THE Securities and Exchange Commission (SEC) emphasized the two-fold role regulators play in promoting innovation in financial technologies (fintech), while keeping investors protected and ensuring market stability.
“It’s a delicate balancing act,” SEC Commissioner Kelvin Lester K. Lee said at the 15th Regional Leadership Program for Securities Regulators organized by the Monetary Authority of Singapore with independent nonprofit organization Toronto Centre on Monday.
“On one hand, as regulators we don’t want to stifle innovation. In fact, we want to encourage growth. But on the other hand, we need to be aware of the risks, some of which are very uncertain at this point, that may arise by allowing new innovations to operate,” he added.
Mr. Lee noted how the coronavirus disease 2019 (COVID-19) pandemic put fintech innovations at the forefront, allowing individuals to have easier access to financial services even if there are restrictions in movement.
The SEC recognized that fintech and innovation now play an important part in the country’s economy, however, it keeps in mind the potential risks it comes with.
“We don’t want to unduly expose investors and the public, and the financial system to the risks that can be brought about by improperly vetted innovations,” Mr. Lee said.
The regulator’s newly launched Philifintech Innovation Office (PIO), an office under its Corporate Governance and Finance Department, will be taking on the responsibility of regulating fintech activities within the country.
The SEC aims to have an activity-based approach instead of an entity-based one when regulating fintech, as well as put up “principles-based” regulations. It aims to “remain technology neutral.”
The PIO wants fintech services to have room for growth through promoting an “innovative culture in the corporate sector.”
“Our aim is that through our innovation office, we can regularly touch base with our stakeholders, and we get to learn from each other,” Mr. Lee said.
The SEC said it is finalizing rules on digital asset exchanges, digital asset offerings, and online lending applications.
“Our approach at the commission is that we make every effort to keep an open mind to allow innovations to flourish without losing sight of our mandate to protect the investing public and secure our corporate and capital market sector,” Mr. Lee said. — Keren Concepcion G. Valmonte