1. PAYMENTS
1.1. EBA updates Single Rulebook Q&A on PSD2
During the period 1 January 2021 to 31 March 2021, the European Banking Authority (EBA) updated its Single Rulebook Questions and Answers publication (Single Rulebook Q&A) on the Revised Payment Services Directive ((2015/2366/EU) (PSD2).
The Q&As in respect of the following articles have been updated:
- Article 2 - Scope;
- Article 4 - Definitions;
- Article 9 - Calculation of own funds;
- Article 18 - Activities;
- Article 66 - Rules on access to payment account in case of payment initiation services;
- Article 87 - Value date and availability of funds;
- Article 97 - Authentication; and
- Article 98 - Regulatory technical standards on authentication and communication.
The Single Rulebook Q&A can be accessed here.
1.2. EBA publishes opinion on removal of obstacles to account access under PSD2
On 22 February 2021, the EBA published an opinion on supervisory actions national competent authorities (NCAs) should take to ensure banks remove any remaining obstacles that prevent third party providers from accessing payment accounts, which restrict EU consumers' choice of payment services (Opinion).
The Opinion will contribute to a level playing field across the EU and to a consistent application and supervision of relevant requirements under PSD2 and the EBA Regulatory Technical Standards on strong customer authentication and common and secure communication (RTS).
NCAs should first assess the progress made by ASPSPs in their respective jurisdictions. Where obstacles persist, the EBA expects that NCAs should take more effective supervisory measures to ensure compliance with the applicable law, including, but not limited to, revoking exemptions from the contingency mechanism already granted to ASPSPs and/or by imposing fines.
By way of background, PSD2 requires ASPSPs to establish the access interfaces through which third party providers can access the customers' payment accounts in a secure manner. The RTS require ASPSPs that have implemented a dedicated interface to ensure that the latter does not create obstacles to the provision of payment initiation and account information services.
The Opinion can be accessed here.
The RTS can be accessed here.
1.3. European Commission consults on proposed EU-wide instant payments scheme
In March 2021, the European Commission launched a number of consultations on a proposed EU-wide instant payments scheme (Proposal). The Proposal follows adoption by the European Commission, in September 2020, of a retail payments strategy for the EU within which the EU-wide instant payments solution was included as an objective. The aim of the Proposal is to foster pan-European market initiatives based on instant payments, which would ensure that anyone holding a payment account in the EU is able to receive and send an instant credit transfer to and from any other payment account in the EU.
On 10 March 2021, the European Commission published for consultation its impact assessment on the Proposal (Impact Assessment). The European Commission is considering a number of policy initiatives, both legislative and non-legislative, to achieve the objectives outlined in the Proposal. The Impact Assessment assesses each of these options against criteria such as likely economic impacts and likely social impacts. The European Commission invited stakeholders to submit their feedback on the Impact Assessment, and the consultation period closed on 7 April 2021.
The Impact Assessment can be accessed here.
On 24 March 2021, the European Commission launched a targeted consultation on the Proposal. The consultation, in the form of a questionnaire, contains questions of a technical nature and aims to collect information from Payment Services Providers (PSPs) and providers of supporting technical services. The questionnaire can be accessed here. The targeted consultation period closes on 2 June 2021.
On 31 March 2021, the European Commission launched a public consultation on the Proposal, again in the form of a questionnaire, which can be accessed here.The public consultation period closes on 23 June 2021.
The European Commission will use the consultation responses to determine whether to pursue the Proposal, and the form of the policy initiatives used to achieve its objectives. The Impact Assessment indicates that the European Commission will consider adopting a Regulation on instant payments in Q1 2022.
2. DIGITAL FINANCE & CRYPTO-ASSETS
2.1. Update on the proposal for a Regulation on a pilot regime for market infrastructures based on DLT
On 2 March 2021, the European Economic and Social Committee (EESC) published its opinion on the Proposal for a Regulation on a pilot regime for market infrastructures based on distributed ledger technology (Proposed Regulation) (Opinion).
The purpose of the pilot regime is to allow regulators to gain experience of the use of distributed ledger technology (DLT) in market infrastructures and to allow companies to test out solutions using DLT, for example by providing derogations from existing legislation. The Proposed Regulation forms part of the European Commission's digital finance package, adopted in September 2020.
In its Opinion, the EESC welcomed the Proposed Regulation. However, it indicated that the 5-year deadline within which the European Securities and Markets Authority (ESMA) is to provide a detailed report to the European Commission on the pilot scheme is too long and advised that the option of ending the pilot scheme following the ESMA report should be considered, phasing it out in a way that allows operators to gradually leave the pilot scheme and recoup as many of the costs incurred during the trial as possible.
The Opinion can be accessed here.
On 11 March 2021, the European Parliament Committee on Economic and Monetary Affairs (ECON) published its draft report on the Proposed Regulation (Report) setting out its recommendations to the European Commission.
The Report supports the overall objectives of the Proposed Regulation, including its aim to provide legal certainty by establishing uniform requirements for operating DLT market infrastructures and to support innovation by removing obstacles to the application of DLT in the financial sector. However, the Report argues that in order to achieve these objectives, the Proposed Regulation should be amended in respect of its scope, to provide for a level playing field between entities competing inside the pilot regime, and to provide for an "early exit assessment" on a potential adjustment or discontinuation to the regime.
The Report can be accessed here.
2.2. Update on the proposal for a Regulation on Markets in Crypto-assets
On 2 March 2021, the EESC published its opinion on the proposal for a Regulation on markets in crypto-assets (MiCA) (EESC Opinion).
MiCA will replace existing national frameworks applicable to crypto-assets not covered by existing EU financial services legislation and will establish rules for 'stablecoins', including when these are e-money. It will establish uniform rules for crypto-asset service providers and issuers at EU level. MiCA forms part of the European Commission's digital finance package, adopted in September 2020.
The EESC welcomed MiCA, noting that the action taken is urgently needed to regulate a technology which is constantly and rapidly changing. However, the Opinion outlined concerns regarding its transitional measures, which provide for permanent exemption from the new regulatory requirements for crypto-assets that were already on the market before the regulation came into force.
The EESC Opinion can be accessed here.
On 19 February 2021, the European Central Bank (ECB) published its opinion on MiCA (ECB Opinion). The ECB welcomed MiCA, however noted that further adjustments were warranted relating to areas falling within the ECB's fields of competence.
The ECB Opinion can be accessed here.
On 9 March 2021, ECON published its draft report on MiCA (Report) setting out its recommendations to the European Commission. The ECON Report sets out its suggested amendments to the text of MiCA.
The Report can be accessed here.
2.3. Update on the proposal for a Regulation on digital operational resilience for the financial sector
On 9 February 2021, the European Supervisory Authorities (that is the EBA, EIOPA and ESMA) (the ESAs) published a joint letter on the proposal for a Regulation on digital operational resilience for the financial sector (Proposed Regulation) (Letter).
The Proposed Regulation aims to introduce a harmonised and comprehensive framework on digital operational resilience for European financial institutions. The Proposed Regulation forms part of the European Commission's digital finance package, adopted in September 2020.
The Letter was addressed to the EU co-legislators (that is, the European Commission, the European Parliament and the Council of the EU). In the Letter, the ESAs set out a number of amendments to the Proposed Regulation concerning its oversight framework to cover the ICT services that Critical Third-Party Providers (CTPPs) provide to the financial sector, addressing governance, resourcing, the need for coherence between oversight recommendations and follow-up work, and proportionality.
The Letter can be accessed here.
On 2 March 2021, the EESC published its opinion on the Proposed Regulation (Opinion). The EESC welcomed the Proposed Regulation and offered a number of recommendations to enhance its effectiveness, including broadening the scope of its application and the alignment of its defined terms with existing guidelines issued by the ESAs.
The Opinion can be accessed here.
On 19 March 2021, ECON published its draft report on the Proposed Regulation, setting out its recommendations to the European Commission (Report). The ECON Report sets out its suggested amendments to the text of the Proposed Regulation, and highlights areas for improvement relating to proportionality, preserving competitiveness and futureproofing.
The Report can be accessed here.
2.4. Update on the proposal for a Directive amending existing EU financial services legislation in respect of crypto-assets and digital operational resilience
On 2 March 2021, the EESC published its opinion on the proposal for a Directive clarifying and amending existing EU financial services legislation in respect of crypto-assets and digital operational resilience (Proposed Directive) (Opinion). The Proposed Directive forms part of the European Commission's digital finance package, adopted in September 2020.
The EESC welcomed the Proposed Directive, and the Opinion can be accessed here.
On 22 March 2021, ECON published its draft report on the Proposed Directive (Report). The Report sets out its suggested amendments to the text of the Proposed Directive, and highlights areas for improvement in order to increase legal clarity and consistency.
The Report can be accessed here.
2.5. ESAs issue reminder to consumers on risks surrounding crypto-assets
On 17 March 2021, the ESAs published a reminder addressed to consumers regarding the risks of crypto-assets (Statement).
The Statement reminds consumers that some crypto-assets are highly risky and speculative, and that consumers must be alert to the high risks of buying/holding these instruments, including the possibility of losing all their money.
The Statement also emphasises that the majority of crypto-assets remain unregulated in the EU. This means that consumers buying and/or holding these instruments do not benefit from the guarantees and safeguards associated with regulated financial services. The Statement notes that in September 2020, the European Commission presented a legislative proposal for a regulation on MiCA and reminds consumers that the proposal remains subject to approval and that consumers do not currently benefit from any of the safeguards foreseen in the proposal.
The Statement can be accessed here.
2.6. EPC publishes updated guidelines on cryptographic algorithms usage and key management
On 16 March 2021, the European Payments Council (EPC) published a new version of its guidelines on cryptographic algorithms usage and key management (Guidelines). This version of the Guidelines, version 10.0, replaces version 9.0, published in March 2020.
The first section of the Guidelines specifies a number of recommendations and best practices on cryptographic algorithms, security protocols, confidentiality and integrity protection and key management. Further detailed background information may be found in the subsequent sections of the document.
In this version, updates have been made regarding the usage of some algorithms and security protocols, and the sections on quantum computing, distributed ledger technology have been reviewed and updated as needed, including new background information.
The purpose of the Guidelines is to provide guidance to the European payments industry in the field of cryptography algorithms and related key management issues.
The Guidelines can be accessed here.
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