Regulatory financial technology (FinTech) initiatives have been springing up across the globe over the past few years. This Friday, the main Cypriot regulator, the Cyprus Securities and Exchange Commission (CySEC), announced that it would also be creating an innovation hub.
According to the regulator’s statement, the new hub will busy itself with the development of financial and regulatory technologies. CySEC’s statement implies that the rapid advances made in such technologies meant the regulator needed to take steps to ensure it can align its edicts with new technological developments.
The hub will enable firms, operating outside of or under CySEC’s supervision, to gain access to the regulatory body’s insights. By this, the regulator presumably means they will have a more concrete understanding of how they should go about adhering to the regulator’s rules.
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Alongside this, firms will receive regulatory expertise and gain access to industry and academic roundtables. Perhaps most significantly, CySEC claims that firms in the hub will be able to influence the regulator’s decision-making process as new regulation is being formulated.
CySEC seems to be particularly interested in blockchain technology. Yes, along with ‘diversity’ and ‘machine learning,’ blockchain may be the most annoying buzzword in the financial industry but it does appear to have some practical uses, such as laundering money, and it is understandable that CySEC wants to get a better grasp of it.
The regulator noted that it wants to get a better grasp of the swathe of new investment products and platforms that use blockchain. Specifically, the regulator wants to take count of the risks and benefits involved in using such technology.
Demetra Kalogerou, Chair of CySEC and Athena of the Cypriot financial industry, commented on the establishment of the new hub, saying: “The establishment of the Innovation Hub marks an important and exciting step for CySEC’s supervision of new and innovative Fintech companies in Cyprus. In promoting closer ties with these fledgling but fast-growing industries, we aim to best protect investors by fully understanding the risks and benefits these new products bring.”