The rules will take the form of new legislation being prepared by the European Commission, in response to complications for investors in supporting start-ups in financial services where the start-up operates across more than one European member state. The rules will not only apply to members of the European Union but also to countries that are members of the single (or ‘internal’) market (the 28 member states plus Switzerland, Iceland, Liechtenstein and Norway).
News about the changes to rules came from Valdis Dombrovskis, who is the vice-president of the European Commission (EC) in an interview with the Financial Times. One aim will be to create fintech hubs, offering networks, work-spaces and attractive incentives for fintechs. Here there is concern about the number of fintechs gravitating towards London and the U.K.’s impending – 2019 – exit from the European Union and uncertain relationship with the single market.
Single digital European market
Dombrovskis told the newspaper: “Europe is certainly well placed for new fintechs emerging, both in terms of the necessary skills, financing for innovation, availability of capital. Everything is there for Europe to be a great place to start fintechs.”
According to analysis by Business Insider, the rules are intended to create “a digital single market” through the removal of barriers. This will especially aid European fintechs to achieve the same scale (in terms of operating over different territories) as happens across Asia and within the U.S. With this it is expected that a greater level of investment will be directed into European fintechs.
While details as to the new rules remains sketchy, the draft legislation from the European Commission is expected in early 2018.
