Financial technologies such as crypto-currencies, blockchain, and crowdfunding have great potential to disrupt or complement traditional financing, depending on how it is regulated. Until now, technological innovation already moves at a much faster pace than policy makers. Though, experience with self-regulation in the financial sector has proven, time and again, that self-imposed codes of conduct are not a substitute for it.
A new Fintech regulatory framework would encourage the sector to grow in healthy ways and reduce the EU’s dependence on inefficient or too-big-to-fail incumbents. It should have a dedicated supervisory capability to build high standards and trust in the sector and aim to: channel savings to long-term sustainable investment, protect retail customers from manipulation and miss-selling, prevent personal data from being abused to discriminate against people or undermine risk pooling, create common disclosure standards so that platforms can be fairly compared, remove cross-border barriers, and avoid the emergence of new systemic risks.