In this article, we summarize the key regulatory updates in the fintech industry as of December 2023. The article highlights the need for financial market participants to be aware of regulatory gaps that have not fully caught up with the pace of innovation. Some of the key updates mentioned include:
Payments
- Payments service providers in Australia must now apply for an Australian Financial Services Licence within six months after its introduction.
- A new concept of ‘payment product’ will be introduced, replacing the previous concept of ‘makes non-cash payments’. This will apply to various payment-related services and facilities.
Startups
- The European Supervisory Authorities released a report on the benefits and challenges related to innovation hubs and regulatory sandboxes
- The report recognizes that the fintech industry has evolved since the last review conducted in 2019.
Markets
- The UK and Switzerland have established the Berne Financial Services Agreement to enhance cross-border market access and reduce regulatory barriers.
Wealth
- The International Organization of Securities Commissions published a warning about the risk of online harm to retail investors from investment scams and frauds.
- The European Securities and Markets Authority published a discussion paper on the usage of digital tools and social media by companies and retail investors.
Crime
- The European Council and European Parliament reached a provisional agreement on the establishment of the new European authority for countering money laundering and terrorism financing.
- AUSTRAC announced plans to strengthen the Australian financial system’s resilience to money laundering, terrorism financing, and other major crimes.
Security
- The Financial Stability Oversight Council released its 2023 report, addressing cybersecurity vulnerabilities and the use of AI in financial services as a vulnerability to the financial system.
- The BIS’s Consultive Group on Innovation and the Digital Economy released a report outlining technical requirements for a retail central bank digital currency (CBDC).
Crypto
- The Basel Committee on Banking Supervision issued a consultation on potential changes to the standard ruling over banks’ exposure to cryptoassets.
- The Financial Conduct Authority released new consumer advice on the risks involved in investing in cryptocurrencies.
Sustainable
- The European Council reached an agreement on a proposal for ESG ratings regulation that aims to boost investor confidence in sustainable products.
- The proposal seeks to improve transparency in the operations of ESG ratings providers and prevent conflicts of interest.
Overall, these regulatory updates highlight the ongoing efforts to adapt regulations to the rapidly evolving fintech industry. Market participants must stay informed about these changes and ensure compliance with updated regulations.
