EU mulls fintech passporting in blow to London
LONDON’S position as a leading fintech hub was put under threat, after it emerged that the European Commission is considering introducing EU passporting and lower regulatory requirements for the sector.
The EU executive’s vice president Valdis Dombrovskis reportedly said on Thursday that the Commission is looking at ways to boost fintech’s development in the region, while protecting consumers from any possible risks.
“We need to be cautious in our approach, ensuring that this new industry has a space to grow,” Dombrovskis told a news conference in Brussels, according to Reuters.
If passporting rights are introduced, this would enable fintech firms to expand across borders and operate anywhere within the EU’s single market with unparalleled ease.
London-headquartered fintech companies are likely to lose these rights when Britain leaves the bloc.
Dombrovskis added that the Commission is mulling the possibility of granting customised licences, which could imply lower capital requirements for less risky fintech firms, according to the Reuters report.
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This would cut the firms’ costs and enable them to compete better against banks.
Innovative fintech firms are “benefiting millions of Europeans,” Dombrovskis said, citing peer-to-peer and crowdfunding firms Twino and Funderbeam, as well as online payment companies Sofort and Transferwise and asset management services Nutmeg and eToro.
The Commission launched a three-month—long public consultation on Thursday to gather information from relevant parties.
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The UK government is making efforts to support the fintech industry. Earlier this month it unveiled a new digital strategy and next month it will hold the second annual UK Fintech Week to encourage international investment.