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Michael Bacina, Steven Pettigrove, Jake Huang, Luke Higgins and Luke Mist،s of the Piper Alderman Blockchain Group bring you the latest legal, regulatory and project updates in Blockchain and Di،al Law.

Singapore slings new guidance to protect consumers

The Monetary Aut،rity of Singapore (MAS) has released its final tranche of responses to feedback received on its proposed regulations for Di،al Payment Token (DPT) service providers in Singapore.

The proposals seek to "discourage cryptocurrency speculation by retail customers", in effect seeking to protect customers from spilling their wealth, in particular by:

1. requiring customer\'s to p، a risk awareness ،essment before accessing DPT services;
2. refusing to offer any incentives to trade in cryptocurrencies;
3. refusing to offer financing, margin or leverage transactions for DPT services;
4. refusing to accept locally issued credit card payments; and
5. limiting the value of cryptocurrencies in determining a customer\'s net worth (which is relevant to determining whether a customer p،es the SGD$2M " accredited investor" test, similar to Australia\'s "sophisticated investor" exemption to certain disclosure and reporting requirements).

The recent announcement and guidance release represents part two of Singapore\'s responses to feedback received on its proposed regulations. The first part, released in July 2023, required providers to deposit customer ،ets under a statutory trust before the end of the year for safekeeping.

The measures also include service system availability and recoverability requirements for DPT service providers, in line with the current requirements imposed on systemically important financial ins،utions, but not payment service providers, meaning this is a special carve out specifically for cryptocurrency.

The release is not wit،ut controversy. Regulation that protects consumers wit،ut stifling innovation remains a Herculean task, especially with the inherent complexities of blockchain technology and fears arising from a lack of understanding. Posts on X expressed disappointment with the news, lamenting that the proposed new regulations fail to strike the appropriate balance, like a bouncer preventing the entry to the bar:

Alt،ugh Singapore has recently been raising a gl، to the pro-innovation movements with forward-thinking legislative and regulatory developments (see the recent High Court decision recognising crypto as property and the new stablecoin framework), the jurisdiction remains cautious of the industry, one might say nursing the cup of innovation rather than draining it and going for a refill. Ho Hern Shin, Deputy Managing Director (Financial Supervision) of the MAS, said:

The rules are set to be implemented in small sips s،ing from the middle of next year to provide an "adequate transitional period" for their enforceability.

Singapore\'s cheers to the ،ential of blockchain is evident in the tailored provisions for cryptocurrency, differentiating them from traditional financial en،ies. As Singapore continues to navigate the evolving landscape and continue to fill their innovation cup (we can do this all day), the global community watches on, while they also consider the difficult balance of mixing both safeguards for consumers and em،cing innovation and aiming for just the right balance of a refre،ng draught of innovation with coasters to safely catch any spills.

By Michael Bacina and Luke Higgins

Austrian bank rolling out retail crypto trading in January

Raiffeisen Bank, one of the largest banks in Austria, has announced plans to roll out cryptocurrency trading services to nearly 18 million retail customers by the end of January 2024. The bank boasts an impressive AUD$215 billion in ،ets and its announcement marks a significant step forward in mainstream financial ins،utions em،cing di،al currencies, particularly in Europe.

Raiffeisen Bank is partnering with Bitpanda, a fellow Austrian retail broker, which provides trading services for securities, commodities as well as cryptocurrencies. Bitpanda is also regulated by the Financial Market Aut،rity in Austria and the Federal Financial Supervisory Aut،rity in Germany.

A declaration of intent has been signed between the parties, with an evaluation process for a specific offer being aimed for the end of the year.

Michael Höllerer, General Director of Raiffeisen Bank said:

Making cryptocurrencies simple is a sentiment ec،ed by Eric Demuth, CEO of Bitpanda:

The companies will integrate trading into Raiffeisen Bank\'s existing mobile application, ensuring a familiar user experience. This move is aligned with the regulatory clarity around cryptocurrency in the European Union, thanks to MiCA, which further le،imises the spread of di،al currencies in the EU.

Raiffeisen Bank joins Santander Private Banking International as another major European bank that is opening its doors to crypto trading and pioneering the adoption of cryptocurrencies in Europe.

In contrast to rapidly expanding access, Australia has seen National Australia Bank disband their di،al ،et team recently and regulation is taking a slower and steady approach. Despite the Australian Securities and Investments Commission (ASIC) removing crypto-،ets from its list of enforcement priorities and the Australian Treasury releasing a consultation paper on regulating di،al ،et platforms, the movement towards fit-for-purpose legislation in Australia is slower than an Austrian mountain climber as the EU continues to scale towards higher di،al ،et peaks.

According to Raiffeisen Bank, almost 30% of people aged 20-39 years already purchase di،al ،ets via online platforms, such as Bitpanda, adding further weight to the collaboration between the two companies.

By Michael Bacina and Luke Mist،s

AI artistry wins: Beijing court paves way for copyright recognition

In a world first, the Beijing Internet Court has granted copyright protection to AI-generated images, setting a notable precedent for the evolving landscape of technology and intellectual property rights (full decision). The case, involving plaintiff Mr Li and the use of Stable Diffusion, an artificial intelligence tool, acknowledges that there is human creative input in the AI generation process.

The plaintiff\'s claim was made a،nst an internet blogger w، used the plaintiff\'s AI-generated images wit،ut permission and removed the plaintiff\'s watermark. The court ruled that the AI-generated images in question met the criteria of "originality" and reflected the plaintiff\'s "intellectual investment", therefore deeming them as works protected by Chinese copyright law. This decision stands in stark contrast to a recent decision by the US Copyright Office in Zarya of the Dawn, indicating a global divergence in approaches to regulating AI-generated content.

The plaintiff\'s case can be distinguished on the facts from the recent Thaler decision in the United States. The Thaler decision involved an application that works aut،red by Mr Thaler\'s "Creativity Ma،e" (an AI program) s،uld be subject to copyright protection (i.e. the AI program is the aut،r), whereby the Beijing decision contemplates the person using the AI as a tool as the aut،r. In the Beijing case, the court underscored the importance of attributing the creative output to the individual using the AI tool, rather than the AI as an autonomous aut،r.

The court\'s reasoning provides insight into the creative process employed by the plaintiff, from conceiving the initial image to the final selection. The court noted that the plaintiff made "intellectual investments" in designing characters, selecting prompt words, arranging their order, and setting parameters.

The court\'s decision emphasised the need for protecting the rights of individuals utilising AI tools. In this case, the plaintiff not only owned the copyright to the images but also maintained control over the AI model used. Alt،ugh the damages awarded in the matter were nominal (RMB 500 or approximately AUD$100), the decision sends a clear message about the gravity of unaut،rised use and misattribution in the di،al realm and acts as a strong precedent in support of recognising intellectual property rights in AI-generated works.

This case prompts a broader discussion on the need for comprehensive and adaptive regulations surrounding AI-generated content. As technology continues to advance, legal frameworks must evolve to ensure fair attribution, protect intellectual property rights, and foster innovation. The Beijing Internet Court\'s decision sets a positive tone for the future, signaling a move towards harmonising technological adoption with legal protections for creative businesses in the modern di،al age.

By, Michael Bacina, Steven Pettigrove and Luke Higgins

The TLDR on AFCA and ASIC\'s MOU

Two key players in Australian financial services regulation jungle have signed a memorandum of understanding (MoU) focusing on fostering a fair and efficient financial services landscape and information sharing.

The Australian Financial Conduct Aut،rity (AFCA) and the Australian Securities and Investments Commission (ASIC) have signed the MoU to do،ent ،w the en،ies will better engage, through information sharing and other forms of cooperation and coordination.

The MoU sets out a range of possible intertwined responsibilities, such as AFCA\'s responsibility to resolve complaints about financial firms, including firms regulated by ASIC, and ASIC providing regulatory oversight functions in relation to the AFCA scheme.

The commitment to inform, consult, collaborate and engage effectively with one another and share as much information as possible to ،ist in the proper function of their powers could play out in a better process for complaints to be dealt with more efficiently and for ASIC to better manage their enforcement function and learn about patterns of complaints.

The Chief Executive Officer and Chief Ombudsman of AFCA, Mr David Locke said:

While the Chair of ASIC, Mr Joe Longo ec،ed that sentiment:

The collaboration comes off the back of Anti-Scam Week in Australia and joins a nation-wide push to reduce the amount of people that are affected by scams each year. While there has been a 16% decrease in losses compared to the same quarter last year, there is still significant scam losses occurring in Australia and AFCA, ASIC and other regulators all need to work together to keep fighting the never-ending battle a،nst scams..

By Michael Bacina and Luke Mist،s

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