[co-author: Erin Davies]
Key developments of interest over the last month include: the U.S. Consumer Financial Protection Bureau publishing a final rule on federal supervision of Big Tech and other widely used digital payment apps; the UK FCA publishing a number of communications regarding its approach to developing the cryptocurrency regulatory regime; and the Hong Kong Government publishing a Stablecoins Bill to formally regulate fiat-referenced stablecoin issuers.
In this Newsletter:
- Regulatory Developments: Payments
- Regulatory Developments: Digital Assets
- Market Developments
- Surveys and Reports
Insights from our Payments Conference 2024: On 20 November, the Hogan Lovells Payments Conference 2024 brought together some of the brightest minds in industry and government for a day of insightful discussions on the future of payments. Click here for summaries and links to recordings of the sessions.
Chapter 1 - Regulatory Developments: Payments
United States: CFPB publishes final rule on federal supervision of Big Tech and other widely used digital payment apps
On 21 November 2024, the Consumer Financial Protection Bureau (CFPB) announced that it had finalised a rule to supervise the largest non-bank companies offering digital funds transfer and payment wallet apps.
The rule will help the CFPB ensure that companies handling more than 50 million transactions per year follow federal law in the same way as large banks, credit unions, and other financial institutions that are already supervised by the CFPB. The rule will enable the CFPB to supervise companies in key areas including: (1) privacy and surveillance, (2) errors and fraud, and (3) debanking (i.e. in cases where consumers potentially face serious harms when they lose access to their app without notice or when their ability to make/receive payments is disrupted).
In its press release, the CFPB stated that it had made ‘several significant changes’ from its initial proposal (November 2023). Specifically, it noted that:
- The transaction threshold determining which companies require supervision is now substantially higher, at 50 million annual transactions.
- In light of the ‘evolving market for digital currencies’, the rule's scope is limited to count only transactions conducted in U.S. dollars. (Note: Hogan Lovells’ assistance to a client with filing a comment letter to the CFPB may have influenced the direction of the final rule).
The rule is the sixth rule by the CFPB to define larger participants operating in markets for consumer financial products and services. The CFPB notes that the first five rules covered larger participants in consumer reporting, consumer debt collection, student loan servicing, international money transfers, and automobile financing.
The rule will be effective 30 days after publication in the Federal Register.
Qatar: Central Bank issues regulatory framework for digital banks
On 3 December 2024, the Qatar Central Bank announced that it had issued a Regulatory Framework for Digital Banks (the Framework) as part of the effort to enhance digital transformation in the financial sector. The press release also notes that digital banks promote financial inclusion and contribute to enhancing the sustainable and innovative financial sector in line with the Qatar National Vision 2030.
The Framework sets out the regulatory requirements for digital banks’ operation and the steps to obtain a digital banking licence in Qatar. To qualify for a licence, aspiring digital banks must show a commitment to enhancing financial inclusion, especially for populations that are unserved or underserved.
Nigeria: Central Bank announces strategic priorities for 2025
On 29 November 2025, Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, announced the CBN’s strategic priorities for the coming year in a keynote address at the 59th Annual Bankers Dinner of the Chartered Institute of Bankers of Nigeria (CIBN). Governor Cardoso stated that the aim for the upcoming year would be to deepen financial inclusion in the country and to position Nigeria as a leader in digital finance across Africa.
The key initiatives announced for 2025 include:
- Adoption of an Open Banking framework to accelerate innovation in the fintech sector.
- Contactless payment systems to modernise Nigeria’s payment ecosystem and enhance efficiency of payments.
- Regulatory sandbox expansion to provide fintech startups and financial institutions with a controlled environment to test innovative solutions. This is anticipated to encourage advancements in blockchain, artificial intelligence, and digital currencies, fostering a culture of innovation in the Nigerian financial sector.
- Revised guidelines for agency banking to improve the operational efficiency and security of agency networks. This is a critical tool for extending financial services to underserved and rural communities.
- Strengthening electronic payment channels to support a cashless economy and enhance resilience against cyber threats.
United Kingdom: HM Treasury launches review of Payment and Electronic Money Institution Insolvency Regulations 2021
On 12 December 2024, HM Treasury (HMT) launched a review of the Payment and Electronic Money Institution Insolvency Regulations 2021 (the Regulations), which introduced a new Payment and Electronic Money Special Administration Regime (PESAR).
In outline, the terms of reference (ToR) for the review provide that it must consider:
- How far the Regulations are achieving their intended objectives as set out in the Regulations and the Banking Act 2009.
- Whether the Regulations should continue to have effect.
Among other matters, the ToR state that where appropriate the review should take into account the FCA’s proposed changes to the safeguarding regime for payments and e-money firms, in so far as they are relevant to the PESAR. For more on the FCA’s safeguarding proposals, take a look at our article.
HMT is required to appoint an independent reviewer to lead the review. It has appointed Adam Plainer to this role. The reviewer is due to produce an interim update with initial conclusions by September 2025, with a final report no later than the end 2025 (which will subsequently be laid in Parliament).
Submissions of evidence can be made until 30 May 2025 using the following mailbox: psar.review@hmtreasury.gov.uk.
United Kingdom: Bank of England consults on fundamental rules for FMIs and publishes updated approach to FMI supervision
On 19 November 2024, the Bank of England (BoE) published a consultation paper on proposed rules and a draft supervisory statement establishing Fundamental Rules for financial market infrastructures (FMIs) (central counterparties (CCPs), central securities depositories (CSDs), recognised payment system operators (RPSOs) and specified service providers (SSPs)).
The proposed fundamental rules will apply to CCPs, CSDs, RPSOs and SSPs. They will only apply to entities that are incorporated in the UK, and are high level overarching requirements that will act as a foundation for the BoE’s forthcoming broader rulebook for FMIs. They cover issues including skill, care and diligence, openness with regulators, operational risk and the management of financial stability risks. They are modelled on, but are not identical to, the PRA’s fundamental rules.
The deadline for responses is 19 February 2025. The BoE expects there to be a six-month implementation period between publication of the final rules and application of the rules to FMIs. The BoE has announced that it intends to apply the fundamental rules to systemic stablecoins in due course.
Also on 19 November 2024, the BoE published an updated version of its approach to FMI supervision. It covers:
- Objectives and legislative framework for the supervision of FMIs.
- Four key principles underlying the supervisory approach: judgement based, forward looking, focused on key risks and proportionate.
- Processes for identifying and assessing risks posed by each FMI. These include a risk model for the supervision of FMIs and the allocation of FMIs into one of three potential systemic impact categories.
- Approach to supervising FMIs in practice, including the degree of intensity of supervision and the tools and legal and enforcement powers available to it.
United Kingdom: FCA publishes policy statement on final changes to Financial Crime Guide
On 29 November 2024, the FCA published a policy statement (PS24/17) with finalised updates to the Financial Crime Guide (FCG) relating to sanctions, proliferation financing, and transactions monitoring. This follows a consultation in April 2024.
The FCG applies to all FCA financial crime supervised firms and firms supervised by the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), including cryptoasset businesses.
Changes include:
- Updating the sanctions chapter to reflect findings from and extensive FCA assessments of firms’ sanctions systems and controls conducted in light of Russia’s illegal invasion of Ukraine in 2022.
- Updating guidance to ensure proliferation financing (PF) is explicitly referenced throughout the FCG where appropriate. This includes highlighting a 2022 change to the MLRs, which requires firms to conduct PF risk assessments.
- Adding key guidance for firms on how to implement and monitor transaction monitoring systems. This includes supporting responsible innovation and new technological approaches.
- Making it clear that cryptoasset businesses should refer to the FCG.
- Adding that firms should consider whether their systems and controls are consistent with their obligations under the Consumer Duty.
- Making consequential amendments including updating outdated references to European Union rules and refreshing case studies based on more recent FCA enforcement notices.
United Kingdom: FCA finalised guidance on APP fraud and risk-based approach to payments
On 22 November 2024, the FCA published finalised guidance on authorised push payment (APP) fraud and enabling a risk-based approach to payments.
The guidance is in response to a request by HM Treasury for the FCA to issue guidance explaining how it expects payment service providers (PSPs) to apply the changes introduced by the Payment Services (Amendment) Regulations 2024 which came into force on 30 October 2024. These Regulations enable PSPs to delay payments by up to 4 business days in order to investigate transactions where there are reasonable grounds to suspect fraud or dishonesty on the part of someone other than the payer.
The FCA’s finalised guidance includes:
- Requirements for delaying outbound payments including determining whether the threshold “reasonable grounds to suspect” has been satisfied.
- How the payment delay window should be used by PSPs.
- PSPs’ obligations if they delay an outbound transaction.
- Treatment of suspicious inbound payments.
The FCA’s Payment Services and Electronic Money Approach Document has been amended to include the new guidance.
United Kingdom: ICO calls on organisations to share personal data promptly to protect customers from fraud
On 22 November 2024, the UK’s data protection regulator, the Information Commissioner’s Office (ICO), published new practical advice calling on organisations to promptly and responsibly share personal data to help prevent scams and fraud being committed on data subjects. In a press release, it clarified that data protection law is not an excuse for failing to share this data.
Singapore: MAS extends deadline for corporate cheques phase out and consults on roadmap to sunset corporate cheques and transition plan for retail cheques
On 5 December 2024, the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) announced that, while banks will stop issuing new cheque books to corporates by 31 December 2025, the deadline to cease processing of corporate cheques is being extended to 31 December 2026. MAS reasons that more time needs to be given for corporates to familiarise themselves with e-payment methods.
To support corporates with the transition, the ABS will launch new Electronic Deferred Payment (EDP) solutions in mid-2025.
Also on 5 December, the MAS launched a consultation seeking views on proposed initiatives to:
- Manage the timeline for phasing out SGD corporate cheques and launch of the EDP solution for post-dated payments.
- Sunset the current Cheque Truncation System (CTS) and replace it with a cost-efficient cloud-based system to serve the needs of remaining cheque users, including users of SGD retail cheques, USD corporate and retail cheques and cashier’s orders.
The consultation closes on 17 January 2025.
United Kingdom: Pay.UK response to National Payments Vision
On 26 November 2024, Pay.UK, the UK’s recognised operator and standards body for the UK’s retail interbank payment systems, published its response to the National Payments Vision launched by HM Treasury on 14 November.
The response states that the Vision's three main pillars—innovation, competition, and security—align with Pay.UK's mission to power payments, champion innovation, and give the UK choice in how it pays. Pay.UK’s focus is on collaborating with stakeholders to significantly enhance the central infrastructure to achieve the Vision's goals.
Pay.UK's technology strategy focuses on creating a future-proof payments platform, serving as an alternative to the New Payments Architecture (NPA) for infrastructure renewal. This strategy will maintain current services like Faster Payments, BACS, and the Image Clearing System, and will evolve to enable new channels and products such as open banking-initiated payments. Consequently, Pay.UK has cancelled the NPA procurement.
Pay.UK is committed to working with customers and the broader ecosystem to design and implement next-generation infrastructure. This includes forming an industry delivery body to support the Payments Vision Delivery Committee and the Vision Engagement Group, ensuring a clear path forward. Pay.UK is looking forward to working with the Committee to help drive infrastructure renewal and define long-term requirements, accountability, and funding to maintain a robust payment systems operator.
For the next phase of innovation in interbank payments, Pay.UK has identified three priorities:
- Unlocking infrastructure renewal.
- Addressing fraud to maintain confidence in the UK's payment systems.
- Interbank transactions in retail to provide more payment options for people and businesses, with a suitable commercial model and consumer protections.
For more on the UK’s National Payments Vision, take a look at our article.
United Kingdom: PSR publishes consultation on new approach to procuring central infrastructure for Faster Payments
On 3 December 2024 (and as mentioned in its response to the National Payments Vision in November), the Payment Systems Regulator (PSR) published a consultation paper (CP24/13) on proposed changes to Specific Direction 3 (SD3), which sets out the legal requirements for Pay.UK in procuring upgraded infrastructure for payments currently made over Faster Payments (FPS). The consultation contains the PSR’s proposed new approach to procuring central infrastructure.
In the light of changed circumstances surrounding the New Payments Architecture (NPA) programme, the PSR is asking for views on:
- Replacing the current SD3 deadline of 1 July 2026 for migrating all FPS transactions to competitively procured infrastructure with an express reference to the PSR's ability to notify Pay.UK of a new deadline. Any new deadline would not be before 1 July 2036.
- The proposed criteria that the PSR will consider when making a decision on a new SD3 migration deadline.
- Requiring Pay.UK to ask for the PSR's non-objection before entering into a new central infrastructure contract for FPS or extending the existing one.
- Drafting SD3b (ie, varying SD3), including removing reporting requirements and expanding the reference to the NPA to include new infrastructure and upgrades that would not otherwise be covered by the NPA definition.
- Potential enhancements to the PSR's regulatory framework given the changed circumstances. The PSR plans to update its 2021 regulatory framework to address risks to competition and innovation, and it intends to publish a more detailed timetable on the updated regulatory framework alongside its decision on SD3.
The consultation closes on 21 January 2025. The PSR plans to publish a policy statement in Spring 2025.
United Kingdom: FCA publishes Consumer Duty focus areas 2024-25
On 9 December 2024, the FCA published a new webpage setting out its priorities under the Consumer Duty for the remainder of 2024/25. It states that affected stakeholders will largely be aware of these initiatives, but it has produced the webpage in response to industry feedback that it would be helpful to show its Consumer Duty areas of focus in one place.
The FCA’s focus areas include sector-specific priorities. For the payments and digital assets sector, the FCA is planning to look at clarity of foreign exchange (FX) pricing in payment services. The initial focus will be on clarity of pricing in money remittance services and account to account transactions. It is planning to undertake this work in 2025.
European Union: Council of EU agrees negotiating mandate on proposed FIDA Regulation
On 4 December 2024, the Council of the EU published a press release announcing that it has agreed its negotiating mandate on the proposed Regulation on a framework for financial data access (FIDA) (2023/0205 (COD)). An accompanying note (dated 2 December 2024) from the Council’s General Secretariat to its Permanent Representatives Committee (COREPER) sets out the text of its mandate for negotiating with the European Parliament.
In the press release, the Council highlights certain aspects of its mandate including that it largely supports the European Commission's initial proposal. The press release also states that agreement on its mandate means the Council can start trialogue negotiations with the European Parliament and the European Commission with a view to reaching agreement on the final text of FIDA.
Chapter 2 - Regulatory Developments: Digital Assets
United Kingdom: FCA publishes approach to developing cryptocurrency regime
On 26 November 2024, the FCA published a number of communications regarding its approach to developing the future cryptoasset regime for the UK. The communications include a research paper on UK consumer attitudes towards cryptocurrency, a blog post outlining issues which will inform the FCA’s approach, and an indicative roadmap for development of the regime.
The results of the FCA’s latest research on UK consumers’ cryptoasset holdings, and attitudes towards cryptoassets, show that awareness and interest in cryptoassets have risen among UK consumers compared to previous years. Both cryptoasset users and non-cryptoasset users say that they would be more likely to invest (or invest further) in cryptoassets if the sector was more regulated in the UK – this is despite 58% of cryptoasset users reporting that they would be happy to continue to trade in an unregulated marketplace. Overall, the FCA considers that there is a need for “clear regulation which supports a safe, competitive, and sustainable crypto sector in the UK”.
The blog post outlines the feedback gathered during the series of roundtables held by the FCA earlier this year with industry (such as exchanges, banks, trading firms, blockchain analytics companies, law firms, industry associations and universities), government officials, academics and other regulatory authorities including HM Treasury, the Bank of England, and the U.S. Securities and Exchange Commission. It explains the issues that are intended to inform the FCA’s approach to developing the relevant rules including admissions and disclosures, the market abuse regime, and trading platforms and intermediaries.
The indicative roadmap sets out an estimated timeline for the development of the UK’s cryptoasset regime (the Roadmap). The Roadmap outlines expected timelines for the relevant discussion papers and consultations, and states that all final policy statements should be published over the course of 2026 followed by the regime going live. The Roadmap does not give expected timings for implementation of any rules.
For more on this development, see our article.
United Kingdom: FCA publishes new webpage on expectations relating to cryptoasset financial promotions and fiat-to-crypto on/off ramp services
On 26 November 2024, the FCA published a webpage containing its expectations of registered/ regulated firms partnering with unregistered cryptoasset firms—for example, Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR) registered firms providing on/off ramp services to unregistered cryptoasset firms (e.g. non-custodial wallet providers)—which may be making promotions to UK consumers in breach of the financial promotions rules.
In particular, the FCA discusses:
- the harms to consumers and markets that may arise out of such partnerships.
- common business models where regulated/registered firms partner with unregistered firms, and the risks posed to regulated/registered firms.
- examples of measures taken by regulated/registered firms to mitigate the relevant risks.
Take a look at our article for more on this development.
United Kingdom: HM Treasury speech on approach to cryptoasset and stablecoin regulation and Bank of England speech on DLT in wholesale markets
On 21 November 2024, Economic Secretary to the Treasury Tulip Siddiq MP announced in a keynote speech at the Tokenisation Summit 2024 that the government intends to introduce draft cryptoasset legislation in the new year. In particular she noted that:
- The draft regulatory framework is expected to cover both stablecoins and other cryptoassets, including staking services, under “a single phase”.
- The draft legislation should clarify that staking services do not fall within scope of the definition of a “collective investment scheme”, which is currently a point of regulatory uncertainty.
- The government plans to introduce such legislation as early as possible in 2025, although no precise timeline was given at the time.
- The government does not intend to bring stablecoin into UK payments regulation at this time.
Also at the Tokenisation Summit 2024, Sasha Mills, Executive Director for Financial Market Infrastructures at the Bank of England (BoE), brought the use of distributed ledger technology (DLT) in wholesale financial markets into the spotlight.
She noted the potential benefits of DLT, including the reduced need for a single central party to perform record-keeping obligations, the ability to improve security and integrity of financial transactions through the use of cryptographic techniques, and the potential for programmability to reduce settlement risk and give rise to “unprecedented” efficiency gains in the trade lifecycle. She also acknowledged the importance of driving innovation in the two components, i.e. both assets and money, to unlock innovation in financial markets.
The speech concluded by noting the commitment from the BoE to explore opportunities for innovation in DLT, particularly in the wholesale financial markets—from securities settlement to new forms of money—as well as recognising the BoE’s role to ensure innovation happens in a way that is safe for market participants and does not propagate risk.
For more on this, as well as on next steps for digital gilts, take a look at our article.
Latvia: Central Bank fast-tracks EU MiCA licences
On 6 December 2024, it was reported that Latvijas Banka, the central bank of Latvia, had announced that it was launching free pre-licensing consultations for crypto-asset service providers looking to pursue EU MiCA licences. The consultation with Latvijas Banka experts will give guidance on viability of applications, regulatory compliance and application readiness. The bank promises a 48-hour response time. The initiative aims to reduce a service’s time-to-market.
European Union: European Commission letter to EBA and ESMA on MiCA and PSD2 overlap
On 10 December 2024, the EBA published correspondence with the European Commission on the interplay between the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA) and the revised Payment Services Directive ((EU) 2015/2366) (PSD2):
- European Commission letter (dated 6 December 2024) to the EBA and ESMA.
- The Commission explains that e-money tokens (EMTs) are deemed to be electronic money under Article 48(2) of MiCA, falling within the definition of "funds" in Article 4(25) of PSD2. This means EMTs are both cryptoassets regulated under MiCA and electronic money (or funds) under PSD2.
- The Commission notes there are diverging interpretations among member states about the interplay between MiCA and PSD2. The treatment of EMTs is being discussed as part of the ongoing work on the proposed PSD3 and new Payment Services Regulation (PSR)). However, solutions need to be found in the meantime.
- The Commission has asked the EBA (co-ordinating with ESMA) to consider issuing an opinion (ie, a "no action letter") on the enforcement of the PSD2 requirements on authorisation as regards services with EMTs provided by cryptoasset service providers (CASPs) that may be inadvertently covered by PSD2. The no action letter should take effect until the PSD3 application date.
- The EBA is invited (with ESMA) to explore whether the PSD2 authorisation process could be streamlined to reduce the operational burden institutions would face where dual authorisation would be required. The Commission also asks for suggestions on potential legislative changes to address any of the issues identified in the letter, which could be taken into account in the ongoing negotiations on PSD2 reform.
- EBA letter to European Commission (dated 10 December 2024).
- In responding to the Commission, the EBA advises that it agrees with the Commission's concerns and is carefully assessing the issues (co-ordinating with ESMA) to determine the best options going forward. The EBA aims to publish a response by April 2025.
European Union: Recent MiCA related developments
Recent publications relating to the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA) include:
- On 26 November 2024, Commission Implementing Regulation (EU) 2024/2545, laying down implementing technical standards (ITS) for the application of MiCA with regard to standard forms, templates and procedures for the cooperation and exchange of information between competent authorities, was published in the Official Journal of the European Union (OJ). The Implementing Regulation comes into force on 16 December 2024.
- On 28 November 2024, Commission Implementing Regulation (EU) 2024/2902, which includes ITS supplementing MiCA, was published in the OJ. It details the reporting requirements for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs) denominated in non-EU currencies. These include reporting reference dates, remittance dates, data exchange formats, and personal data retention periods. The Implementing Regulation will come into force on 18 December 2024 and apply from 1 January 2025.
- On 28 November 2024, the European Commission adopted a Delegated Regulation (C(2024) 8510 final) containing regulatory technical standards (RTS) that specify how cryptoasset service providers (CASPs) operating a trading platform for cryptoassets should present transparency data. This includes pre-trade and post-trade transparency obligations and the requirement to publish transaction details in near real-time. The Delegated Regulation will enter into force 20 days after publication in the OJ, following approval by the Council of the EU and the European Parliament.
- On 29 November 2024, the European Commission adopted Delegated Regulation (C(2024) 6909 final) which contains RTS specifying the content and format of order book records for CASPs operating a trading platform for cryptoassets under MiCA. The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation, which will enter into force 20 days after publication in the OJ, following approval by the Council and the Parliament.
- On 3 December 2024, Commission Implementing Regulation (EU) 2024/2984 was published in the OJ. It lays down ITS for the application of MiCA with regard to forms, formats and templates for the cryptoasset white papers which must be made available in a “machine-readable format”. It enters into force on the twentieth day following its publication (i.e. 23 December 2024) and will apply from 23 December 2025.
- On 4 December 2024, ESMA published a new webpage with the official translations, including the English language version, of joint ESMA and EBA guidelines (EBA/GL/2024/09 / ESMA75-453128700-10) on suitability assessments under MiCA. The joint guidelines apply from 4 February 2025 (ie, two months after publication of the translations). National competent authorities (NCAs) must notify ESMA or the EBA (as appropriate) by this date whether they comply, do not comply but intend to comply, or do not intend to comply with the joint guidelines. Financial market participants and financial institutions are not required to report whether they comply with the joint guidelines.
- On 10 December 2024, the European Supervisory Authorities (ESAs) (ie, the EBA, ESMA and EIOPA) published a final report (ESA 2024 28) on draft guidelines on templates for explanations and opinions, and the standardised test for cryptoassets, under Article 97(1) of MiCA. A related press release includes a flowchart on the standardised test. The guidelines will apply two months after the publication of their translations into all of the official EU languages.
France: AMF updates MiCA webpage
On 29 November 2024, the Autorité des marchés financiers (AMF), the French financial markets regulator, updated its webpage which sets out an explanation of the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA).
The webpage provides detailed information about the regulatory framework for cryptoassets in the European Union with the aim of providing clarity and support to market participants as they navigate the new regulatory landscape. Key information provided on the webpage includes:
- A comprehensive overview of MiCA, explaining its objectives and scope.
- Regulatory requirements for different types of cryptoassets, including asset-referenced tokens, e-money tokens, and other cryptoassets. This includes information on authorisation, governance, and operational requirements for issuers and service providers.
- Consumer protection measures embedded in MiCA, such as transparency obligations, disclosure requirements, and the establishment of complaint handling procedures.
- How MiCA aims to ensure market integrity and financial stability by setting out rules to prevent market abuse and ensuring the resilience of cryptoasset service providers.
- Information on the implementation timeline of MiCA, detailing when different provisions will come into effect and the transitional arrangements for existing market participants.
- Links to additional resources, such as regulatory texts, guidelines, and Q&A documents to help stakeholders understand and comply with the new regulations.
European Union: EBA publishes consultation on extending RTS on central contact points under MLD4 to cover CASPs
On 4 December 2024, the EBA published a consultation paper (EBA/CP/2024/23) on proposed amendments to Commission Delegated Regulation (EU) 2018/1108, which contains regulatory technical standards (RTS) relating to central contact points (CCPs) that reflect a mandate in Article 45(10) of the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4). The RTS set out the criteria for determining the circumstances in which the appointment of a CCP is appropriate and the functions of CCPs.
The EBA is seeking views on amendments to Commission Delegated Regulation (EU) 2018/1108 that would extend the application of the RTS to cryptoasset service providers (CASPs). This reflects amendments made to MLD4 by the Wire and Cryptoasset Transfer Regulation ((EU) 2023/1113) (WCTR)) to extend the scope of MLD4 to cover CASPs.
The proposed amendments set out specific criteria for determining the circumstances in which the appointment of a CCP should apply in respect of CASPs, following the same approach taken in respect of electronic money issuers (EMIs) and payment service providers (PSPs) by focusing on the size and scale of the activities carried out by the entity in the host member state.
The consultation closes on 4 February 2025. The EBA intends to publish a final report on the draft RTS in Q2 2025.
European Union: ECB publishes second digital euro progress report
On 2 December 2024, the European Central Bank (ECB) published a second progress report on the digital euro preparation phase and an associated press release. The preparation phase was launched on 1 November 2023 and is laying the foundations for the potential issuance of the digital euro.
Key points include:
- Since the first progress report, the ECB has updated the digital euro scheme rulebook in light of an interim review representing views of consumers, retailers and payment service providers (PSPs). Changes include development of parts of the rulebooks on minimum experience standards and risk management.
- The ECB has concluded a call for applications, which launched in January, for potential providers of digital euro components and related services. The ECB has invited selected bidders to tender and will publish the outcome of this procedure in 2025 once it has been finalised.
- New user research and experimentation activities have started to gather insights into user preferences and inform decision making. Target groups for this work are small merchants and vulnerable customers. The outcome will be published in mid-2025.
- The ECB is forming innovation partnerships with key stakeholders including merchants, PSPs, fintech companies and universities, to test conditional payments and other potential use cases for the digital euro.
- ECB is collaborating with national central banks of the Eurosystem and national authorities to develop a methodology for setting digital euro holding limits. The proposed method will be tested during 2025.
The decision on whether to move on to the next phase of preparations will not be made until the end of 2025.
Scotland: Government issues consultation on status of digital assets as property
On 27 November 2024, the Scottish Government issued a consultation on proposed legislative reforms regarding the status of digital assets as property under Scottish private law. It states that changes are needed for Scots law to keep up with digital and technological developments. The consultation notes that, unlike the law of England and Wales, Scottish law cannot rely on case law to provide legal answers on the status of digital assets as property.
The consultation closes on 5 February 2025.
United Kingdom: House of Lords call for evidence on Property (Digital Assets etc) Bill
On 19 November 2024, a House of Lords Special Public Bill Committee issued a call for evidence on the Property (Digital Assets etc) Bill. The Bill had its second reading in the House of Lords on 13 November 2024.
The Committee seeks written evidence on several questions including: whether the Bill, in its current form, is necessary and effective; would it have any negative or unexpected consequences; how the Bill could be improved; whether it should have retroactive effect; and what implications the Bill could have for the development of this area of common law, both in England and Wales and in other legal jurisdictions.
The call for evidence closes on 20 December 2024.
Hong Kong: Government publishes Stablecoins Bill
On 6 December 2024, the Hong Kong government published the Stablecoins Bill in the Hong Kong SAR Gazette and a related press release. The Bill aims to put in place a regulatory regime for issuers of fiat-referenced stablecoins (FRS) in Hong Kong.
According to the press release, the Bill seeks to enhance the regulation of virtual asset (VA) activities by addressing financial stability risks, ensuring user protection, and leveraging the benefits of VAs and their technologies. Under the proposed licensing regime, anyone issuing FRS in Hong Kong in the course of a business, issuing FRS pegged to the Hong Kong dollar, or actively marketing FRS to the public in Hong Kong must be licensed by the Hong Kong Monetary Authority (HKMA) subject to certain exemptions and safe harbours. The Bill also grants the HKMA supervisory, investigatory, and enforcement powers.
The Bill will be introduced into the Legislative Council for its first reading on 18 December 2024.
By way of comparison, the Monetary Authority of Singapore (MAS) has previously announced its final stablecoin regulatory framework, applying only to single-currency stablecoins (SCS) pegged to the SGD or any G10 currency that are issued in Singapore (Stablecoin Issuance Service). Hong Kong seems to have gone with a broader all-encompassing approach that captures and potentially requires licensing for FRS issued in Hong Kong regardless of the underlying reference currency (subject to certain exemptions and safe harbours). In Singapore, other stablecoins not falling within a Stablecoin Issuance Service will continue to be regulated as digital payment tokens (DPT) under the Payment Services Act 2019.
Chapter 3 - Market Developments
United States: Proof-of-concept for regulated settlement network
On 5 December 2024, the Securities Industry and Financial Markets Association (SIFMA) set out its findings from its Regulated Settlement Network (RSN) proof-of-concept in which it explored the capability of shared ledger technology to upgrade multi-asset and cross-network transaction settlement for domestic users of U.S. dollars and regulated securities.
The working group included Citi, JP Morgan, Mastercard, Swift, TD Bank, U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp.
Key findings from the proof-of-concept include:
- Enhancing multi-asset and cross-network settlement can be achieved through a shared-ledger Financial Market Infrastructure (FMI) that includes tokenised securities, central bank deposits, and commercial bank deposits, with each institution managing its own partition. This network provides a unified settlement infrastructure with 24/7, programmable, and precise settlement capabilities, enabling financial institutions to optimize their collateral and liquidity positions. Additionally, it addresses issues such as infrastructure fragmentation and uncertainty in the settlement process.
- The RSN infrastructure supports precise settlement across various asset classes within a shared-ledger FMI, showcasing its scalability and versatility for modern financial transactions. It also successfully connects with other third-party networks through interoperability solutions, facilitating synchronized settlement.
- The legal workstream found no issues that would prevent the creation of RSN as envisioned in the Proof of Concept (PoC) under current legal frameworks. However, further analysis and engagement with regulators are necessary before reaching any final conclusions.
Brazil: On Pix’s fourth anniversary it is the most used payment method in the country
On 3 December 2024, the Bank Central do Brasil (BCB) published an update on its instant payment system, Pix, for its fourth anniversary. It revealed that Pix is driving financial inclusion in the nation. Between 2018 (Pix’s launch) and 2023, the number of active users in the national financial system grew by 103%.
In the update, the Deputy Governor for Licensing and Resolution at the BCB announced that "Pix Automático" will launch on 16 June 2025. The goal is to simplify recurring payments, like utility bills, with automation. Currently, receiving direct debit payments requires agreement between the company receiving the funds and a bank offering the service. However, with "Pix Automático", no agreement will be necessary.
Additionally, it has been reported from BCB survey findings that Pix is now the most used payment method in the country, with 76.4% of the population using it, and 46% using it as their most frequent payment method. Pix has overtaken debit cards, cash, and credit cards.
Sweden: Central Bank says retail payment infrastructure must modernise
On 20 November 2024, Sveriges Riksbank (Riksbank), Sweden’s Central Bank, announced that major changes were underway in Sweden to modernise its retail payment infrastructure. The clearing and settlement of retail payments will be adapted to create more secure, efficient and accessible retail payments. Whilst instant payments already account for a large share of retail payments in the country, Riksbank wants more payments to be settled in this way. Additionally, it wants the infrastructure to be ready for changing European standards and future market innovation.
Norway: Norwegian krone to be added to Eurosystem instant payment service
On 29 November 2024, it was reported that Norway had struck a deal to add the krone to the Eurosystem’s Target Instant Payment Settlement (TIPS) service. The move will enable participants in Norway to settle payments instantly and at all times in central bank money. The inclusion is planned for the first half of 2028. This follows the inclusion of the Swedish krona and Danish krone which will both arrive next year.
Spain: Spanish banks are first in Europe to onboard EU instant cross-border payment scheme
On 18 November 2024, it was reported that the Spanish banking community had become the first EU market to fully enable the EU instant cross-border payment scheme under the European Payment Council’s One-Leg-Out Instant Credit Transfer (OCT Inst) scheme.
OCT Inst is a cross-currency payment scheme supporting the processing of incoming and outgoing international instant account-to-account-based credit transfers. The scheme is designed to ensure faster execution of international payments, more transparency on costs and better traceability of payment systems.
In November 2023, the scheme went live, however the postponement of ISO20022 migration led to payment service providers (PSPs) and clearing and settlement mechanisms (CSMs) replanning the start of operations.
Australia: Banks pilot fraud data sharing network
On 20 November 2024, it was announced that Australian banks ANZ, Commonwealth Bank Australia, National Australia Bank, Suncorp Bank and Westpac are all taking part in a pilot of a fraud and scams intelligence-sharing network using behavioural and device-based technology from security vendor BioCatch.
If the network identifies risks associated with a receiving account, BioCatch provides intelligence to the bank in real time to allow it to review the transaction before the money leaves the bank. The network combines behavioural intelligence with digital session, payment, account, device, and non-monetary event intelligence to assess the potential risks of receiving accounts. BioCatch allows the banks to share the intelligence in real time.
BioCatch states that this will help banks prevent scams where a fraudster manipulates a victim via email, text, or social media communications.
United Kingdom: CFIT creating digital ID for businesses
On 2 December 2024, the Centre for Finance, Innovation and Technology (CFIT) announced details of progress by its industry-wide coalition towards creating a secure digital ID that seeks to counter economic fraud. The coalition of financial institutions and technology companies has worked to design the digital ID which should make securing finance and conducting business quicker and less vulnerable to fraud. Research undertaken by the coalition since its launch has proved that widespread adoption of a digital company ID would help prevent fraud, boost efficiency for financial institutions, reduce compliance costs and enable the creation of a secure smart-data economy.
Over seventy organisations are participating in the work, including proof of concept partners Lloyds Bank, NatWest Group and Monzo, alongside the likes of Mastercard, Companies House, Barclays, Santander, HSBC, Virgin Money, Moody’s, A&O Shearman, Dun & Bradstreet, CRIF, Ernst & Young, Experian, GLEIF, LexisNexis Risk Solutions, OneID, Revolut, Visa and Yoti; as well as regulators such as the FCA and Payment Systems Regulator (PSR).
The work is supported by the Chancellor, who in the National Payments Vision welcomed the work of CFIT and its coalition to “explore the potential of digital verification solutions to combat economic crime”.
Bahrain: Crypto.com partners with Mastercard to issue prepaid card program in Bahrain
On 4 December 2024, it was reported that Crypto.com had obtained a licence to issue cards on Mastercard’s networks. The partnership comes as paying with cryptocurrency gains in popularity. The new program will start with Crypto.com launching a Mastercard-powered card in Bahrain, allowing its customers to use their card at over 150 million in-store and online locations worldwide. Users will be able to fund their card using e-money wallets or third party-issued credit and debit cards.
The card programme will later expand across the Gulf Cooperation Council countries including Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
Singapore: Dtcpay to have stablecoin-only payment model by 2025
On 3 December 2024, Dtcpay, a Singapore-licensed cryptocurrency platform, announced that it would transition to only support stablecoins for all Digital Payment Token (DPT) payment services. This means it will no longer support cryptocurrencies on the platform by late 2024. By January 2025, it will exclusively handle stablecoin transactions. The company notes that stablecoins account for a significant proportion of its transaction volume already. It will support Tether’s USDT and Circle’s USDC as well as First Digital USD (FDUSD) and Worldwide USD (WUSD). The decision aligns with its strategy to provide a more secure and scalable payment system.
Global: Bitcoin reaches $100,000 for the first time
On 5 December 2024, it was reported that Bitcoin’s price had exceeded $100,000 for the first time, a milestone for digital currency. This came one day after U.S. President-elect Donald Trump said he would nominate a crypto advocate to lead the U.S. Securities and Exchange Commission (SEC).
United Kingdom: GoCardless announces partnership with Endava on bank payment solutions
On 12 December 2024, it was reported that GoCardless, a global provider of bank payment solutions, had announced a partnership with Endava, a provider of technology services, with the aim of helping enterprise merchants adopt bank payment systems more efficiently.
The partnership will involve Endava integrating and managing GoCardless payment solutions for enterprise clients that are carrying out large-scale digital transformation projects.
In addition, the partnership will allow joint clients to gain access to GoCardless' Direct Debit system, which facilitates recurring payments by automatically withdrawing funds from payers’ accounts on due dates. GoCardless' Open Banking-based Instant Bank Pay feature will also be available for one-off payments.
Chapter 4 - Surveys and Reports
Global: Juniper Research whitepaper on fintech payment trends for 2025
In November 2024, Juniper Research published its latest whitepaper ‘Top 10 Fintech & Payments Trends 2025’. Juniper Research’s in-house analysts conducted research and analysis on emerging technologies, industry developments and market disruption in the fintech and payments space to narrow down the final trends selected in the whitepaper.
The 2025 projected trends include:
- A race for innovation within the digital wallets market. Reasons include the expansion of existing wallet capabilities, the possibility that existing apps can become wallets, and more potential for bank-backed wallets.
- Adoption of virtual cards. They possess a variety of features such as spend limits, instant issuing, transaction limits, transaction data, and merchant restrictions, making them especially suitable for employee spending for corporations.
- Financial institutions will invest heavily in behavioural biometrics which will drive shifts in ID verifications. Behavioural biometrics is a form of passive ID verification to enable businesses to better track the continual behaviour of a user and allow for ongoing authentication. An example of advanced biometric authentication is the logging and analysing of a user’s typing and swiping patterns on their device.
- eCommerce merchants will adopt ‘glocal’ payments which are both global and local in nature, allowing international businesses to accept payments in different geographic markets while adapting to the local payment preferences and regulations of each one. One driver of glocal payments adoption is that consumer preferences are moving away from traditional cash and card payments towards local payment methods, such as Pix in Brazil and UPI in India.
- Regtech innovation to accelerate banking-as-a-service (BaaS) compliance challenges, including anti-money laundering.
- Banks will invest in PSD3 and PSR readiness. These new rules will strengthen Open Banking. However, this will require banks to improve their technical performance, meet compliances, or face tougher sanctions, and cease national variation on offerings, easing the implementation of the new requirements.
- Financial institutions’ efforts for AI will focus heavily on automating and improving fraud prevention and identity verification. Juniper Research expects financial institutions to focus on internal uses of AI for the foreseeable future with the focus eventually shifting to customer-facing activities. However, the highly risk-adverse nature of how banks operate will make this a slow transition.
- Sustainable fintech will become a key differentiator for banks. Climate change and social impacts have become key concerns for consumers. Digital banks will sharpen their focus on allowing consumers to invest in environmental projects and companies to offer a competitive edge over traditional banks.
United Kingdom: British Retail Council survey finds cash usage has increased for second year in a row
On 5 December 2024, the Payments Survey 2024 by the British Retail Council (BRC) was published, reporting on findings from 2023. The BRC surveyed members, with responses received from members accounting for an annual sales turnover of £171 billion, which was 37% of the total UK retail sales in 2023.
Key findings include:
- Cash usage in UK retail has risen for the second year in a row, accounting for 19.9% of transactions in 2023. This may reflect efforts from consumers to better manage budgets in the face of the cost of living crisis. It is also likely to be related to the drop off of cash usage during the pandemic. Pre-pandemic, in 2019, cash payments accounted for 36.9% of payments. The BRC expressed its support for the new FCA rules introduced in September 2024 to support consumers’ continued access to cash.
- Cards remain the preferred method of payment, accounting for 85.7% of spending by turnover in 2023, up slightly from 85.2% in 2022, although this is still down from the 89.3% seen in 2021, during the pandemic. Use of credit cards fell slightly from 14.9% to 14.2% , which may reflect consumers switching card preferences as interest rates increased, or relying less on credit as inflation eased.
- Alternative payments (excluding Buy-Now, Pay-Later and Account-to-Account transfers) fell from 4.9% of transactions in 2022 to 3.8% in 2023.
- Costs to retailers for processing card payments increased by 26.09%. The BRC recommends that the Payment Systems Regulator (PSR) must ‘swiftly’ conclude its market reviews of cross-border interchange fees and scheme and processing fees, and implement effective remedies to ‘curb the ever-increasing, unjustified fee hikes that merchants are forced to accept’.
Africa: The State of Inclusive Instant Payment Systems in Africa 2024 report
On 20 November 2024, the AfricaNenda Foundation published their third annual ‘The State of Inclusive Instant Payment Systems in Africa” (SIIPS) report. The report was commissioned in partnership with the World Bank Group and the United Nations Economic Commission for Africa, and used data from central banks and instant payment system (IPS) operators. The report provides comprehensive analysis of the use of instant payment systems in Africa and financial inclusion in the continent.
The report states that the financial ecosystem in Africa is evolving, with 31 live IPS in 26 countries, and another 25 countries preparing to launch their own systems. In just five years, the volume and value of IPS transactions has grown by 37% and 39% respectively. Digital payment adoption is being driven by increasing access to mobile phones, fintech innovation and increased regulatory support.
However, the report states that services need to be more inclusive than they currently are. Only 16% of individuals in sub-Saharan Africa made a digital merchant payment. Some of the barriers standing in the way of digital payment adoption are unreliable mobile networks that disrupt user experience, transaction costs, and limited acceptance of digital payments. Additionally, women and older individuals are less likely to use IPS. Women report that their lower literacy levels, low incomes, and lack of financial dependence discourage them from using digital payments.
The report also states that more inclusive market conditions could help attract newer business models. It found that regulations regarding licensing and Know Your Customer (KYC) misaligned with the realities of today’s market, and are making it harder for non-traditional payment service providers (PSPs), such as e-money issuers, to participate in today’s environment. The report notes that some regulators looking to increase inclusivity in their payments markets are adopting risk-proportionate licensing that effectively manages the real world risks that fintechs pose.
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