Global Trustee and Fiduciary Services Bite-Sized Issue 8 2024

6 QUICK LINKS AIFMD CBDC CRYPTOASSETS CSDR FINTECH FSB FUND LIQUIDITY MAR MIFID II/MIFIR OPERATIONAL RESILIENCE REMUNERATION SUSTAINABLE FINANCE/ ESG UCITS ASIA PACIFIC EUROPE IRELAND NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 8 | 2024 LawCommission Publishes Scoping Paper on Decentralised Autonomous Organisations On 11 July 2024, the Law Commission of England and Wales published a scoping paper looking into how Decentralised Autonomous Organisations (DAOs) can be characterised and how the law of England and Wales might accommodate them now and in the future. The paper seeks to identify current issues around DAOs to inform any future law reform or innovations. According to the Law Commission the term “DAO” describes, in very broad terms, a new type of online organisation using rules set out in computer code. A DAO will generally bring together a community of participants with a shared goal – whether profit-making, social or charitable – often with some control over governance matters distributed among participants through the use of distributed ledger technology (DLT) and smart contracts. The Law Commission says the term DAO does not necessarily indicate a particular type of organisational structure and, therefore, cannot imply any specific legal treatment. The scoping paper explains what DAOs are and describes the current treatment of DAOs under the law of England and Wales. It identifies how the current lawmight respond to, or facilitate, DAOs. The Law Commission’s work focuses on the aspects of DAOs that are significant for policy and legal purposes rather than providing detailed descriptions of their technical features. The paper also identifies areas where further workmight be useful to accommodate DAOs, if this were thought desirable, and to ensure that their activities arewithin the reach of the regulatory regime. Link to a Summary of the Paper here Link to the Paper here FSB Cross-border Regulatory and Supervisory Issues of Global Stablecoin Arrangements in EMDEs On 23 July 2024, the Financia Stability Board (FSB) published a report on cross-border regulatory and supervisory issues of global stablecoin arrangements in emerging market and developing economies (EMDEs). The FSB says EMDEs may be exposed to macro-financial risks arising from the use of foreign currency pegged global stablecoins (GSC), which can increase financial stability risks by destabilising financial flows and straining fiscal resources. This report explores potential factors driving the higher level of activities related to foreign currency-pegged stablecoins in EMDEs, their associated financial stability risks and regulatory challenges, and provides considerations to address them. Link to the Report here FSB Chair Calls for Further Progress Implementing Non-bank Financial Intermediation Reforms On 22 July 2024, the FSB published a letter from its Chair, Klaas Knot, to G20 Finance Ministers and Central Bank Governors, ahead of the G20 meeting held on 25-26 July. In his letter, Mr Knot highlights historically high debt levels of both government and private sector borrowers and vulnerabilities in real estate markets and non-bank financial intermediation (NBFI) as areas that deserve continuing attention. These vulnerabilities raise the potential for sharp price corrections in the event of a shock, which could be more likely amid heightened geopolitical uncertainty and rich asset valuations in some markets. He calls for full implementation of the agreed G20 financial regulatory reforms to address these vulnerabilities. The letter covers the two reports the FSB is delivering to the G20: a stocktake on regulatory and supervisory initiatives related to the identification and assessment of nature-related financial risks, which was published on 18 July 2024; and the FSB’s annual progress report on its work to enhance resilience in NBFI, delivered together with the letter. The letter notes that many of the underlying vulnerabilities that contributed to stress in the NBFI sector during recent market incidents are still largely in place. The NBFI progress report highlights a number of challenges hampering progress, including data challenges that impede a full assessment of NBFI vulnerabilities and the formulation of effective policy responses.