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The principle of Open Finance promotes an ecosystem where the customers of financial services allow some of their data to be utilised for the creation of more innovate financial solutions. The EU’s second Payment Services Directive (PSD2) is moving towards its third version, namely PSD3. In this insight briefing, we analyse how the proposed PSD3 could enhance the principle of Open Finance in the fintech sector.
FinTech

Fintech Insights #3 –
Open Finance in the Proposed PSD3

Open Finance is becoming a pivotal element in the evolution of the European Union's regulatory framework for payment services, most notably embodied in the anticipated Third Payment Services Directive (“PSD3”). The European Banking Authority (“EBA”) has proposed significant revisions to the current legislation, many of which aim to further the objectives of enhancing competition, facilitating innovation, increasing payment transaction security, protecting consumers, and creating a unified EU retail payments market​. The second version of the Payment Services Directive1 (“PSD2”) was last updated in 2015 and came into force in 2018. PSD2 not only offers clear guidelines to the payment service…
Mario Mizzi
24th May 2023
FinTech

Fintech Insights #2 –
Maltese EMIs

Electronic Money Institutions (EMIs) are financial institutions that offer electronic money services to customers. Legislation on EMIs is partially harmonised in the EU as there is only an Electronic Money Directive (Directive 2009/110/EC) (“EMD”) rather than a regulation. In Malta, the EMD is transposed in the Financial Institutions Act, Chapter 376 of the Laws of Malta. Article 2 of the EMD defines electronic money as “electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Article…
Mario Mizzi
10th May 2023
In this series of briefings on financial technology law, we will share insights on the current and proposed EU laws that seek to regulate financial services being provided through digital means.
FinTech

Fintech Insights #1 –
Introductory Briefing

The progression of online financial ecosystems supporting any modern economy hinges on the citizens’ use of new financial technologies. In Malta, the word ‘fintech’ is neither defined by law nor found in the jurisdiction’s primary legislation. Yet, local stakeholders on the island commonly limit the meaning of the word to blockchain-based finance. In reality, at EU level (and to a certain extent, globally), fintech comprises all those banking and digital payment solutions which make use of the internet and other electronic means rather than using ink and paper. These include electronic money institutions, payment service providers, and banks using any…
Mario Mizzi
4th May 2023
The Parliament of the European Union has approved the ‘Markets in Crypto Assets’ regulation
FinTechLegal Updates

EU Parliament approves MiCA

The European Parliament gave its final approval to the Markets in Crypto-Assets Regulation (‘MiCA’) on 20 April 2023. The regulation forms part of the EU’s broader digital financial package whose aim is to encourage the use of fintech while ensuring consumer protection and financial stability across the EU. MiCA is the first harmonised EU framework for regulating crypto-assets and is applicable across Member States without national transposition. The regulation introduces three sub-categories of crypto-assets, namely asset-referenced tokens, e-money tokens, and other crypto-assets, which includes utility tokens and other cryptocurrencies. MiCA has three distinct regulatory regimes for issuers of stablecoins, non-stablecoins,…
Mamo TCV Advocates
21st April 2023
AI systems are ultimately complex computer codes whose output reflects their input. If the inputted data contains human bias, the AI system tends to produce results which exacerbates existing biases. In this insight briefing, we analyse the effect that human bias in AI could have on EU investment funds.
Investment Services & Funds

AI & Funds #5 – Human Bias

In an underground burial temple located within the EU’s southernmost State, one can find a primitive drawing of a spiralling never-ending red tree. Archaeologists opine that the millennia-old Saflieni Hypogeum’s ‘Tree of Life’ was painted to give meaning to death. There is no evidence that the Maltese prehistoric biosphere sustained red spiralling trees. If archaeologists did not inform us about this pictorial human bias, one might have assumed that never-ending trees did exist in Malta. Humans understand that trees are not never-ending and the red artefact is merely an imaginary depiction. On the other hand, Artificial Intelligence (“AI”) knows that…
Mario Mizzi
9th March 2023
The legal obligation to disclose information is a frequent occurrence in investment services laws. The draft framework for regulating artificial intelligence in the EU also puts vigorous emphasis on transparency. In this insight briefing, we compare the transparency obligations under the AIFMD with Article 52 of the draft EU AI Act to analyse the former’s adroitness for AI utilisation.
Investment Services & Funds

AI & Funds #4 – Transparency Obligations

In the ‘Proposal for a Regulation laying down harmonised rules on artificial intelligence’ (the “draft EU AI Act”), transparency is regulated by Article 13 and Article 52 thereof. The former applies to systems of Artificial Intelligence (“AI”) which are classified as high-risk and the latter applies to limited-risk AI systems. As explained in the previous briefing of this series of insights on AI and investment funds, the use of AI in investment services will generally fall under limited-risk AI systems. The reason being that high-risk AI systems as defined under the draft EU AI Act do not include AI systems…
Mario Mizzi
2nd March 2023