What has happened?
The UK government has launched its first Fintech Sector Strategy, which outlines the initiatives the government intends to take to help the sector grow.
What does this mean?
Announced by Chancellor of the Exchequer, Philip Hammond, at the second International Fintech Conference in London today, the strategy comprises a host of FinTech measures, including a new crypto assets task force, the next steps in 'robo-regulation' and a UK-Australia FinTech bridge.
In a press release, Hammond explained that the new task force, which will include the Bank of England, the Financial Conduct Authority and the Treasury, "will help the UK to manage the risks around Cryptoassets, as well as harnessing the potential benefits of the underlying technology".
The Chancellor also announced several other FinTech measures, including 'robo-regulation' pilot schemes.
These schemes aim to help new FinTech firms, and the financial services industry as a whole, "comply with regulations by building software which would automatically ensure they follow the rules, saving them time and money".
Commenting on the initiative, Rachel Kent, partner in Hogan Lovells Financial Institutions Sector, said:
"A key issue that came out of the Innovate Finance Global Summit earlier this week is that the UK cannot rest on its laurels if it wants to retain its position as position as the global FinTech capital. We, therefore welcome the government's announcement of a new FinTech strategy. The regulation of crypto assets and robo advice are key issues to get right, not just domestically but internationally too. It's great to see the UK taking a lead on these points.
Hogan Lovells Technology partner John Salmon, also explained why a common approach will be welcome:
“Having a joined-up approach across different parts of the government is a really welcome development. The treatment of crypto assets is currently complex and uncertain so having a common view across regulation, tax and currency will be a very positive step forward. It will be very important for the new task force to engage with the industry. There are many different models for crypto assets which throw up different legal and tax issues and which currently need to be dealt with on a bespoke basis. There is still a great deal of confusion as to how the existing regulations and tax rules apply to crypto assets and having a clear and common view is vitally important in the development of these new asset classes and for the ecosystem to develop to its potential.”
Other notable elements of the strategy include the creation of industry standards that will make it easier for FinTechs to partner with banks, as well as plans for the government to collaborate with FinTechs to "create 'shared platforms' which will help remove the barriers that these firms face in setting up new systems".
Rachel Kent explained how standards will be helpful:
"Many FinTechs have arrangements with existing banks built in as a key part of their business model and we know from our clients that engaging with the procurement processes is a real struggle. Standards that enable those obstacles to be overcome in a compliant but more efficient way will be very welcome and will facilitate earlier adoption of new technologies on a bigger scale."
Another initiative is the creation of a Connect with Work programme developed by the government's FinTech Delivery Panel to help FinTechs to take advantage of the UK's diverse workforce.
Three new FiNTech Regional Envoys will also be appointed "to ensure the benefits of FinTech are felt across the UK".
Also announced is a new Fintech Bridge agreement signed by Hammond and Scott Morrison, Treasurer of the Commonwealth of Australia.
The Fintech Bridge aims to "open up an new important market for UK FinTech firms wanting to expand internationally", as well as help both countries to harmonise policies and increase regulatory co-operation.
As part of the Fintech Bridge, Hogan Lovells' Strategic Partner Innovate Finance and FinTech Australia will introduce a regular business to business summit, advising the UK and Australian governments on how best to support the sector.
Hogan Lovells Head of Fintech and Innovation, Emily Reid, stressed the importance of the new Fintech Bridge and Regional Envoys to the UK FinTech market:
"The new Fintech Bridge with Australia will help start-ups with their international expansion into new markets with like-minded regulators. Of equal significance is the appointment of Fintech Regional Envoys to promote the expansion of the sector within the UK, adding opportunity and diversity to the London FinTech powerhouse."
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