David Gyori writing in the Irish Tech News predicts that one of the 10 Fintech Megatrends for 2016 will be Regulators "waking up" to P2P and Crowdfunding.
The Irish Regulator - taking its lead from the European Commission - notified consumers in 2014 that Crowdfunding is not a regulated activity, and recognizing that such regulation could impede the rise of Crowdfunding and P2P Platforms, hasn't introduced any such regulation- yet.
That said, the Regulators are keeping an eye on this space- with the EU Commission recently stating that it dosent intend to introduce legislation- but rather will focus on awareness campaigns with investors and consumers and encouraging best practice.
Its interesting that the new Governor of the Irish Central Bank in a recent address stated that:
"On the subject of cyber risk, we are seeing a material increase in the frequency, sophistication and severity of cyber-attacks on financial sector firms. This will be an important area of focus for us over the coming period. As highlighted by Deputy Governor Cyril Roux in a speech in September, we expect financial firms to be addressing this risk clearly and effectively. In particular, cyber risk is a matter for the board and senior management, not only for the IT division. You can expect to hear more from us on this topic during 2016."
Cyber-risk and Cyber-security is therefore one area where we may see regulatory creep in the Crowdfunding Sector.
Watch this Space.
Peer to Peer Lending and Crowdfunding have been the true favorites of the FinTech world. We think that in 2016 they may start to become the “favorites” of regulators as well. There is clearly a so-called “regulatory arbitrage” meaning that incumbent financial services providers are regulated in a much heavier manner than the new, more nimble FinTech companies. This is partially justifiable by difference in size, but there is an opportunity to be less regulated by simply positioning a company as a FinTech (instead of a traditional financial services provider) and this “regulatory arbitrage” will probably have to be dissolved.