The global rise of Fintech is encouraging investor interest all over the world. Governments are looking into blockchain technology to modernize their systems and private firms are funding promising startups. The latest move has been made by the European Union. Legislation has been introduced to provide crowdfunding passports to citizens to fund the fintech startups they are willing to support.
The legislation, drafted by the European Commission (EC), is called the Fintech Action Plan. It will allow consumers to bypass the banks and create a government sponsored Kickstarter-style platform. The passports will be issued by the European Securities and Markets Authority and will allow for Fintech companies to operate across the EU and for investors to reap returns anywhere in the EU.
The advent of Brexit will, of course, effect this law since separate clauses will have to be established if British fintech companies wish to take advantage of it.
With this law the EC hopes to create a ‘single consumer market for financial services’ as well as a ‘Digital Single Market’. However, the law is unlikely to become effective before late 2022 as there are Parliamentary Elections next year.
The advantage of legislation like this in a market as large as the EU is that it incentivizes entrepreneurship regardless of national or individual economic hardship. A company being founded in Greece or Italy, countries hit hard by economic recession, would be able to get funding from any nation within the EU without a hitch. This would, in theory, help individual economies fare better.