On 8 March 2018, the European Commission released its FinTech Action Plan (the “ FinTech Action Plan”) addressing issues ranging from licensing, authorization and standardization in FinTech to potential regulatory approaches to cryptocurrencies, cloud services, blockchain technology and cybersecurity. The FinTech Action Plan is part of the Commission’s efforts to build the Capital Markets Union and its agenda to create a Digital Single Market. The proposed initiatives can be categorized under three overarching policy objectives designed to grasp opportunities and limit risks associated with the new technologies.
First, the Commission seeks to create enabling conditions for the scaling up of innovative business models in the EU. Therefore, together with the FinTech Action Plan, the Commission put forward a proposal for a Regulation that will establish a European passporting regime for crowdfunding service providers. To foster competition and cross-border operations of FinTechs, the FinTech Action Plan also includes policy steps towards consistent licensing requirements and common standards. In terms of standardization, the FinTech Action Plan highlights in particular standardized application programming interfaces that would provide a basis for an open banking ecosystem in the EU. The Commission also intends to assess the suitability of existing regulation in light of emerging trends in the use of cryptocurrencies and Initial Coin Offerings.
Second, the Commission aims to boost the uptake of new technologies in the financial sector. The policy actions will target, inter alia, switching between cloud services providers as well as the development of standard contractual clauses for cloud outsourcing. With respect to distributed ledger technology (“DLT”) and blockchain, the Commission plans to develop a comprehensive strategy addressing its applications in all sectors of the economy, as well as to foster the interoperability and standardization efforts. Furthermore, the Commission will also consider the use of DLT to collect and share information from public companies in the so-called European Financial Transparency Gateway. The Commission efforts will be supported by the already-established EU Blockchain Observatory and Forum.
Third, to enhance the security and resilience of the financial sector, the Commission will look into possible barriers hampering information sharing on cyber threats among financial market participants. The FinTech Action Plan also foresees a cost-benefit analysis of a potential EU cyber-resilience testing framework for the financial sector’s largest players.