The European Commission has introduced a financial technology action plan in a bid to become a centre of innovation for new technologies. It aims to increase cybersecurity and ensure integrity, and develop solid blockchain governance.
As part of the plan, the commission will establish an EU FinTech Laboratory, where providers and regulators can meet, consult on the digitisation of information for investors, run workshops, and develop a best practice guide on regulatory sandboxes.
“Companies that develop financial technology are currently faced with diverging regulatory and supervisory regimes,” said the commission. “While some Member States offer a wide range of tools to encourage the use of financial technologies in financial services, the market is still underdeveloped in other Member States.”
The action plan forms a supportive element in the commission’s efforts to build a capital markets union and a single market for consumers. It is also an integral part of the commission’s drive for a digital single market.
Sandboxes and blockchain
Concerning sandboxes—controlled environments under regulatory supervision in which fintech providers may conduct live experiments—the commission said it would set out guidelines for how member states could organise their sandboxes, the types of activities concerned and their supervision.
“Regulatory sandboxes are gaining popularity, mostly in developed financial markets,” explained the commission. “A common and co-ordinated approach among Member States would therefore be useful to encourage innovation across the EU.”
As for blockchain, the commission said that cross-border infrastructure for blockchain is crucial to reap the full benefits of this new technology, which it said was set to lead to a major breakthrough in how assets are exchanged, validated, shared and accessed through digital networks.
“Developing this infrastructure requires the development of a proper governance framework, as well as solving existing interoperability issues.”
It also said it would identify some pilot projects to identify services of public interest to further consolidate expertise and demonstrate the use of these distributed ledger technologies.