The uncertainty of recent years has made predicting the future even more of a risky business. Nonetheless, we’ve noted overarching trends in our coverage which it seems safe to bet will also feature prominently in 2022. As the threat of covid-19 fades, governments have begun to shift away from reactive towards more proactive legislative agendas – particularly in the context of fast-evolving technologies, economic pressures and climate change. Here are just a few broad issues that seem likely to occupy many a Lexology headline – and catch many readers’ eyes – over the coming year.
Crypto goes mainstream
From bitcoin and stablecoins to non-fungible tokens and decentralised finance (DeFi), 2021 saw surging interest in topics involving cryptoassets; yet 2022 may be the year crypto truly goes mainstream. Many jurisdictions have hitherto regulated crypto transactions under existing legal and regulatory frameworks, but more are expected to introduce separate bespoke regimes – primarily to combat money laundering and protect consumers. However, lively debate will likely ensue surrounding how to regulate the crypto craze without stifling innovation.
- DeFi applications use blockchain to facilitate automated financial services transactions, ostensibly without any central intermediary. This clearly puts them in a regulatory grey area, as most existing regimes focus on regulating intermediaries. Increasing restrictions on DeFi thus seem likely.
- Cryptocurrency exchanges will face increased oversight. US SEC Chair Gary Gensler has indicated his desire for greater regulation of many tokens as securities, while the EU Markets in Cryptoassets Regulation (MiCA) will progress through the legislative process this year. MiCA would impose substantial compliance obligations on token issuers and subject some stablecoins to regulatory approval, on top of insider dealing and market abuse provisions.
- Central bank digital currencies may ultimately be the key driver towards the mainstream, as dozens of countries proceed with blockchain-based projects linked to their hard currencies.
Big Tech reined in?
Will 2022 be the year the Big Tech platforms are forced to change their business models? It seems possible, as regulators take an increasingly interventionist approach to what they see as practices harmful to both competition and consumers.
- Cross-border enforcement cooperation will grow as the G7 antitrust authorities have recently vowed to work together in tackling competition issues in digital markets.
- New theories of harm and types of abuse will likely be recognised – including the ‘self-preferencing’ by dominant platforms of their own products over those of third parties. This will be addressed by the pending EU Digital Markets Act.
- Merger control scrutiny in digital markets is intensifying globally – including proposals for Big Tech acquirers to seek prior approval of transactions.
- FTC v Facebook will be a case to follow. The US FTC complaint against Facebook for monopolisation of the social networking market was successfully refiled with more ‘robust’ evidence and will now proceed to trial. If successful, the suit may even result in Facebook’s divestiture of Instagram and WhatsApp.
ESG demands begin to bite
Following COP 26, governments, consumers, shareholders and employees are demanding greater transparency and verifiable progress towards net zero. Businesses can therefore expect more environmental, social and governance (ESG) pressures on the horizon.
- Disclosure requirements akin to those in the EU Sustainable Finance Disclosure Regulation will likely proliferate globally, not least following the G7 countries’ 2021 agreement to mandate climate-related financial disclosures.
- Anti-greenwashing campaigns will grow. For instance, the UK Competition and Markets Authority has announced a full investigation of corporate sustainability claims over 2022, as it estimates that 40% of online claims could be misleading.
- Climate litigation will escalate rapidly. Following the Dutch case of Milieudefensie v Royal Dutch Shell – which ordered the oil giant to reduce its emissions – similar suits are appearing across Europe and beyond. Shareholder activist claims will help to drive this uptick and many will target directors for liability; solid D&O insurance coverage will therefore be a priority for boards.
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