The Dubai Financial Services Authority (DFSA) is enhancing its contribution to Dubai’s position as the region’s leading hub for innovation through the publication of a new FinTech consultation paper.
The paper is the third in a series, setting out the DFSA’s approach to the regulation of pioneering FinTech activities.
The DFSA has been following developments in the FinTech industry and, in 2016, determined that the current regime for regulating firms in the DIFC is already flexible enough to accommodate many aspects of FinTech without introducing new rules.
The latest’s consultation sets out the DFSA’s approach to FinTech firms that want to test innovative products and services in the DIFC.
Firms meeting the qualifying criteria will receive a Financial Services Licence, referred to as an Innovation Testing Licence, which reflects the nature of the activities to be conducted during the testing phase.
The DFSA will put in place limits on the FinTech testing activities to ensure appropriate controls for the safety of customers. Given the limits on activities permitted during testing, FinTech firms will not have to comply with DFSA Rules where they are inappropriate at a testing stage.
The testing phase is a step towards the FinTech firm obtaining a full Financial Services Licence.
Mr Ian Johnston, Chief Executive at the DFSA, said: “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 the market develops and respond to the evolving requirements of this industry.”
The DFSA is committed to providing the regulatory infrastructure to support the sustainable development of FinTech in the DIFC.
Earlier this year, the DFSA launched two consultations which proposed frameworks for the regulation of loan-based and investment-based crowdfunding platforms.
The DFSA’s consultations come on the heels of DIFC’s launch of the FinTech Hive Accelerator programme in January 2017, the first such accelerator programme in the region. The programme provides a platform for financial services and technology firms to build solutions for the financial sector.