‘Roadmap’ Set By European Union Banking Watchdog To Oversee Fintech: The EU’s banking watchdog laid down a roadmap that is expected to curb the current discrepancies in the regulation of the fast-paced financial technology industry while putting into consideration digital currencies. The new rules that will take effect on January will enable start-ups to provide effortlessly typical banking solutions like payment processing.
Andrea Enria, the European Banking Authority leader, remarked that the watchdog is set to scrutinize Fintech companies and the services they provide to see that similar services in the European Union are regulated consistently. The reports of the assessment will be announced at the end of this year.
For many years, regulators have been hesitant to provide all-encompassing laws for Fintech, giving the excuse that the sector is smaller than the mainstream banking industry. Unfortunately, the political sector has not been advocating for innovation at a time when places like Berlin, London, and Paris are drawing closer Fintech companies.
EBA will carry out an assessment on the regulatory sandboxes or the controlled environments which have been established by particular national regulatory bodies to enable Fintech to experiment new applications on consumers. Speaking at Copenhagen Business School, Enria said that there is a need for firms to take part in the home-based financial service market on a standardized level while at the same time maintaining top-notch consumer protection policies.
The first strike from Brussels has already hit the Fintech regulation whereby the sector is expected to provide the alternative licensing method as far as crowdfunding goes. However, having a central regulatory arm for Fintech companies as in the case of banks is not the ideal solution. What should be implemented is vigilant monitoring on the connections between Fintech firms and banks that normally established joint services.
European Banking Authority might suggest adjustments to the prevailing financial laws in the EU so they can favor the modern technologies and suit the Fintech startups. The EU is prepared to monitor digital currencies even if the rest of the world fails to take actions, once the G20 (a group of 20 nations) decides on the relevant rules at a conference that will be held this month.
Particular bankers are pushing for regulations but a solid unanimity exists for the universal laws considering the various measures that countries are taking e.g. lack of action and prohibitions. Enria is not yet convinced that digital currencies need to be placed under the big umbrella of regulations. Such a move would lead to an unexplored realm which needs years of research to grow.
According to Enria, subtle strategies in the short-term would suffice, focusing on ways to curb fund embezzlement, terrorist monetary laws, deter banks from withholding digital currencies, and caution consumers. Such regulatory mechanisms would deter any attempt to accord official permit to a business in a divergent sector that is bound to change fast hence almost impossible to regulate.