Dubai’s financial regulator has launched a consultation on measures to shepherd new fintechs through a special testing stage, prior to their approval as fully operational firms.
According to the proposals – tabled by the Dubai Financial Services Authority (DFSA) – each fintech that applies to establish itself in the emirate will initially work under a special Innovation Testing Licence (ITL).
“This licence,” explains the consultation paper, “will reflect the nature of activities conducted during the testing phase under the firm’s ITL Test Plan.
“This will include a number of restriction and conditions regarding the activities that a fintech firm can carry out, to ensure that the testing of the business proposition, service or product is appropriately controlled.”
As the paper explains, restrictions and conditions that fintechs in the scheme will be required to observe may include:
In return for honouring those conditions, fintechs would be able to work under a set of simplified regulations designed to provide them with the required space to put their ideas through their paces.
On the potential length of each ITL arrangement, the paper explains: “As the purpose of our approach is to allow the firm to test and develop its fintech proposition (but not to carry on a fully operational fintech business) the DFSA would expect the firm to use the simplified regulatory framework under the ITL for a limited period of time only.
“The period will be generally be six to 12 months and, in exceptional cases, the DFSA may consider extending that to a period of no longer than two years.”
DFSA managing director, policy and strategy, Peter Smith said that his organisation has fielded enquiries from “a number of interested fintech firms” about what kind of opportunities exist for them in Dubai, under the emirate’s current regulations.
He added: “We have concluded that it would be helpful to current stakeholders, and to the wider public, for us to set out more explicitly how we will deal with future enquiries from those interested in establishing a presence in the DIFC for a fintech business.”