The FinTech Guide of Policies and Laws

Personal and business finance management has become much easier and more convenient with the rise of non-traditional financial services. Today, you don’t need to go to a local bank office to pay bills or send a transaction to your family. It’s all done via a broad range of innovative financial software products that have flooded the global financial market and won the hearts of users with comfort, easy onboarding, and greater access to finance. 

Due to such rising demand for FinTech products and services, hundreds of software developers worldwide have designed their unique digital offers to win a fair share of the booming market. Still, it’s not enough to create a sleek and functional app to nail the FinTech niche. A FinTech firm has to be aware of the surrounding legal environment first of all, knowing which regulations it should comply with and what laws regulate its operations. Here is a brief guide to to inform the design of new compliant products.

Introduction to FinTech

As we’ve already said, it is an innovative financial sector that enables fast and low-fee transactions among network users, both in fiat currencies and cryptocurrencies. FinTech apps allow mobile payments, crowdfunding initiatives, stock and crypto trading, and consumer spending management apps. All this variety of financial products can be considered FinTech as they all integrate cutting-edge technology to transform the users’ financial operations.

Risks Associated with FinTech

Overall, the rise of FinTech brings both positive and negative changes to the global financial landscape. The pros of the FinTech evolution include greater access to capital for previously unbanked and underbanked populations, lower commissions for transactions, greater flexibility and user-friendliness of financial services, and a lower threshold for new entrants. On the negative side, the boom of FinTech services brings: 

  • New opportunities for money laundering and sponsorship of terrorism. 
  • Looser compliance requirements and control over the movement of funds. 
  • Identity fraud (creation of fake accounts for criminal activities). 
  • Scams and hackers use mobile app vulnerabilities to steal user data and break into their accounts.

As the recent evidence shows, criminals have found many ways to cheat the system of FinTech firms, so they use these channels for terrorist funding, money laundering, and financial fraud. FinTech providers’ reliance on third-party assistance with identity verification and service provision opens new avenues for cyberattacks and data theft. Thus, it’s imperative to design new rigorous compliance measures, laws, and policies to ensure robust customer data protection and accountability within the emerging FinTech ecosystem. 

Aspects of FinTech Operations Requiring Regulation


As a rule, people think of these companies as private financial services providers exempt from traditional regulatory and legal compliance. However, these firms deal with people’s money, so they also need to comply with many rules and regulations in terms of: 

  • Ensuring transparency of their operations, disclosure of data about risks, and information about the potential conflict of interests. 
  • AML/KYC norms (every provider should have protocols for verifying the user’s identity). 
  • Safe storage of users’ funds. 
  • Risk management at all levels of their operations. 
  • Limits of their liability. 
  • Prudential requirements (the minimum capital with which an investor can access a specific service or professional liability insurance policy). 
  • Regulations about retention of credit risk
  • Detailed information about business continuity and legal procedures associated with the company’s discontinuation of services. 

FinTech Regulations Worldwide

Though FinTech comes with some risks, many countries have already embraced the benefits of technological innovation. They have put regulatory measures in place to control and promote the FinTech industry’s development. 

  • In Australia, the National Prudential Regulation Authority (APRA) oversees FinTech firms and works to reduce entry barriers for new FinTech players. Its operations are regulated by the Australian Securities and Investments Commission (ASIC). 
  • Hong Kong applies identical regulatory and legal requirements for FinTech and traditional banks. Their activities are overseen by the Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA), and the Office of the Commissioner of Insurance. 
  • The USA and the UK have no FinTech-related policy or legal framework to date. However, all of them are required to comply with the AML/KYC regulations set by the FCA and other regulatory entities to prohibit the unregulated transfer of money and assets for criminal activity funding.  
  • In Singapore, the government has established a FinTech Regulatory Sandbox and relies on the decisions of the Monetary Authority of Singapore (MAS) in FinTech regulation.

Regulation of Crypto-Assets

The introduction of crypto-asset exchanges is pretty new in the global FinTech landscape. Still, the booming popularity of cryptocurrencies has made it imperative for governments to consider new ways of regulating crypto-asset transfers. 

  • Abu Dhabi has introduced a Spot Crypto Asset Framework via its Financial Services Regulatory Authority (FSRA) to regulate ICOs and other activities with cryptocurrencies. 
  • France’s AMF regulates digital assets service providers with a 2019 decree. Licensing of FinTech firms is optional here, but they should still register with the AMF and can provide services only upon an approval from the Autorité de Contrôle Prudentiel et de Résolution (ACPR). 
  • New York has an active licensing regime for crypto-asset operations. The Virtual Currency Business Activity (BitLicense) rules came into force in June 2015, covering a wide range of operations with cryptocurrencies.

Regulatory Challenges of U.S.-based FinTechs

There is no FinTech-specific regulatory framework in the USA to date. However, given that financial services of all kinds are subjected to robust regulations, every company should comply with state and federal regulations related to the sphere of its specialization. For instance, a company providing consumer lending services, money transactions, and virtual money operations should get a state license for such activities. At the federal level, the Consumer Financial Protection Bureau (CFPB) oversees FinTech operations and enforces a large number of consumer protection laws upon them. 

Besides, U.S.-based companies need to file for official registration with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). They also need to take proper technical and regulatory measures to comply with the Bank Secrecy Act (BSA) and anti-money laundering (AML) regulations. 

Ricardo is a freelance writer specialized in politics. He is with from the beginning and helps it grow. Email: richardorland4[at]