctions listed by any other country or jurisdiction. Dual-regulated firms should also notify the PRA.

For firms such as electronic money institutions (EMIs), payment services firms, cryptoasset businesses and Annex I financial institutions, this is regarded as a material change of circumstance and the FCA expects to be informed if these firms, or any connected entities, are subject to financial sanctions.

Firms should notify the FCA in line with SUP 15 requirements through the usual reporting mechanisms.

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Payment Market Developments

United States: Strike partners with Shopify to accept Bitcoin payments

On 8 April 2022, Strike, the digital payments platform built on Bitcoin's Lightning Network, announced its partnership with Shopify, unlocking the ability for eligible U.S. Shopify merchants to receive Bitcoin payments from customers globally as U.S. dollars.

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Middle East: Visa partners with Pop ID to bring facial verification payments to the Middle East

On 5 April 2022, Visa announced its partnership with PopID, a consumer verification service. Together they will collaborate on launching facial verification payment acceptance in the Middle East region. The goal of the partnership is to provide cardholders with new safe, secure, and innovative ways to pay.

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Brazil: Santander launches instant payments for companies from Europe to Brazil

On 30 March 2022, Santander announced a payment solution allowing customers from Europe to make transfers into Brazil in local currency in real time. This new service will shorten payment times from several days to minutes and removes the need for intermediaries and FX documentation.

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United Kingdom: Mastercard and Tenemos partner to enable UK banks to introduce Request to Pay services

On 29 March 2022, Tenemos announced a collaboration with Mastercard that will accelerate the take-up of its Request to Pay service among UK banks. Tenemos and Mastercard aim to accelerate market adoption, enabling complete end-to-end, real-time processing and secure and successful communication between buyers and payers.

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United States: Wells Fargo partners with Bilt Rewards and Mastercard to launch credit card

On 28 March 2022, Wells Fargo announced a partnership with Bilt Rewards and Mastercard. Together they will launch the first-of-its-kind co-branded credit card that allows members to pay rent and earn points with no transaction fees on rent payments at any rental property in the U.S.

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United States: RobinHood announces new Cash Card that invests spare change

On 22 March 2022, RobinHood announced their new Cash Card which will allow users to automatically invest their spare change into stocks and cryptocurrency as they spend. The Cash Card builds on their mission to democratise finance by giving debit card customers the same benefits and rewards that were once reserved for credit card holders.

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Germany: eBay partners with Klarna

On 16 March 2022, eBay announced its partnership with Klarna, the buy now, pay later provider. Together they will offer millions of German customers more flexible payment options.

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United Kingdom: Mastercard partners with HSBC to bring B2B payment options to the UK

On 21 March 2022, Mastercard announced its partnership with HSBC to launch a new business-to-business (B2B) payment solution in the UK - Mastercard Track Card to Account Transfer – which allows businesses to use their commercial card programme to make payments to any supplier, regardless of whether the supplier accepts card payments.

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Africa: United Bank of Africa partners with Cellulant to extend payment services across 19 African countries

On 18 March 2022, the United Bank of Africa and Cellulant, a pan-African payments company, announced their partnership which will extend payment services for merchants and consumers across 19 African countries in which the United Bank of Africa operates.

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Australia: ANZ bank mints first Australian dollar stablecoin

On 24 March 2022, the ANZ bank announced it had successfully executed the first ever Australian-bank issued Australian dollar stablecoin (A$DC) payment through a public permissionless blockchain transaction.

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Surveys and Reports

Global: Over one third of global population to adopt mobile wallet payments by 2024

On 1 March 2022, Merchant Machine published a study on mobile wallets which details how people use mobile wallets in different countries, at different ages and with different mobile wallets.

In particular, the study found that:

• In 2015 it was estimated that there were 0.4 billion users of mobile payment apps and by the end of 2022 this number will rise to 2.661 billion.
• The use of digital mobile wallets is set to see an increase of 16% by 2024.
• The use of physical credit cards is predicted to see an 8% decrease from 22.80% in 2020 to 20.80% in 2024. Other forms of e-commerce payment methods are predicted to see a decrease as well, such as debit cards, bank transfers, cash on delivery and charge and deferred debit cards.

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United Kingdom: Millions will struggle if cash is phased out

On 30 March 2022, the Royal Society of Arts published a new piece of research which explored the use of cash in an increasingly digital economy.

In summary, the research found that:

• One in five people (19% of the population, 10 million people) say they would struggle to cope in a cashless society.
• Almost half the population (48%, 25 million people) say that it would be problematic for them if there was no cash in society as they know it.
• Two-thirds of the population (64 %) are concerned about fraud when making digital payments.

The research showed that despite online banking and shopping becoming more common, the percentage of the UK population wholly reliant on cash is unchanged.

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Global: 40% of global consumers intend to use crypto as a form of payment in 2022

On 4 April 2022, Checkout published a report titled 'Demystifying Crypto: Shedding light on the adoption of digital currencies for payments in 2022'. The report is a comprehensive look at how both consumers and merchants in 11 countries are evaluating opportunities to adopt digital currencies.

In short, their report found that 30% of UK consumers, and 40% of global consumers, intend to use crypto as a form of payment in 2022.

Additionally, the research found that merchants are also keen to progress crypto's place in the payments system. Almost 70% of the merchants surveyed for the report believe that the speed of crypto payments has the potential to revolutionise their business models, with 80% of those already using crypto payment options saying that it was easier to settle in crypto than using fiat currencies.

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