Dubai regulator unveils fintech innovation licence to thrill
The Dubai Financial Services Authority (DFSA) will allow firms to apply for a financial services licence as it seeks to boost innovation in the region.
As reported in March, DFSA issued a new consultation paper and proposed its licence plans.
The licence, known as an Innovation Testing Licence (ITL), will allow qualifying firms to develop and test concepts from within the Dubai International Financial Centre (DIFC), without being subject to all the regulatory requirements that normally apply to regulated firms. 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.
Ian Johnston, chief executive at the DFSA, says: “As regulators, it is our responsibility to provide a framework which supports the sustainable development of this industry while protecting consumers and financial stability.”
The DFSA says its approach is aligned with the UAE’s National Innovation Strategy to create an “innovation-friendly ecosystem”. In line with the goals of the Dubai 2021 strategy, the DFSA states it is also formalising its approach to loan-based and investment-based crowdfunding platforms. Specifically, it says loan-based crowdfunding has become a “valuable source of financing for SMEs in several jurisdictions”.
Firms will be able to use the ITL to test a product or service for six to 12 months. “In exceptional cases”, the DFSA will consider extending that period. 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 firm will have to cease carrying on activities in the DIFC that need regulation.
