UK and EU Payments, Crypto Regulation Divergence

[ad_1]

In 2023, the UK will accelerate its divergence from European payment and crypto regulations.

Meanwhile, the EU pushes forward with its own political agenda and, in 2023, will continue to forge its way without the UK.

On financial regulation, the UK Financial Services and Markets Bill (FSMB) forms the centerpiece of the government’s post-Brexit financial sector reform.

During a September debate on the bill, Rishi Sunak, who was a backbencher at the time but has since become prime minister, explained how the new approach embodies a sweeping sweep and a complete revocation of virtually all retained EU legislation relating to financial services. .

Specifically, Sunak highlighted provisions in the bill aimed at making the UK financial services sector more internationally competitive. He said it would remove certain caps and limits on financial market transactions so that market activity is not unreasonably restricted.

Different directions for crypto

Of course, market activity these days includes trading in crypto assets, an area where the UK and EU are set to adopt and change their own new regulations in 2023.

In the final stages of its passage through the House of Commons in the fall, a series of amendments have been made to the FSMB to ensure that it will bring crypto assets under the regulatory scope of the Financial Conduct Authority (FCA ).

Accordingly, the FSMB asks for comparison with the EU Regulation on Crypto Asset Markets (MiCA), also slated for adoption in 2023 following the postponement of a vote originally scheduled for December.

In a summary of the various rules and regulations, UK Treasury Economics Secretary Richard Fuller said the UK’s approach to a lot of things to do with financial services is to have a agile system that relies heavily on regulators to write their rules. as things come within the regulatory scope.

Distinguishing this from the EU’s more legalistic approach, when discussing crypto regulation, Fuller said that in the UK we trust regulators to work quickly and efficiently to write the rules that are suitable at that time.

This point can be seen in the different ways the FSMB and MiCA have defined crypto assets.

While the former reserves only one passage to a rather broad definition while retaining the power to change that definition to the Treasury, the latter is a dedicated legal instrument intended to regulate space, replete with a detailed taxonomy of the various types of crypto assets it covers. .

What awaits us for European payments regulation

Besides crypto markets, another key policy area that will shape post-Brexit regulatory divergence in the months and years to come is that of payments.

Already, the FCA has exercised its power to change the regulation that payment service providers must follow so that it no longer reflects the EU approach.

For example, earlier this year, the regulator changed its definition of strong customer authentication (SCA) to embrace a broader concept of inherence.

Referring to the EU regulation by which UK companies were previously bound, the FCA writes that we consider that the EBA guidance… may be unnecessarily restrictive and does not accurately reflect the meaning of the inherent.

As a result, the FCA has updated its guidance to enable data-driven behavioral analytics, differentiating its approach from the EU, where only behavioral analytics rooted in physical attributes are considered adequate identifying characteristics for customer authentication.

Far from resting on their laurels, EU policymakers are also expected to make changes to payment rules in 2023.

For example, in its official work program for the year, the European Commission points to an early revision of late payment rules aimed at forcing companies to pay their invoices within 30 days.

The Third Payment Services Directive is perhaps the biggest change to the EU regulatory framework for payments currently under development.

While the initial process started in 2022, more details on the new directive are expected in 2023. Currently, it looks like PSD3 will force some sort of application programming interface (API) standardization for open banking , one of the main recommendations of the European Banking Authority.

The UK is also moving forward to adapt its open banking framework.

Earlier this month, regulators outlined their vision for the next stage of open banking in the country, with more details expected in the first quarter of next year.

At the center of the future regime will be a new authority designed to oversee the sector, which will replace the current Open Banking Implementation Entity and be tasked with supporting innovation and competition in the space.

For all PYMNTS EMEA coverage, subscribe to the daily EMEA newsletter.

PYMNTS Data: Why Consumers Are Trying Digital Wallets

A PYMNTS study, New Payments Options: Why Consumers Are Trying Digital Wallets, reveals that 52% of US consumers tried a new payment method in 2022, and many chose to try digital wallets for the first time.

See More In: authentication, crypto regulation, cryptocurrency, EMEA, European Union, Featured News, Financial Conduct Authority, Financial Services and Markets Bill, Crypto-Asset Markets, News, Open Banking, regulation, UK

[ad_2]