The Financial Technology Law Review: Editor's Preface

This fifth edition of The Financial Technology Law Review is published after a roller coaster year for crypto in particular, but also for many other fintech projects.

Bitcoin, and with it many other cryptocurrencies, soared to all-time highs in 2021, but dropped to half their value later in the year. This may cause problems for a country like El Salvador, whose president, Nayib Bukele, declared Bitcoin as an official currency of the country (together with the US dollar). On the other hand, China and Russia moved against independent cryptocurrencies such as Bitcoin; and Facebook (or now Meta) sold off its Libra (later known as Diem) project to a finance company; while Paypal intends to set up its own stablecoin. At the same time, more than 50 central banks worldwide researched or even implemented blockchain-based central bank digital currencies (CBDC), from Iran to the United States, the EU and China. The Bahamas may have been the first to launch, in 2020, a CBDC, but it will not remain the only country to do so.

In addition to CBDCs and the metaverse, media attention focused on non-fungible tokens and decentralised finance (DeFi). While many DeFi projects build on the initial Bitcoin dream of creating a decentralised, trustless financial ecosystem, it remains to be seen whether DeFi will be able to impact traditional financial market participants significantly.

Global fintech funding reached new records in 2021, more than doubling the figure of 2020 and accounting for more than 20 per cent of overall venture funding. Growth rates are impressive in Latin America and Africa, although the United States remains the leader, followed by Asia and Europe. Crypto exchanges started to list at traditional exchanges, and in many countries there are now well-established investment products focused on cryptocurrencies, DeFi projects or fintech start-ups. Hence, fintech may claim to have become an established part of the financial ecosystem from an investment perspective also.

In addition to many start-ups presenting new ideas and products, however, nearly all major participants in financial markets now support one or several major fintech initiatives. Progress with implementing fintech projects was made, in particular, in areas such as insurtech and commodity trade finance, but many projects also focus on regtech (sometimes linking up with legaltech), aiming ultimately to automate parts of the regulatory and supervision process. Some states have projects to support this by making their regulation more machine-reading friendly.

Hence, the outlook for 2022 promises further developments in areas in which enterprises see immediate business opportunities or cost-saving possibilities. At the same time, grand projects such as the metaverse, artificial intelligence-based financial services or DeFi may provide some surprises.

While the response of governments and regulators to this new dynamism was slow at the start, many new regulatory initiatives are now close to implementation. It is worth watching out for new opportunities that these regulations will create. In spite of initiatives to harmonise the approach (in particular, in anti-money laundering), national solutions will continue to vary considerably between jurisdictions. Hence, a structured collection of overviews of certain aspects of fintech law and regulation such as The Financial Technology Law Review continues to be valuable not only for the international practitioner, but also for anyone who looks for inspiration on how to deal with hitherto unaddressed and unthought-of issues under the national law of any country.

The authors of this publication are from the most widely respected law firms in their jurisdictions. They each have a proven record of experience in the field of fintech; they know both the law and how it is applied. We hope that you will find their experience invaluable and enlightening when dealing with any of the varied issues fintech raises in the legal and regulatory field.

The emphasis of this collection is on the law and practice of each of the jurisdictions, but discussion of emerging or unsettled issues has been provided where appropriate. The views expressed are those of the authors and not of their firms, the editor or the publisher. In a fast-changing environment, every effort has been made to provide the latest intelligence on the current status of the law.

Thomas A Frick
Niederer Kraft Frey
April 2022

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