In this edition we round up FinTech-related financial services regulatory developments for the week ending 27 June 2025.
ICYMI
Global
FATF releases 6th targeted update on implementation of standards on virtual assets and best practices on travel rule supervision
The Financial Action Task Force (FATF) has published its sixth targeted update on the global implementation of anti-money laundering and countering the financing of terrorism (AML/CFT) measures to virtual assets and virtual asset service providers (VASPs). The report assesses jurisdictions' compliance with Recommendation 15 and the related Interpretative Note (R.15/INR.15), which was updated in 2019 to apply AML/CFT measures to virtual assets and VASPs. The FATF finds that overall, jurisdictions, including those with materially important VASP activity, have made progress since 2024 towards developing or implementing AML/CFT regulation and taking supervisory and enforcement actions.
However, there is need for further work on licensing and registration, and jurisdictions continue to face difficulties in identifying natural or legal persons that conduct VASP activities. Jurisdictions have also reported challenges with mitigating the risk of offshore VASPs.
To assist global implementation of the Travel Rule, the FATF has also published Best Practices on Travel Rule Supervision alongside the report. [26 Jun 2025] #Crypto #DigitalAsset
FSI Executive Summary paper on considerations for open finance
The Financial Stability Institute (FSI) at the Bank for International Settlements (BIS) has published a two-page Executive Summary note on open finance. BIS, with a number of global partners, including the International Monetary Fund (IMF), has jointly developed Key Considerations for Open Finance. These high-level considerations are provided for financial sector authorities implementing or seeking to implement or improve open finance frameworks.
The key considerations are structured around ten key elements of an effective open finance framework. They include:
- under 'organising for open finance': object setting, process leadership, and governance;
- under 'regulating open finance': the approach to regulating, oversight and supervision, and consumer and data protection; and
- 'under operational elements': consumer information and awareness, participation, technical infrastructure and architecture, and pricing. [26 Jun 2025] #OpenFinance
FSI Executive Summary paper on financial stability implications of AI
The FSI has published a three-page Executive Summary of the Financial Stability Board (FSB) report The Financial Stability Implications of Artificial Intelligence, which was published in November 2024. The FSB undertook a stocktake of industry and regulatory AI use cases to prepare the report which sets out the potential implications of AI use for financial stability. The FSI, in its note, provides an overview of the report findings and policy recommendations. [26 Jun 2025] #AI
WEF: Future of Global Fintech report – from rapid expansion to sustainable growth
The World Economic Forum (WEF), in partnership with the Cambridge Centre for Alternative Finance, has published the second edition of the Future of Global Fintech report, which provides insights on the current fintech landscape through new data on areas such as market performance, regulatory perception, technological innovation and contributions to financial inclusion.
Key findings include:
- the global fintech industry remains robust in its transition to a more sustainable growth phase;
- macroeconomic factors continue to be the primary challenge for fintech growth, though improvements have been noted;
- financial inclusion remains central to the fintech value proposition, with traditionally underserved segments comprising significant portions of customer bases;
- partnerships play a critical role in fintech strategies; and
- fintechs are generally satisfied with the regulatory landscape and supervisory approaches.
This edition also explores the expanding role of AI, examining how firms integrate AI across various business functions, the subsequent impact on performance and the associated risks (including concerns around bias, deepfakes and the cost of adoption). The findings reveal that firms are actively investing in AI to enhance customer experience, improve operational efficiency and drive cost savings
The research findings are based on a global survey of 240 fintech companies across six retail-facing industry verticals and six regions. Findings, interpretations and conclusions expressed in the publication do not necessarily represent the views of the WEF or other stakeholders. [25 Jun 2025] #AI #Fintech #Deepfakes
UK
UK Finance: A Fireside Chat with Sarah Breeden
UK Finance has published a summary of a fireside chat with Sarah Breeden, Deputy Governor for Financial Stability at the BoE, which took place at the UK Finance Digital Innovation Summit. The coversation covered AI, deep tech, programmable money and the application of machine learning. [27 Jun 2025] #AI #MachineLearning
FCA: Multi-firm review – risk management and wind-down planning at e-money and payments firms
The FCA has published the findings from its multi-firm review of risk management and wind-down planning at e-money and payments firms.
Although firms are expected to have these capabilities in place, in line with Principle 4 of the Principles for Businesses and the FCA's priorities for this portfolio, the findings indicate that risk management frameworks and wind-down plans in firms remain underdeveloped. The regulator identified three main areas for improvement to firms' risk management frameworks:
- enterprise-wide risk management frameworks;
- liquidity risk management; and
- consideration of group risk.
Whilst firms had made efforts to structure wind-down plans in line with FCA expectations, the underlying content was often incomplete, high-level and not aligned with the risk management framework, with inadequate triggers and links between financial resources held and resources required for wind-down. None of the firms reviewed fully met the regulator's expectations, and, in particular, were not following the guidance in FG20/1.
The regulator asks firms to compare its findings to their arrangements to check whether they meet existing expectations, and to identify areas where they may need to further invest in risk management and wind-down planning. [26 Jun 2025] #Payments
BoE publishes annual report and accounts
The Bank of England (BoE) has published its 2024/2025 annual report and accounts. The report highlights the BoE's first stress test of system-wide exploratory scenario, and the launch of new tools for non-banks that can be used in times of market dysfunction. It summarises the BoE's transformation programme, citing examples such as the completion of the multi-year programme to renew the Real-time Gross Settlement (RTGS) infrastructure. Additionally, the report confirms the BoE's plans to extend the deployment of AI tools. [26 June 2025] #AI
HMT: Joint statement on the June 2025 UK-US Financial Regulatory Working Group meeting
HM Treasury (HMT) and the US Treasury have issued a joint statement on the 11th official meeting of the UK-US Financial Regulatory Working Group. The meeting focused on several key themes, including: the economic and financial stability outlook; banking systems and regulation; cybersecurity and operational resilience; digital finance and innovation; cross border payments; and AI. The Working Group will reconvene by early 2026. [25 Jun 2025] #AI #Cyber #Payments
FCA, PRA and PSR revise MoU on payments framework
The FCA, the PRA and the Payment Systems Regulator (PSR) have signed a revised memorandum of understanding (MoU) which sets out the high-level framework that the regulators use to cooperate with one another in relation to payments in the UK.
The revised MoU introduces principles for regulatory cooperation to guide the regulators' ways of working across areas like policy, supervision, authorisations and strategy work. To complement the MoU, the regulators have set out further information explaining how their objectives, regulatory remits and key workstreams fit together. A diagram setting out the roles and responsibilities of each regulator across key payments-related workstreams has also been published.
In March 2025, HM Government (HMG) announced its intention to consolidate the functions of the PSR primarily into the FCA. HMG has been clear that there will be no immediate changes to the PSR's remit or ongoing work programme. The revision of the MoU therefore reflects the PSR's current responsibilities. [24 Jun 2025] #Payments
BoE speech on RTGS – enabling innovation in wholesale payments
The Bank of England (BoE) has published a speech delivered by its Executive Director of Payments Victoria Cleland at the UK Finance Digital Innovation Summit 2025. Ms Cleland described the function and importance of the real time gross settlement (RTGS), the benefits it is already delivering and the opportunities it unlocks for the future. She also discussed the ongoing work by the BoE to support further innovation in wholesale payments, and the collaboration needed to deliver this. [24 Jun 2025] #Payments
Europe
ESMA Q&As – Prospectus Regulation, MiCAR, UCITS
The European Securities and Markets Authority (ESMA) has published a number of Q&As, including in relation to the Markets in Crypto-Assets Regulation (MiCAR):
- Custody agreements in the exercise of rights attached to cryptoassets;
- Commingling clients' cryptoassets with cryptoassets from other entities of the group when acting as custodian; and
- Shared order book model. [27 Jun 2025] #Crypto #MiCAR #DigitalAsset
ESMA report: Functioning and review of DLT pilot regime
ESMA has published a report on the distributed ledger technology (DLT) pilot regime. The report contains information about business models, types of DLT financial instruments offered, and technical or legal issues encountered by supervisors to date. It also analyses the types of exemptions requested by DLT market infrastructures and the conditions under which national competent authorities (NCAs) have granted those exemptions (including the compensatory measures imposed to mitigate risks).
ESMA's recommendations to the EC cover:
- how to make the regime more attractive to the market, and
- suggested amendments to the regime to make it permanent and allow for more flexibility in the regulatory thresholds or eligible assets depending on the risks of each business model.
The EC is expected to present its own report to the EP and the Council within three months. Depending on the EC's recommendations, the regime may be extended, amended, or converted into a permanent regulation. [25 Jun 2025] #DLT
Hong Kong
FSTB and SFC launch two-month consultation on proposed regimes to regulate VA dealers and custodians
The Financial Services and the Treasury Bureau (FSTB) and the SFC have launched a joint public consultation on the legislative proposals for establishing licensing regimes for virtual asset (VA) dealing and custodian services. Comments on the proposals are required to be submitted by 29 August 2025. During the consultation period, the FSTB and the SFC will also meet with relevant sectors to gather feedback.
This follows the FSTB's earlier consultation launched in February 2024 on the legislative proposals for establishing a licensing regime for VA over-the-counter service providers. Based on the feedback received, the FSTB and the SFC have revised the legislative proposals and now consult on the framework and key elements of the revised proposals.
The revised legislative proposals cover the licensing regimes for VA dealing service providers and VA custodian service providers. Under the proposals, the SFC will be the standard setter, responsible for formulating regulatory requirements applicable to licensed and registered VA dealing and custodian service providers. The HKMA will be the frontline regulator for banks and stored value facilities registered to provide the relevant services. Both the SFC and the HKMA will be provided with the powers to implement the regimes in accordance with the statutory requirements.
Irrespective of whether the relevant VA dealing services are provided through a physical outlet and/or other platforms, both simple dealing services (such as smaller-scale conversions between different VAs or between VAs and fiat money) and more complex services (such as brokerage activities, block trading activities, and other activities of advisors or asset managers) will fall under the scope of the licensing regime for dealing.
The provision of VA custodian services as a business will be defined as - by way of business, the safekeeping of (i) VAs on behalf of clients; or (ii) instruments enabling transfer of VAs of clients (including but not limited to private keys) on behalf of clients.
Under both licensing regime, licensed or registered providers will need to meet fit-and-proper criteria and comply with a range of regulatory requirements, including (among others) those relating to financial resources, knowledge and experience, risk management, financial reporting and disclosure, conduct of business, information and notifications, and record keeping.
The licensing regimes will be fully implemented on the date the relevant statutory provisions come into effect, with no deeming arrangement. [27 Jun 2025] #DigitalAsset
Protection of Critical Infrastructures (Computer Systems) Ordinance to come into effect on 1 January 2026
The Security Bureau has gazetted a notice appointing 1 January 2026 as the day on which the Critical Infrastructures (Computer Systems) Ordinance will come into operation.
The Ordinance seeks to impose statutory requirements on designated operators of critical infrastructures, to ensure they take appropriate measures to protect their computer systems and minimise the chance of essential services being disrupted or compromised due to cyberattacks (see our previous update). [27 Jun 2025] #Cyber
Government releases second policy statement to scale Hong Kong to new heights of global digital asset leadership
The Hong Kong Government has issued its second policy statement on the development of digital assets, building upon the initial policy statement issued in October 2022 (see our previous update).
The second policy statement 2.0 introduces the 'LEAP' framework:
- Legal and regulatory streamlining: The Government is establishing a comprehensive and unified regulatory framework for digital asset service providers, covering digital asset exchanges, stablecoins issuers, digital asset dealing service providers and custodian service providers. The Financial Services and the Treasury Bureau and the HKMA will be spearheading a comprehensive legal review to facilitate the tokenisation of real-world assets (RWAs) and financial instruments, considering different aspects of tokenised bond issuances and transactions, including but not limited to settlement, registration and record requirements.
- Expanding the suite of tokenised products: The Government will regularise the issuance of tokenised Government bonds and incentivise the tokenisation of RWAs to enhance liquidity and accessibility through (among others) clarifying the stamp duty treatment for tokenised exchange traded funds. The Government will also promote the tokenisation of a broader range of assets and financial instruments, including in sectors such as precious metals (eg, gold), non-ferrous metals, and renewable energy (eg, solar panels).
- Advancing use cases and cross-sectoral collaboration: The implementation of the licensing regime for stablecoin issuers on 1 August 2025 will facilitate the development of real-world use cases. The Government is also fostering collaboration among regulators, law enforcement agencies and technology providers for development of digital asset infrastructures. The Government welcomes proposals from market participants on how it may test the usage of licensed stablecoins. In addition, Cyberport will launch a funding scheme for blockchain and digital assets.
- People and partnership development: The Government is strengthening talent development through partnerships with industry and academia, and is positioning Hong Kong as a centre of excellence for digital asset knowledge-sharing and international co-operation, including joint research initiatives and global regulatory collaboration. [26 Jun 2025] #DigitalAsset #Tokenisation
SFC publishes 2024-25 annual report
The SFC has published its 2024-25 annual report, providing an overview of its work in the financial year ending 31 March 2025 and outlining its strategic priorities for the future.
The SFC's priorities for 2024-26 include:
- Leading market transformations via technology and ESG – This includes developing virtual asset market and regulatory regimes, collaborating with industry in building tokenisation ecosystem, leading regional and global efforts in sustainable finance, growing local sustainable finance ecosystem, and stemming greenwashing.
- Enhancing the SFC's own resilience and efficiency – This includes prudent financial control and effective resource deployment, improving operational efficiency, deploying artificial intelligence and other technologies, and guarding against cyber threats.
The report also highlights the SFC's key initiatives taken to implement the above priorities. [25 Jun 2025] #Cyber #DigitalAsset #AI
HKMA Chief Executive issues inSight article on stablecoins
The Chief Executive of the HKMA, Mr Eddie Yue, has published an inSight article regarding the upcoming implementation of the stablecoin licensing regime in Hong Kong, as well as stablecoins more generally. The licensing regime is expected to come into effect on 1 August 2025 and the HKMA is conducting industry consultations on detailed implementation guidelines for early adoption (see our previous update). Globally, jurisdictions like the EU and the US are advancing their own stablecoin regulations.
Mr Yue clarified the nature of stablecoins. A stablecoin is not an investment or speculative instrument, and by nature, has no room for appreciation. It is a type of blockchain-based payment means, which includes central bank digital currency networks established among central banks, tokenised deposits being explored by international banks, and the interlinkages of fast payment systems across different jurisdictions. Each of them has its own merits with a varying degree of maturity, and the growth potential will be determined largely by market forces.
As the interface connecting traditional finance and digital assets, stablecoins present inherent and spillover risks, the effective management of which is becoming a focal point for global regulators. The HKMA has been actively participating in the work of international organisations, including the Financial Stability Board (FSB), which published the 'Global Regulatory Framework for Crypto-Asset Activities' (2023), on which Hong Kong's regulatory regime is largely based. The HKMA is currently coordinating the FSB's review of the implementation of the framework globally.
Mr Yue noted that Hong Kong is among the first jurisdictions to put in place a regulatory framework for stablecoin issuers. The framework adopts the principle of 'same activity, same risks, same regulation'. In light of the novelty and potential risks of stablecoin, the need for user protection, market capacity and long-term development, the HKMA expects to set a high bar for licensing and will only grant 'a handful of licences' initially.
The upcoming licensing regime requires stablecoin issuers to demonstrate adequate capabilities across areas such as the management and security of reserve assets, effective price stabilisation mechanisms, comprehensive and feasible redemption policies, as well as capabilities in technological security, risk management, and anti-money laundering. There are also additional requirements where cross-border activities are involved. [23 Jun 2025] #Stablecoin #Crypto #CBDC #DigitalAsset
Singapore
MAS: Response to letter on stronger safeguards for bank transfers
The Monetary Authority of Singapore (MAS) has published its response to a forum letter calling for the implementation of additional safeguards, such as mandatory name verification, for large bank transfers. MAS stated that it will consider the suggestion as part of efforts to better protect customers against fraudulent or erroneous transfers. [26 Jun 2025] #Payments
MAS/ABS announce new entity to govern national payment schemes
MAS and the Association of Banks in Singapore (ABS) have jointly announced the incorporation of the Singapore Payments Network (SPaN), which will administer and govern Singapore's national payment schemes.
SPaN has been set up as a not-for-profit company limited by guarantee to drive national payments objectives. The initial members of the company are MAS and the domestic systemically important banks (D-SIBs). SPaN aims to provide strong governance over national and cross border payment schemes, promote continuous payments innovation and encourage active collaboration among key industry players. [25 Jun 2025] #Payments
MAS speech: How banks can drive opportunity, innovation and inclusion
MAS has published a speech delivered by its Chair Gan Kim Yong at the Association of Banks in Singapore (ABS) Annual Dinner on how banks can respond to three defining shifts amid accelerating geo-economic disruptions: the transition to a low-carbon future, rapid technological advancements (including AI), and the growing financing needs of an ageing population. [25 Jun 2025] #AI
India
SEBI consults on guidelines for responsible use of AI/ML in securities market
SEBI has published a consultation on a set of proposed guiding principles for the responsible usage of AI and machine learning (ML) applications and models in securities markets. The principles are intended to optimise benefits and minimise potential risks associated with the integration of AI/ML based applications in securities markets to safeguard investor protection, market integrity and financial stability. Responses to the consultation are requested by 11 July 2025. [20 Jun 2025] #AI #MachineLearning
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