Fintech: regulation groundwork is being set
Financial Technology, or FinTech, brings to mind crypto-currencies such as Bitcoin, which after an initial boom and subsequent die-down, appears once again to be on the rise. Bizcommunity reported a 20% jump in the crypto-currency in less than an hour on 2 April.
“The cryptocurrency’s price crossed the $5 000 mark, touching the highest level since November 2017. All other major cryptocurrencies, including Ethereum, XRP and Litecoin have experienced gains of around 10%,” the financial news website reported.
This substantial increase is likely to attract investors and the interest of regulators. Crypto-currencies operate in a relatively unregulated environment, which means government is unable to track fraud or protect consumers from fraudulent activities by currency issuers.
The SA Reserve Bank recently issued a consultation paper on proposed regulation of crypto-assets. The paper proposes that the Financial Intelligence Centre (FIC) include service providers of crypto assets as accountable institutions required to comply with the FIC Act.
The Reserve Bank, which at first opted not to oversee or regulate crypto-currencies, has since established a FinTech programme whose scope has now been broadened to review FinTech (technology used in financial services), looking at both the pros and cons as well as any required regulation.
You can read a more detailed report on the latest FinTech developments and proposed regulatory approaches in the latest FSCA Bulletin.