The Australian government has published draft laws for “an enhanced regulatory sandbox” that will go easy on FinTech startups by letting them operate without a full license.
The Australian government has revealed drafts of the new regulatory framework that will relax licensing requirements for innovative new FinTech startups in the country. The new framework will enhance Australia’s sandbox for the testing of a wide range of FinTech products and services without the mandatory requirements to meet all licensing requirements of the Australian Securities and Trade Commission. Services can be tested for 24 months with firms required to adhere to consumer protections and disclosure requirements.
The new framework will allow FinTech firms to test and work on:
- providing holistic financial advice in relation to superannuation, life insurance and domestic and international securities;
- issuing and facilitating consumer credit;
- issuing non-cash payment products; and
- providing a crowd-funding service.
‘Non-cash payment’ services like bitcoin payments Brisbane startup Living of Satoshi has seen significant user growth in recent years and Australia’s recent legislation to put an end to the double taxation of digital currency transactions is certain to boost the cryptocurrency sector.
Notably, the marked inclusion of a ‘crowd-funding service’ will come as a relief for startups and companies seeking finance through initial coin offerings (ICOs), a radical new form of fundraising powered by cryptocurrencies. Earlier in September, the Australian Securities and Investments Commission (ASIC), the country’s securities regulator, issued guidelines for ICO promoters and operators after recognizing their “potential”.
Australian Federal Treasurer Scott Morrison has called the new draft legislation a “game changer for competition in the financial services sector” to help the country become a FinTech hub in the Asia-Pacific region.
The official stated:
[T]he FinTech regulatory sandbox will allow a broad scope of activities to be tested without the need to meet all the existing licensing requirements of the Australian Securities and Investments Commission. The enhanced regulatory sandbox will help firms overcome the initial regulatory burden and costs of licensing that may otherwise hinder innovative offerings.
Consultation on the draft regulations are open until December 1, 2017 before the final draft is submitted to become law.