The Dubai International Financial Centre (DIFC) Courts have partnered with Smart Dubai to create what they say is the world’s first “Court of the Blockchain”. According to an announcement on 30 July, they will initially explore how to aid verification of court judgments for cross-border enforcement. They say they plan to create a blockchain-based court designed to streamline the judicial process, remove document duplications, and drive efficiencies. Future research announced will investigate handling disputes arising out of private and public blockchains and out of regulation and contractual terms encoded within smart contracts.
Dubai International Financial Centre (DIFC) has signed a FinTech Memorandum of Understanding (MoU) with professional services company Accenture. Under the MoU, FinTech Hive at DIFC – the first financial technology accelerator in the Middle East region – will collaborate with Accenture’s FinTech Innovation Labs in New York, London and Hong Kong, to share resources and knowledge on research and trends in FinTech. In line with the DIFC Growth Strategy 2024 and Dubai Vision 2021, FinTech Hive gives financial companies access to technologies to support their digital transformation while providing innovators with access to potential clients and investors.
The Islamic Finance News Europe Forum 2017 took place in London on 11 September. The Forum gave several insights into the Islamic FinTech regulatory space.
Ian Johnson, the Chief Executive of the Dubai Financial Services Authority (DFSA) (the regulator of the Dubai International Finance Centre (DIFC)) spoke at the Forum about his organisation’s approach to regulating the FinTech space. He said that regulators are engaging strongly in the sector, often at the behest of their national governments who are leading the charge as a policy matter. The regulator’s job was to allow innovation whilst maintaining systemic and investor protection.
On 28 August, the Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) of Hong Kong entered into a co-operation agreement to establish a framework for mutual assistance to keep abreast of the development and application of FinTech in their jurisdictions. Under the agreement, the SFC and the DFSA will cooperate on information sharing, potential innovation projects and referrals of innovative firms seeking to enter one another’s markets.
The agreement follows the launch of:
- the SFC’s FinTech Contact Point in March 2016 to enhance communication with businesses involved in the development and application of FinTech and RegTech in Hong Kong. Its purposes is to facilitate the FinTech and RegTech community’s understanding of the current regulatory regime in Hong Kong and to enable the SFC to stay up to date with industry developments; and
- the DFSA’s regulatory FinTech regime (see some of our earlier posts on FinTech in Dubai – crowdfunding, accelerator and innovation testing licences)
On 1 August, the Dubai Financial Services Authority (DFSA) launched its regulatory framework for loan and investment-based crowdfunding platforms, the first such framework in a Gulf Cooperation Council country. The regulations aim to ensure clear governance for FinTech businesses and provide appropriate protection for their customers. They also formalise the DFSA’s approach to regulating crowdfunding platforms which had operated through interim arrangements since 2016. The framework has not been officially released as yet so we will publish a link to the regulations when available.
The Dubai Financial Services Authority (DFSA) published a new FinTech consultation paper on 6 March 2017 entitled “Testing FinTech Innovations in the Dubai International Financial Centre (DIFC)”. The paper is the third in a series, setting out the DFSA’s approach to FinTech regulation.
The DFSA had previously determined that the current regime for regulating firms in the DIFC was flexible enough to accommodate many aspects of FinTech without introducing new rules. The latest consultation sets out the DFSA’s approach to FinTech firms that want to test innovative products and services in the DIFC. Firms meeting the qualifying criteria will receive a Financial Services Licence, referred to as an Innovation Testing Licence, which reflects the nature of the activities to be conducted during the testing phase. The DFSA will put in place limits on the FinTech testing activities to ensure appropriate controls for the safety of any customers involved. Given the limits on activities permitted during testing, FinTech firms will not have to comply with DFSA Rules where they are inappropriate at a testing stage. The testing phase is a step towards the FinTech firm obtaining a full Financial Services Licence.