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

    UK Authorities Consult on Implementation of Basel 3.1 Standards

    The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.

    November 30, 2022 WebPage Regulatory News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8597