Regulators from around the world, including the UK, US and Hong Kong, have formed a ‘global sandbox’.
The Financial Conduct Authority (FCA) has launched the Global Financial Innovation Network (GFIN) to allow companies to test products in multiple countries. The UK was one of the first countries in the world to introduce a FinTech sandbox, and earlier this year, asked for views on the merits of creating a global FinTech sandbox.
However, regulators are still struggling to get to grips with the ever-changing sector.
GFIN bring in 11 other regulators, including the US Bureau of Consumer Financial Protection, the Monetary Authority of Singapore and the Hong Kong Monetary Authority.
Together they will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.
Christopher Woolard, FCA executive director of strategy and competition and board member said: “The creation of the Global Financial Innovation Network (GFIN) is an important next step for organisations like ours who are actively engaged in understanding and harnessing the benefits of innovation in financial services for consumers, while managing the potential harm.
“The establishment of the GFIN can help share the experiences and knowledge from across different markets, while also providing a platform for innovative firms wishing to scale their propositions via testing in multiple countries.”
Following an initial consultation on the idea of a ‘global sandbox’ in February, responses were positive about the idea of regulators collaborating on this topic. The feedback suggested that respondents were supportive of the idea of providing a setting for regulators to collaborate on common challenges or policy questions firms face in different jurisdictions.
Respondents also said that the global sandbox could reduce the time it takes to bring ideas to new international markets, as well highlighting the importance of the project being transparent and fair to those potential firms wishing to apply for cross-border testing.
Issues highlighted were artificial intelligence, distributed ledger technology, data protection, regulation of securities and Initial Coin Offerings (ICOs), know your customer (KYC) and anti-money laundering (AML).
Earlier this month, the head of the Department of Financial Services (DFS) of New York strongly opposed the US Treasury’s support for FinTech sandboxes. The state’s financial regulatory body has also spoken against the Office of the Comptroller of the Currency’s decision to begin accepting applications for national bank charters from nondepository financial technology (FinTech) companies.
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