The REGTECH Book

From RegTech to TechReg – Regulation in a Decentralized World

By Axel Apfelbacher¹ and Jasmina Ekic²

¹Chief Strategy Officer, Niiio Finance Group AG

²Business Development Manager, Financial Services Industry

Liberal markets are organized to allow users and providers of services the ability to interact without unnecessary interference by third parties. They are a central element of market capitalism and have been established in many economies as a means of organizing daily interactions.

In all of these markets, though, we encounter rogue behaviour leading to damages suffered by users of services or products offered. The standard reaction is to implement or tighten regulations that are supposed to ascertain that such behaviour is not repeated. This is true for any market, including the provision of financial services, which is one of the most regulated industries these days, not least as a consequence of the global financial crisis that started in 2007.

Existing Regulatory Framework

Today, regulation in financial services is almost exclusively targeting the intermediaries that act as providers of such services. We encourage financial services companies to implement compliance practices and policies that target unwanted behaviour and make them pay damages if they fail to act in accordance with the set of regulations we have unilaterally or multilaterally agreed on as governance frameworks. The mainstay of this approach to regulation is that the potential reputational or monetary ...