The Dubai Financial Services Authority (DFSA) has announced that it will now allow FinTech firms to apply for a temporary licence, giving them the opportunity to test new innovative FinTech products and services.
This initiative signals the next phase of the DFSA’s regulatory roadmap which aims to foster greater innovation in Dubai.
The new Innovative Testing Licence will allow qualifying FinTech firms to develop and test innovative concepts from within the Dubai International Financial Centre, without being subject to all of the regulatory requirements that normally apply to regulated firms.
The licence will be available to firms for six to 12 months, but the DFSA will consider extending that period in exceptional cases. The DFSA will work with applicants to understand the business proposal and establish the appropriate controls for the safety of any customers involved, on a case-by-case basis.
If a firm has met the outcomes detailed in the regulatory test plan, and it can meet the full DFSA Authorisation requirements, it will migrate to full authorisation. If it does not, the company will have to cease carrying on activities in the DIFC that need regulation.
Ian Johnston, chief executive at the DFSA, said: “FinTech is changing the landscape for financial services, providing more opportunities to seek financing and increasing financial inclusion. As regulators, it is our responsibility to provide a framework which supports the sustainable development of this industry while protecting consumers and financial stability.
“Our efforts to develop a regulatory framework that promotes growth and innovation, while protecting financial stability and consumers, is part of our contribution to Dubai’s greater vision of becoming an information-based society and a smart city.”
In line with the goals of the Dubai 2021 strategy, the DFSA is also formalising its approach to loan-based and investment-based crowdfunding platforms. Specifically, loan-based crowdfunding has become a valuable source of financing for SMEs in several jurisdictions.
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