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Fintech

The fintech, distributed ledger technology (DLT) and cryptoassets markets continued to develop extremely rapidly in 2021 and this looks set to continue.

Moving into 2022, the main themes that we see in these markets so far as they relate to derivatives and structured products are:

  1. A significant increase in both cryptoasset derivatives and structured products. This market gained momentum in 2021 and with the publication at the end of the year by ISDA of a whitepaper on Contractual Standards for Digital Asset Derivatives we expect this will continue. We look forward to seeing the development of contractual standards for digital asset derivatives and are advising various market participants on the structuring and documentation of these products.

    The whitepaper, which Linklaters advised ISDA on, can be accessed here.

    2021 also saw a significant uptick in cryptoasset-linked structured products, with the launch of a number of exchange-traded products, among others.
  2. Increased issuance of digital securities. On 28 April 2021 the European Investment Bank issued EUR 100,000,000 0.000% Notes due 2023, registered on the Ethereum public blockchain. The notes represented the euro market's first multi-dealer led, primary issuance of notes recorded to a public blockchain and were settled against central bank digital currency (CBDC) tokens issued by the Banque de France. This prompted an enthusiastic market response, and was followed by similar international transactions using digital securities and CBDC. We expect 2022 to see further issuances of digital securities.

    For more information, please see Linklaters advises EIB on the issuance of Notes on the Ethereum public blockchain for central bank digital currency issued by the Banque de France.
  3. Further development of the use of DLT and new technologies in financial market infrastructures and markets more broadly. We are seeing the launch or expansion of DLT-based platforms out of test environments and into production, including across the securities, repo, securities lending and derivatives markets. These are supported by novel infrastructure arrangements relying on tokenised cash and securities. We are also seeing these technologies support new ESG-related products, amongst other rapidly developing markets.

As part of Linklaters’ “Year to Come and Year in Review” series, our global fintech team has published its Fintech Global Year to Come 2022 and Year in Review 2021 publication, which has further detail on what we look forward to in 2022 in the fintech space and a summary of the key legal and regulatory developments in 2021.

This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts, or contact the editors.

Explore further topics across our DSP Horizon Scanning 2022 publication

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