Japan and Singapore follow fintech-friendly steps after FCA and ASIC deal

Rick Steves

After recent news of a joint agreement between the UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) that lifts barriers to entry for FinTech startups, the Singaporean government has announced a separate office which is dedicated to such companies. In an attempt to keep the city-state in the frontline of […]

Japan and Singapore follow fintech-friendly steps

After recent news of a joint agreement between the UK Financial Conduct Authority (FCA) and the Australian Securities and Investments Commission (ASIC) that lifts barriers to entry for FinTech startups, the Singaporean government has announced a separate office which is dedicated to such companies.

In an attempt to keep the city-state in the frontline of the financial business, both the central bank and the National Research Foundation (NRF) will set up one-stop virtual office on May 3, where they will be reviewing funding schemes. FinTech labs of UBS and Standard Chartered are already set up in Singapore.

This way, Singapore can work toward avoiding potentially falling behind Japan’s move this week, where it announced intentions of eased investment restrictions for FinTech startups in a chocking business environment where low rates, risk averse population and strict regulation have kept the sector from evolving.

Sophie-Gerber
Sophie Gerber

This can be noticed by the different funding dynamics seen in other countries: in 2015, US, China and India FinTech ventures raised $7.4 billion, $2.7 billion and $1.5 billion, respectively, while the financing in Japan totaled $44 million in the first three quarters.

Some of these regulatory changes in Japan, still to be approved in Parliament in May, include allowing banks to buy stakes of up to 100 percent of non-finance related companies, instead of the current 5-15 percent, which would permit them to fully own robotic investment advisory services and distributed ledger technology (DLT), such as blockchain.

The UK and Australia regulatory authorities FCA and ASIC have already announced their deal last week. Respectively, fintech industries are responsible for an estimated annual revenue of $9.52 billion and $985,000 million. But despite the uplifting news for entrepreneurs and investors, compliance specialist weren’t completely cheerful.

In an interview with FinanceFeeds reporter Ricardo Esteves, Sophie Gerber, Director (Legal and Compliance) at Sophie Grace Legal Pty Ltd., didn’t sound fully optimistic about ASIC intentions of reviewing the AML rules including concessional tax treatment for investments in FinTech firms.

“Yes, we hope so, but historically there has been a mismatch between government policy and ambitions and ASIC’s regulation. For example the government wanted to make Australia a “financial services hub” a few years ago, but the policies and the implementation across all of the regulators were never forthcoming to ensure this happened” – Sophie Gerber, Director, Sophie Grace Legal Pty.

Japan’s latest move could be of major importance to an economy with a risk-averse population, BoJ interest rates at zero and an estimated amount of $9 trillion in individuals’ cash deposits.

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