Partnering With Tech and Fintech Firms: Key EU/UK Regulatory Considerations for the Payments Sector

There has been a rapid increase in collaboration between fintechs and other technology firms and more traditional payment service providers (PSPs) such as banks, merchant acquirers, and money transmitters. While fintechs and technology firms are often seen as direct competitors of traditional PSPs, in a market driven by innovation, both sides of the market increasingly consider collaboration a mutually beneficial way to play to each participating firm’s strengths. For more traditional PSPs, the technologies that a fintech or technology firm develops can help enhance and streamline, and in some cases modernize, the services provided to customers. For a fintech or technology firm, partnering with a PSP can provide an efficient and effective way to expand into the payment services market, particularly for customers who are more inclined to use traditional PSPs.

Regulators are monitoring these developments with growing interest and with an eye to potential risks to customers and markets as well as their ability to supervise regulated firms and their operations. This post highlights a number of EU/UK regulatory issues that fintechs, technology companies, and PSPs should consider when collaborating with one another.

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Schrems II – Live Reaction to the Key Landmark Decision on the Future of International Data Transfers

Join Us for Post-Decision Coverage of the Schrems II Case

On July 16, the Court of Justice of the European Union will release its much anticipated decision in the Schrems II case, evaluating the validity of key data transfer mechanisms, including Standard Contractual Clauses. The decision could impact the future of international data flows and your business.

We will host an immediate reaction and analysis with leading industry panelists on this landmark decision to understand its impact and what the future may hold.

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French Council of State Partially Annuls CNIL Cookie Guidelines on Use of Cookie Walls

On June 19, 2020, the French Conseil d’État (“Council of State”) issued a decision partially annulling the Guidelines of the French Data Protection Authority (the “CNIL”) on cookies and other tracking tools (“Guidelines”). The Council of State ruled that the CNIL’s Guidelines could not prohibit the use of ‘cookie walls’, a practice which consists of blocking user access to a website where the user refuses to consent to cookies and other tracking tools. Nevertheless, the Council of State confirms the Guidelines on other key points, such as the requirement to facilitate the right to withdraw consent to cookies, the retention period for cookies and the information requirement for cookies not subject to a consent requirement.

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Two Rulings in Two Weeks on the TCPA’s Autodialer Restrictions

The last two weeks have brought two important (although unrelated) rulings on the TCPA’s Autodialer Restrictions.  First, on June 25, the Federal Communications Commission limited the applicability of the autodialer restrictions in the Telephone Consumer Protection Act, 47 U.S.C. § 227 (the “TCPA”), to an emerging texting technology. Second, less than two weeks later, the Supreme Court ruled that an exception to the TCPA’s autodialer restrictions for calls to collect federal debts was unconstitutional and expanded the statute’s reach.

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NYDFS Announces a Series of Virtual Currency Initiatives

On June 24, 2020, the New York State Department of Financial Service (NYDFS) announced a series of virtual currency initiatives aimed at providing additional opportunities and clarity for BitLicense and limited-purpose trust company applicants and licensees. These initiatives include:

  • A proposed framework for obtaining a conditional BitLicense when partnering with an existing licensee
  • A proposed approach for NYDFS pre-approval of certain virtual currencies and a licensee’s ability to self-certify the use of new virtual currencies
  • New procedures aimed at creating a more transparent and timely process for reviewing BitLicense applications
  • A BitLicense FAQ page

The NYDFS’s press announcement stated that these initiatives were developed based on feedback from the industry to make it easier for virtual currency companies to successfully operate in New York. If the stated intent is achieved, these initiatives will be a welcome change for virtual currency businesses, which have often faced long timelines and a burdensome review process when submitting a BitLicense application or attempting to expand their approved activities. It remains to be seen, however, whether those objectives can be met.

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Privacy and Cybersecurity Roundtable: Monitor-Side Chat Series

These informal video chats, moderated by Sidley partner Alan Raul, are designed to help fill the COVID-19 induced privacy discussion drought. We look forward to hearing what is on the mind of key data protection and cybersecurity thought leaders from both public and private sectors. Each chat will be relatively brief, leaving some time to address participant questions via our virtual space. Please feel free to suggest any topics you would be interested to hear addressed by contacting dcevents@sidley.com.

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Key Takeaways From Sidley’s Privacy and Cybersecurity Monitor-Side Chat Featuring Bruno Gencarelli, Head of International Data Flows and Protection at the European Commission

On June 25, 2020, Sidley partner, Alan Raul, founder and co-head of Sidley’s privacy and cybersecurity practice, hosted Bruno Gencarelli, head of International Data Flows and Protection at the European Commission, for a Monitor-Side Chat.

The discussion focused largely on the Commission’s report on two years of the GDPR which was issued on 24 June 2020. Key themes of the report include:

  • EU data protection authorities (“DPAs”) should increase their efforts towards the adoption of a harmonised approach to responding to cross-border investigations;
  • a call for greater resources to be given to DPAs by EU Member States to ensure the GDPR is sufficiently enforced;
  • a need for greater consistency among EU Member States on interpretations of the GDPR in national laws in order to avoid unnecessary burdens on companies; and
  • greater utilisation of the data portability right under the GDPR to ensure individuals have greater involvement in the digital economy by enabling them to switch between different service providers and make use of other innovative services.

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