LONDON (Reuters) - The European Union’s executive will propose a draft law on crowdfunding and forge common blockchain technology standards to help a European financial technology sector flourish, an EU document seen by Reuters showed on Monday.
The European Commission is due to publish its plans, perhaps as soon as this week, as it seeks to encourage fintech, a sector that promises future growth and jobs.
The departure of Britain, a major fintech hub, from the bloc next year, has put pressure on Brussels to step up efforts to encourage fintech firms to set up shop in the European Union.
The EU plans include a proposal for a bloc-wide licensing system for crowdfunding platforms which allows investors to fund start ups.
“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.
It would avoid the patchwork of regulatory approaches fintech firms currently face, it added.
But the case for broad regulatory action and reforms for fintech at this stage is limited, the document said.
Instead, many of the measures involve regulators and the industry working together.
How to improve resilience of fintech firms to hacking will be assessed, along with quantifying the costs and benefits of a “cyber threat testing” for major market participants and infrastructures within the whole EU financial sector, the document said.
The EU executive will review existing financial rules to see if they are suitable for cryptocurrencies and initial coin offerings.
The bloc’s financial services chief, Valdis Dombrovskis, said last week the EU stood ready to regulate cryptocurrencies if need be.
The EU will also boost efforts to forge common standards for the blockchain technology that underpins cryptocurrencies, seen as having a future in payment and securities trading services.
“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 says.
The commission will present a “blueprint” by the final quarter of 2018 for regulatory “sandboxes” or the controlled environment some national watchdogs already offer fintech firms for testing new applications on real customers.
The blueprint would contain best practices and guidelines for setting up innovation hubs. Only 13 of the bloc’s 28 members have set up sandboxes as some national watchdogs say it is not part of their remit.
Reporting by Huw Jones, editing by Louise Heavens and Jon Boyle