Archive: January 2024

What relevance does a tort doctrine from the late Middle Ages hold for modern electronic forms of property like digital assets? Quite a bit, it turns out. Recent court rulings show the venerable common-law tort of conversion providing an effective vehicle for relief in a number of cryptocurrency and NFT disputes.

A flurry of significant European Court of Justice judgments relating to data protection were published in the final few months of 2023.

Political agreement was achieved at the beginning of December in relation to the EU’s AI Act (AIA) – the first major step in the regulation of artificial intelligence.

2024 was not a happy new year for Genesis Global Trading, Inc. (“GGT”). On January 3, 2024, the New York Department of Financial Services announced a consent order with GGT, where GGT agreed to pay NYDFS $8 million and to surrender its BitLicense (for cryptocurrency trading), due to alleged violations of NYDFS’ cybersecurity and its virtual currency regulations. This post will focus on the cybersecurity regulation issues. (For more information about the crypto and financial services/regulation aspects, please see https://www.nortonrosefulbright.com/en/knowledge/publications/4c9650ae/2023-crypto-round-up

In late 2023, HM Treasury set out its final proposals for the UK’s future financial services regulatory regime for cryptoassets, confirming its intention to bring a number of crypto activities into the regulatory perimeter for the first time. A week after HM Treasury’s final proposals were published, the FCA and the Bank of England both published discussion papers on their proposals to implement Phase 1 of the regime.

HM Treasury has set out its final proposals for the UK’s future financial services regulatory regime for cryptoassets, confirming its intention to bring a number of crypto activities into the regulatory perimeter for the first time. The proposals, published on 30 October 2023, are outlined in HM Treasury’s response to its February 2023 consultation and call for evidence on the topic, its response to the May 2022 consultation on managing the failure of systemic digital settlement asset (including stablecoin) firms, and a policy paper which provides an update on plans for the regulation of fiat-backed stablecoins (together the HMT Final Proposals). The legislation to facilitate the bringing of stablecoins and cryptoassets into financial services regulation, the Financial Services and Markets Act 2023 (FSMA 2023), received Royal Assent on 29 June 2023.

On 3 January 2024, the European Central Bank (ECB) announced that it will be conducting a cyber resilience stress test on 109 directly supervised banks in 2024.

Recovery of fraudulently obtained cryptoassets has been a key driver of crypto litigation in the English courts, and this is set to continue in 2024. English Courts have been ready to deploy remedies such as freezing orders and interim proprietary injunctions and the recent detailed analysis by HHJ Pelling, writing extra-judicially, illustrates that English courts recognise the importance – and the complexities – of this litigation. However, exactly how these remedies should be deployed against exchanges is still a developing area, as shown by the recent decision in Piroozzadeh v Persons Unknown [2023] EWHC 1024. Binance successfully argued that an injunction against it should be discharged and the judgment threw doubt on the basis for any proprietary or restitutionary liability against exchanges. The scope of remedies available to victims of cryptoasset fraud may become clearer if any statutory action is taken following the Law Commission’s final Report on Digital Assets (published on 28 June 2023). The Law Commission proposes explicit statutory recognition of digital assets as a ‘third form’ of property and the creation of an advisory technical group, which will facilitate the creation of a principled set of remedies involving digital assets.

December tends to be a busy time for everyone, so you may have missed a privacy update or two. We have set out some updates in the form of questions, with links in the answers where you can find more information. (For those making this quiz a competitive event, we have included a tie-breaker/bonus question.)

On 18 December 2023, the Payment Systems Regulator (PSR) published a consultation paper, CP23/12, on expanding variable recurring payments (VRPs). In CP23/12, which has been published alongside a progress update from the Joint Regulatory Oversight Committee (JROC), the PSR is consulting on changes to Faster Payments to enable a phased expansion of VRPs.