“In view of emerging technology in financial markets and services, the United States Commodity Futures Trading Commission (CFTC) and the United Kingdom Financial Conduct Authority (FCA) have reached this cooperation arrangement in order to enhance mutual understanding, identify market developments and trends, facilitate innovation with respect to financial technology (“FinTech”), and foster the use of technology for more effective and efficient regulation and oversight of financial markets and participants (“RegTech”).”
That’s the opening of a signed agreement between Britain’s FCA and America’s CFTC, binding the two to support “innovative firms through each other’s financial technology (FinTech) initiatives – LabCFTC and FCA Innovate.”
The agreement might fast-track company approvals from one regulator if they have undergone the regulatory process of the other.
With the two so agreeing to share information on market trends and developments as well as share insights derived from sandboxes, proof of concepts, or innovation competitions.
“FCA’s Project Innovate is the gold standard for thoughtful regulatory engagement with emerging technological innovation,” CFTC’s Chairman Giancarlo said before adding:
“This arrangement demonstrates our cross-Atlantic commitment to facilitating market-enhancing innovation and sharing best practices in FinTech engagement.”
Although FCA has had a number of such agreements, including with Australian counterparts, Canada, Hong Kong, Singapore and others, “this is the first FinTech innovation arrangement for the CFTC with a non-US counterpart,” Giancarlo says. While Andrew Bailey, Chief Executive of the FCA, stated:
“International borders shouldn’t act as a barrier to innovation and competition in financial services and that is why agreements like the one we have signed today with the CFTC, a forward looking and proactive regulator, are so important.
As our first agreement of this kind with a US regulator, we look forward to working with LabCFTC in assisting firms, both here in the UK and in the US, who want to scale and expand internationally in our respective markets.
As part of the Arrangement, the FCA and the CFTC will be hosting a joint event in London to demonstrate how firms can engage with both regulators.”
FCA has led the way in this space as far as regulation is concerned, declaring a sandbox where rules can be more lenient or fully discarded under regulatory supervision as far back as 2014.
That was soon followed by a number of other jurisdictions, including CFTC itself which launched its own sandbox in May 2017.
FCA’s close collaboration with blockchain tech companies under Project Innovate has given them first hand experience of the challenges innovators face both from the market and other potential competitors, such as banks which FCA has implicitly accused of engaging in anti-competitive practices.
FCA’s Innovation Hub has supported over 500 businesses and the authorization of 43 businesses since it launched, with 16 new companies joining in December, including an Ethereum insurance dapp.
They have, moreover, been somewhat quite on ICOs, simply clarifying that many of them might not fall within their remit. But Canada’s equivalent has gone further and has approved what remains one of the very few regulated ICO.
CFTC says they have assisted over 150 entities since the Lab launched and will soon “seek public feedback on a planned 2018 innovation competition.”
Its Chairman, Christopher Giancarlo, has called for a “Do No Harm” approach and has often praised FCA where Fintech and blockchain based innovation is concerned.
FCA, therefore, is seemingly placing itself at the centre of a global Fintech regulatory framework, now assisted by Giancarlo’s leadership. Potentially showing in the process how Britain could lead or assist in leading after Brexit by tapping into common jurisdiction and equally forward looking regulatory environments.