Featured Product

    IMF Publishes Notes Examining Regulatory Issues Related to Fintech

    January 10, 2020

    IMF published notes on the regulation of crypto assets and on the institutional arrangements for fintech regulation and supervision. The note on the regulation of crypto assets identifies selected elements of regulation and supervision that authorities should consider when deciding on a regulatory framework for crypto assets. The note on institutional arrangements for fintech regulation and supervision presents findings from a review of the institutional arrangements in 10 jurisdictions; it highlights that the fintech institutional framework mostly mirrors the established responsibilities for financial-sector policy, supervision, and development.

    Note on regulation of crypto assets 

    The note briefly summarizes some of the most relevant risks related to crypto assets and concentrates on how regulatory frameworks could address these risks. To illustrate the analysis, some country examples are compiled in the Appendix. Some of the risks incurred by investors are, for instance, operational and cyber risk of wallet providers and the crypto trading platform; market, credit, and default risk of issuers; comingling risk of assets; liquidity risk of both issuers and service providers; market manipulation; misselling; and fraud. Crypto assets are also vulnerable to misuse for money laundering and terrorist financing. In addition, crypto assets may generate contagion and business model risks, which may potentially become systemic and warrant a prudential response.

    The note highlights that regulators need to continuously monitor the crypto-asset landscape to understand the direction of industry developments. Ongoing efforts to address data gaps to monitor markets and potential contagion effects to the existing financial sector are welcome. Regulators need to take a proactive approach to address any risks potentially emerging from industry developments and swiftly build capacity and expertise in new instruments and new technology, given the high reputational risks involved. Capacity and resources of supervisory authorities, in addition to the potential damage to trust in the financial sector, will need to be evaluated in each case. Moreover, regulators also need to clearly communicate the role of regulation and supervision to the public, emphasizing the risks that are borne by investors and consumers. While regulation should be tailored to jurisdiction-specific features, a consistent approach and international cooperation will be key to prevent and minimize regulatory arbitrage and potential inconsistencies in the application of laws and regulations.

    Note on institutional arrangements for fintech regulation and supervision

    The note reviews the institutional arrangements for fintech regulation and supervision in 10 jurisdictions, including both advanced economies and emerging market and developing economies. These jurisdictions are UK, France, US, Hong Kong, United Arab Emirates, Dubai and Abu Dhabi, Japan, Malta, Singapore, and Switzerland. The note describes the division of responsibilities among national authorities, the organization of supervisory authorities’ main fintech functions, and domestic and international coordination on fintech matters. The note highlights that countries differ in the emphasis placed on promoting the development of fintech as opposed to regulating it. Some regulators prioritize traditional prudential and conduct objectives. Others give more weight to innovation, inclusion, competition, and development. 

    Most supervisors have set up a core fintech group and an expert network. The core group is usually full time and is supported by a network of experts across the agency which is available to help as needed on specific issues. Domestic and international coordination takes various forms. Coordination among domestic agencies typically makes use of existing senior-level structures; when fintech issues arise, they are referred to a sub-committee or result in the creation of a taskforce to develop proposals. International coordination arrangements range from bilateral agreements and initiatives (for example, fintech Memoranda of Understanding) to multilateral ones coordinated by the standard-setting bodies. In addition, a new multilateral network, the Global Financial Innovation Network, has recently been set up to exchange lessons learned, develop a common sandbox and help firms navigate between different jurisdictions as they aim for scale internationally. Finally, the note emphasizes that, looking to the future, regulators need to be prepared to change their institutional arrangements quickly, given the speed and ubiquity of fintech development.

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, Fintech, Crypto Assets, Institutional Arrangement, Cyber Risk, IMF

    Related Articles
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7875