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 today.
The paper is the third in a series, setting out the DFSA’s approach to the regulation of pioneering financial technology (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 Dubai International Financial Centre (DIFC) is already flexible enough to accommodate many aspects of FinTech without introducing new rules. Today’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 any customers involved. 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.
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.”
Peter Smith, Managing Director, Policy and Strategy, at the DFSA, added: “The DFSA has been discussing opportunities with a number of interested FinTech firms. We have concluded that it would be helpful to current stakeholders, and to the wider public, for us to set out more explicitly how we will deal with future enquiries from those interested in establishing a presence in the DIFC for a FinTech business.”
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 follow the DIFC’s launch of the FinTtech 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.
The DFSA’s approach is also aligned the with UAE Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed Bin Rashid Al Maktoum, National Innovation Strategy to create an innovation-friendly ecosystem. Technology is a pivotal part of this strategy, and plays a central role in the Dubai Plan 2021 to develop the Dubai economy, as evidenced by initiatives such as the Dubai Future Accelerators and the Dubai Blockchain Strategy.