The European Commission (EC) has unveiled a platform designed to improve the communication between fintech startups and financial regulators.
The EU Digital Finance Platform was first mentioned as part of the EC’s digital finance strategy in 2020 but has now gone live.
Speaking at the virtual launch event, commissioner Mairead McGuinness said that the platform is designed to overcome regulatory fragmentation across the EU in order to help fintechs scale up their operations.
“Innovative financial firms need more support to tackle the challenges they face on a day-to-day basis,” she said.
“In those areas where an EU framework is lacking, diverging national requirements and supervisory practices can make it very difficult for firms to offer their applications across Member States,” added McGuinness.
The platform will have two “building blocks”. The first is the digital finance observatory which allows registered users to share content such as research. It also contains the European fintech map designed to help startups showcase their offerings.
The second part is the platform itself which will offer startups a single access point for information from the various supervisors and regulators within the EU, including licensing requirements. It will also host a number of features linked to cross-border testing initiatives.
“In this way I believe that this website can offer very practical support to scaling up digital financial services right across Europe,” said McGuinness.
Regulation within the fintech sector has come under the spotlight in recent months, especially in the digital assets and crypto space where many EU states have different licensing regimes.
This was an issue raised in the UK where the Financial Conduct Authority had to issue temporary licenses to crypto firms that missed the registration deadline – a move that led to criticism of the slow pace of the regulator’s registration efforts.
Another concern among market participants is the lack of a level playing field for incumbent players and crypto startups that may not be subjected to the same level of rules and regulations.
It is unclear how far the EU’s Digital Finance platform will go towards meeting these concerns but McGuinness urged market participants not to underestimate “these ‘softer’ initiatives”.
“Dialogue and closer links can - and will - translate into tangible results,” said the commissioner.