In its advent to establish Dubai as a FinTech hub, the Dubai Financial Services Authority (DFSA) has released a consultation paper as a part of its approach to regulating the FinTech sector.
Dubai’s financial regulator has revealed its vision to embrace Fintech development in the region by setting up the required infrastructure and facilitates required for testing of financial technology innovations. Moreover, the authority confirms that it does not intend to regulate unless needed, stating it will be “flexible, response, innovative and adaptable” with Fintech firms.
In statements, DFSA chief executive Ian Johnston stated:
The DFSA’s approach to Fintech has been to regulate where needed, in order to create an environment that encourages innovation in technology in its many forms and applications. The DFSA will continue to watch as teh market develops and respond to the evolving requirements of this industry.
The latest consultation paper [PDF] is the third in a series concerning the DFSA’s approach to the regulation of the Fintech sector. The paper is aimed at individuals or firms operating or looking to set up a Fintech business with testing within the DIFC’s environment.
Blockchain, data analytics, mobile payments and banking as well as robo advisory are some of the FinTech innovations highlighted by the DFSA.
Companies or startups that meet the qualifying criteria will receive an ‘Innovation Testing License’.
With the early (and temporary) financial services license, startups will see limits imposed on the FinTech sandbox environment by the DFSA for the safety of customers involved. However, firms will not have to comply with DFSA rules where they aren’t necessary during the testing stage, due to the limits imposed.
Upon successful testing within the regulatory environment, a Fintech firm will obtain a full Financial Services License.
“The DFSA has been discussing opportunities with a number of interested Fintech firms,” added DFSA managing director of policy and strategy, Peter Smith. “We have concluded that tit would be helpful to current stakeholders, and to the wider public, for us to set out more explicitly how we will deal with future enquiries from those interested in establishing a presence in the DIFC for a FinTech business.
Furthermore, the authority claims that its Fintech-friendly approach coincides with the wider embracing stance adopted by Dubai toward new innovations and technology. The DFSA points to other initiatives such as the sweeping Dubai Blockchain Strategy program, where one of the goals is to see 100% of all government documents on a blockchain rather than paper by the year 2020.
More recently, the Dubai government partnered tech giant IBM to announce the development of a blockchain platform for trade finance in the global trading hub.
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