This Friday saw the European Union’s banking watchdog set an outline to plug loopholes in the rapidly evolving financial technology sector. Further, they worded caution in addressing cryptocurrencies.
January onwards, the new EU Rules has made it easier for start-ups to offer conventional banking services like payments and receivals.
The chair of the European Banking Authority, Andrea Enria, explained that the watchdog is eyeing to review the nature of services offered by fintech firms these days, with an eye to bring consistency in regulation across the EU. The report of this assessment is due by the end of this year.
There were two main reasons for regulatory holdback on fintech so far. The first one being that the relative size of the sector as compared to traditional banking is quite small. Further, there is political incentive to keep it unregulated to lure fintech firms into the country.
The EBA will be carrying out regulatory review in controlled environment, aka, Sandboxes, where fintech firms can experiment new apps and services to customers.
“We need to ensure that firms can enter and participate in the internal market for financial services on an equal footing and that a high standard of consumer protection is maintained,” stressed Andrea.
The EBA may recommend changes to the current EU Financial Rules to make them more “technologically neutral” and proportionate for fintech firms.
The EU has indicated a move to regulate cryptos if there is no action at the upcoming G20. And, the consensus does seem dodgy given the varied directional stance taken by different nations.
Enria on the other hand feels unconvinced of the requirement to bring cryptos under the full gamut of regulation. He believes the same would take years to develop. Instead he stresses on a more focused, short term approach to plug the current qualms, like, warning consumers and preventing traditional banks from holding cryptocurrencies.