New Australian Draft Legislation Would Empower FinTech Innovation

In order to “help firms overcome the initial regulatory burden and costs of licensing that may otherwise hinder innovative offerings,” the Turnbull Government in Australia published draft legislation and draft regulations for an “enhanced regulatory sandbox” on October 24, 2017. The latest proposals were announced on the website for the Treasurer of the Commonwealth of Australia, MP Scott Morrison.

Firms that are granted exemptions from the Australian Financial Services Licence (AFSL) and/or the Australian Credit Licence (ACL) would be able to test a variety of FinTech activities. The Australian Securities and Investments Commission (ASIC) would make the determinations on how exemptions start and cease to apply.

In a statement, MP Morrison wrote, “The 24‑month testing timeframe will improve firms' ability to evaluate the commercial viability of new concepts, promoting greater competition and delivering more choice for Australian consumers.”

Some of the FinTech products and services that would be tested under the new framework include:

  • providing holistic financial advice in relation to superannuation, life insurance and domestic and international securities;
  • issuing and facilitating consumer credit;
  • issuing non-cash payment products; and
  • providing a crowd-funding service.

An explanatory memorandum for the legislation is available here. Consultation is open until November 3, 2017, for the draft legislation and until December 1, 2017, for the draft regulations.

ASIC has proven friendly to cryptocurrency and FinTech advances. In September 2017, ASIC issued guidance to explain that token offerings have “the potential to make an important contribution to the options available to businesses to raise funds.” Also in Australia, the Parliamentary Friends of Blockchain Group was launched in August 2017.