Egypt’s Financial Regulatory Authority (FRA) has approved a draft law to develop and regulate fintech in non-banking activities, just weeks after forming the committee to prepare the new rules.
Covering areas including crowdfunding and digital investments as well as issuance of bonds and securities, the draft law enables the FRA to issue temporary licenses to qualified fintech companies. The regulator is required to establish a regulatory sandbox for fintech companies to test their products and services under the supervision of the regulators. IFN understands from a previous announcement by the FRA, that the sandbox would likely be a virtual setup.
While there is no explicit provision for Shariah compliance, the new framework could pave the way for the development of Islamic fintech solutions in the North African country which is home to three fully-fledged Islamic banks and 14 Shariah banking windows. The country has seen an uptick in Islamic finance activities including the issuance of corporate Sukuk, signalling the growing acceptance of Shariah instruments as a fundraising tool. FRA Chairman Dr Muhammad Omran during the announcement of the formation of the draft law committee noted that fintech is “no longer a luxury but an essential tool to facilitate financing”.
The draft defines the types of companies and solutions that would be regulated under the proposed framework as well as licensing procedures, infrastructure requirements, technical competence and information systems, organization structure and professional competence as well as other minimum requirements to facilitate fintech activities.