July 18, 2019

EBA published the findings of its analysis on the regulatory framework applicable to fintech firms when accessing the market. The report illustrates the developments on the regulatory perimeter across EU, the regulatory status of fintech firms, and the approaches followed by competent authorities when granting authorization for banking and payment services. EBA findings show a few national legislative developments that could potentially create an "unleveled" playing field in EU.

On crowdfunding, EBA takes note of the EC proposal for regulation on crowdfunding service operators. On crypto-asset related activities, the report refers to the EBA January report on crypto-assets and the follow-up actions. As to the authorization approaches, EBA found that proportionality and flexibility principles are applied in the same way by competent authorities irrespective of whether the applicant presents a traditional or innovative business model and/or delivery mechanism. In the context of the second Payment Services Directive or PSD2, the monitoring by EBA will observe whether such principles are used to fast-track applicants. EBA will also monitor with a view to better assess the specificities of the national special regimes on granting authorization as a credit institution with a capital lower than EUR 1 million and their application to fintech applicants. Overall, the national regulatory status of fintech firms with innovative business models or delivery mechanisms shows the following two developments:

  • The shift from non-regulated to regulated activities—notably payment initiation services and account information services being subject to PSD2
  • The ancillary/non-financial nature of the services provided by fintech firms not subject to any regulatory regime, with the exception of crowdfunding, and to some extent activities related to crypto-assets

This report delivers on one of the action points of the FinTech Action Plan of EC, which was published in March 2018 and ESAs to map current authorizing and licensing approaches for innovative fintech business models. The report also delivers on the EBA FinTech Road map of March 2018, which in line with the EC FinTech Action Plan, identified the monitoring of the regulatory perimeter, including the assessment of current authorization and licensing approaches to fintech firms, as one of its priorities for 2018/2019.

 

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Keywords: Europe, EU, Banking, Fintech, Proportionality, Fintech License, Fintech Action Plan, EBA

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