Today we are facing increasingly intense and rapid changes in the world of finance and financial services, and in this sense, regulators struggle to keep up. Thus, we see that Fintech, regulators themselves, and financial firms want to be competitive, efficient, and up-to-date. In this sense, the University of Cambridge launched a long-range program (called the regulatory genome project) to face and solve some challenges to improve the regulation of finance globally.

What is the project about?

The Regulatory Genome Project has three parts: the first consists of creating an open repository of regulatory information that is machine-readable; the second part is to encourage entities and agencies to write regulations legibly, and the third part is to promote standardized regulations across borders.

Fintech companies want clarity regarding regulations, as they know that their sector is a trust-generating mechanism. If there is no trust, there will be no adoption by their target audience. Regulators and governments also understand that good regulation can be implemented efficiently, allowing innovation to drive and making the market more open and competitive.

Starting the Regulatory Genome

The Regulatory Genome starts from a research project led by the CCAF. It relies on funding initially provided by the Omidyar Network to create the solution called RegSimple, which simplifies the comparison of regulations in different jurisdictions (as reported by the University of Cambridge). Besides, the United Kingdom’s Foreign, Commonwealth, and Development Office have contributed funds that will allow the scope and functionality of RegSimple to be expanded to meet the needs of regulators in emerging economies (developing countries). It is important to note that there are currently regulators in more than 20 jurisdictions contributing to the project.

RegSimple initially started as a tool to assist Fintech companies in understanding local and international regulations. Several Fintech companies have problems expanding into other underlying markets since they have to apply for different permits and meet certain requirements, which often generates friction. Another point to keep in mind is that understanding the regulatory environment requires time and resources, making the process difficult.

The purpose of RegSimple

The RegSimple project will help (developing) countries with digital finance projects as these countries continue to improve their financial regulations. Among the most followed regulators is the Monetary Authority of Singapore (MAS), the Abu Dhabi Global Markets in the US, and the Financial Conduct Authority (FCA). Importantly, regulators face increasing challenges due to the impending shift towards digital innovation regarding financial services.

Impact of the pandemic

The impact of Covid-19 has accelerated the process of change, putting regulators on the “defensive” by having to recognize that they need to “respond” to the emergence of new risks, especially around cyber risk (the risk that is not covered in many existing regulations). This situation has caused many regulatory entities to update or implement systems that allow them to be more secure and competitive.

What do you think about this topic? Did you already know about this project? Do you know anything else about this project?

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