Abstract
FinTech activities often take place within an unregulated space or are subject to non-homogeneous regulatory frameworks. After a prevalent approach of “wait-and-see” by regulators, followed by an intense (still ongoing) debate on the opportunity to regulate, national authorities and international regulatory bodies have started to design regulatory provisions. The main aims are to eliminate the space for regulatory arbitrage and ensure the financial markets greater stability and resilience, as well as to provide customers and investors with a higher degree of protection. Co-operation between authorities in this area of regulation is key to the success of the new provisions, given the pervasiveness and innovative features of FinTech. This chapter reviews the regulatory approaches adopted so far and describes the main regulatory actions taken at the European level.
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Notes
- 1.
The route taken by the New York Federal Reserve involved setting up a Fintech Advisory Group made up of exponents of the finance industry and technology firms for the purpose of improving the authority’s innovation-related know-how and fostering debate with operators (New York Fed 2019).
- 2.
- 3.
- 4.
The characteristics of security tokens and the underlying smart contracts make a series of operation run by the various financial intermediaries involved in the traditional securities trading superfluous.
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- 6.
The regulations issued by Consob in 2013 were amended in 2016 and 2017 (Consob 2017).
- 7.
The 2017/1129 EU regulation relating to the statement to be published for public prospectus and admission to securities bargaining in a regulated market sets out an exemption from the obligation to issue for sums below a defined minimum threshold. The European Commission (2018b) proposed a maximum threshold of 8 million euros, below which small and medium-sized enterprises accessing a crowdfunding platform must not be considered issuers of public shares for legal purposes.
- 8.
The existence of alternative payment systems to legal tender which do not pass through regulated financial intermediaries can reduce the efficacy of the monetary transmission strategies implemented by the central banks (European Parliament 2016) in the event that monetary resources start to flow out of banks accounts into virtual wallets or other alternative solutions.
- 9.
Once again the Chinese experience offers some interesting insights. China was one of the main global crypto currencies markets, on the strength of the great freedom accorded platforms to set up and develop activities. In 2017, the Chinese government decided to ban both initial coin offerings (ICOs), and the circulation and use of virtual currencies whose legal value is not recognised (PBC 2017). Applying this ruling proved difficult because virtual money exchanges continued to take place in China in the face of the ban, via the use of foreign sites and offshore platforms.
- 10.
As a result of crypto currencies regulations and the dissemination of the platform, the Japanese market authorities acted against two platforms in 2018, blocking their operations in the aftermath of a serious cyberattack which led to huge investor losses and required significant improvements in anti-money laundering policy terms from a further eight platforms (Financial Times 2018).
- 11.
See the ICO Updates section on https://www.sec.gov/ICO.
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Tanda, A., Schena, CM. (2019). The Regulatory Framework and Initiatives. In: FinTech, BigTech and Banks. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-22426-4_5
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