As the European Union (EU) prepares for the U.K.’s exit from the bloc next year, the EU’s executive is set to propose a draft law aimed at boosting the FinTech market throughout the region.
According to news from Reuters, a document by the European Commission revealed that the law would enable the FinTech sector to grow through crowdfunding and common blockchain technology standards.
“An EU framework would offer a European passport, and, at the same time, ensure the proper management of platforms and the protection of fund providers,” the draft document said.
The proposed law would bypass the mixture of regulatory approaches FinTech firms currently have to deal with, as well as review how firms handle cybersecurity and cyber threats. In addition, the EU would work toward creating common standards for the blockchain technology that supports cryptocurrencies.
“An EU-wide FinTech market will not reach its full potential without the development of open standards that make interoperability possible, simplify the exchange of data between market players and facilitate competition,” the document said.
A “blueprint” that includes best practices and guidelines for setting up innovation hubs will be released by the final quarter of 2018 for regulatory “sandboxes.” Some national watchdogs offer these controlled environments (or “sandboxes”) to FinTech firms for testing new applications on real customers. So far, only 13 of the bloc’s 28 members have set up sandboxes.
This is another step the EU is taking to boost FinTech market growth before the U.K. exits the bloc in 2019. Last September, EU finance ministers met to discuss finding ways to lure more FinTech companies their way, focusing mainly on companies in the U.K., since the region represents the main FinTech market in Europe.
While the Chinese FinTech market was valued at $102 billion in 2015 and the FinTech market in the U.S. was valued around $36 billion, the EU FinTech market, by comparison, is valued at $6 billion and is growing at a slower rate than its counterparts.