Balancing Innovation and Investor Protection in FinTech Frameworks
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The UK FinTech sector is globally prominent, driven by technologies like openbanking, AI, blockchain and digital payments. Regulators therefore strive to nurture innovationwhile safeguarding consumers. On the innovation side, the FCA’s Regulatory Sandbox andInnovation Hub provide controlled environments to test new services, reducing time-to-market.Government support (via “API first” open banking mandates and digital licensing) furtheraccelerates new entrants. Conversely, investor protection is assured through existing rules:fintech firms must obtain FCA/PRA authorisation and comply with financial promotion, AML/KYCand data security laws. Recent FCA initiatives exemplify this balance: for instance, proposals tolift the retail ban on crypto ETNs impose strict listing and disclosure requirements. Overall, UKlaw employs a principles-based approach, using tailored regulatory sandboxes and updatedrules (like the Consumer Duty) to allow creative financial services to flourish in a safe, well-regulated environment.
