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Regulation and Fintech Innovation: A Delicate Balance Shaping the Future of Finance

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2 years ago

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By Tim Popplewell, CEO, Scintilla

Fintech innovation and regulatory oversight share a complex and often uneasy correlation. Together, their relationship resembles a dance—a tango—where one leads while the other follows, each attempting to set the rhythm. Yet, the key to success lies in balance. The goal of innovation is to build products and services that solve problems, and the goal for regulators is to ensure that all stakeholders are protected, without hindering the process of innovation. Recent events, such as the $3 billion fine imposed on TD Bank for anti-money laundering (AML) failures, demonstrate this intricate interplay. For emerging fintechs, the lesson from this is clear: compliance isn’t merely a regulatory obligation—it’s a business imperative, innovating an approach to AML and compliance practices early on so fintechs can avoid costly pitfalls while simultaneously driving development forward.

The evolving dynamic between regulation and innovation underscores a broader reality: regulation serves not to stifle fintech but to align its rapid advancements with the interests of consumers, economies, and the broader financial landscape, while protecting all stakeholders in the sector. This alignment is not without challenges. Regulators must perform a delicate balancing act, weighing opportunity against risk and ensuring that fintech’s disruptive potential is harnessed for the greater good. This tango is a continuous negotiation, where each step must be carefully calibrated to ensure progress without missteps.

Innovation creates risk, regulators keep them in check

At its core, fintech innovation arises from necessity—businesses identifying gaps in the market and responding to shifting consumer demands. Whether it’s the rise of digital wallets, peer-to-peer lending platforms, or blockchain-based solutions, fintech pioneers have consistently disrupted traditional financial models to deliver faster, cheaper, and more accessible services. But this industry cycle also produces a side-effect in which risks need to be taken, when changes are being made, and regulators need to ensure that consumers, and the general public are not harmed when these risks are being taken. 

Yet, while fintech moves at the speed of innovation, regulators are motivated by a broader set of priorities. Their focus extends beyond market gaps to encompass systemic stability, consumer protection, and economic opportunity.

Regulators are tasked with safeguarding the integrity of financial systems, ensuring fair competition, and mitigating risks to global and local economies. This comprehensive approach often finds itself lagging behind innovation, understandably leaving them in a reactive position. This is not necessarily a flaw but a necessity. By observing the impact of fintech innovations in real time, regulators can craft policies that address emerging challenges without stifling creativity. The result is a regulatory framework that not only protects stakeholders but also creates an environment where fintech can thrive sustainably.

Regulation’s role in creating opportunity

While fintech is often seen as the primary driver of transformation, the real power to shape the financial landscape, in fact, lies with regulators. Their policies establish the standards and frameworks that determine how, and to what extent, innovations are adopted at scale. Far from being mere gatekeepers, regulators can act as catalysts for growth by creating conditions that encourage experimentation while minimizing risk.

Switzerland’s Crypto Valley serves as a prime example of how regulatory foresight can unlock opportunity. The Swiss Financial Market Supervisory Authority (FINMA) has worked to establish clear guidelines for blockchain and cryptocurrency projects. These frameworks have not only attracted major players like JPMorgan but have also provided smaller startups with the clarity and confidence needed to innovate. By defining the rules of engagement, FINMA has fostered a productive environment where incumbents and challengers alike can experiment with new technologies without fear of regulatory ambiguity.

The regulatory environment, when designed thoughtfully, offers a dual benefit. It paves the way for mass adoption by providing consumers and businesses with the trust and security needed to embrace new solutions. Simultaneously, it fosters competition and collaboration, encouraging fintechs to build on established innovations to create even more advanced offerings.

The regulatory objective to protecting the consumer

Amid the excitement of fintech innovation, it’s easy to overlook the most critical stakeholder: the consumer. For all its potential, fintech must ultimately serve the needs of the people who use its products and services. This imperative is central to regulatory agendas, which prioritize consumer safety and trust above all else.

The rapid evolution of digital finance—from the rise of credit and digital banking to the advent of cryptocurrencies and tokenized assets—has created both opportunities and risks for consumers. While fintechs race to capitalize on shifting demands, regulators work to ensure that consumers are not left vulnerable to exploitation or harm.

This focus has driven the development of compliance standards such as AML and know-your-customer (KYC) requirements, which hold financial institutions accountable for safeguarding consumer interests. However, these regulations do more than just protect consumers—they also spur innovation. Fintech companies are increasingly leveraging artificial intelligence (AI) and blockchain technology to streamline compliance processes, demonstrating how regulation can serve as a springboard for technological advancement.

For instance, AI-powered KYC solutions are reducing onboarding times while enhancing accuracy, and blockchain-based systems are creating tamper-proof records that bolster trust in tokenized assets. By prioritizing consumer safety, regulators not only mitigate risk but also create opportunities for fintechs to differentiate themselves through innovation.

The need to manage risk to economies and markets

While consumers are a primary concern, regulators must also consider the broader economic implications of fintech innovation. There’s a reason many new fintech companies are called ‘disruptors’; disruption is inherent to fintech’s DNA, but unchecked disruption can pose significant risks to local and global markets.

Take, for example, the rise of cryptocurrency and blockchain-based finance. By enabling near-instantaneous cross-border transactions, crypto has the potential to upend traditional banking systems. Yet, this same capability has also raised concerns about money laundering and illicit activities, prompting regulators to take a cautious approach.

In Dubai, the Virtual Assets Regulatory Authority (VARA) has established a rigorous compliance regime, not just for cross-border transactions but for fintech companies more widely and the license to operate in this region rests with these requirements. 

While the high cost of obtaining a VARA license has limited market entry for smaller players, it has incentivized collaboration within the industry. For example, Scintilla Network, a leader in tokenized real-world assets, has extended its broker-dealer license to partners, creating a collaborative ecosystem where smaller firms can innovate without bearing the full burden of regulatory compliance.

Such examples highlight a crucial dynamic: regulation may introduce challenges, but it also drives solutions. By encouraging collaboration and resource-sharing, regulatory frameworks can encourage an environment where innovation thrives despite—or perhaps because of—the constraints imposed.

Ensuring a level playing field

As fintech matures, regulators face a growing challenge: maintaining fairness in an increasingly competitive landscape. While collaboration has been a boon for the industry, the looming threat of market monopolies is a significant raison d’être for regulators who serve to cultivate equal opportunities for businesses.

Major players are rapidly consolidating their positions, leveraging their scale and resources to dominate emerging markets. But where newcomers and new entrants to the industry may have once held the upper hand with niche offerings and never-seen before USPs, the big dogs are quickly catching up, offering the same if not better services, products and user experiences to its already significant share of the market. 

Are we seeing a monopolized market in the making? Perhaps. The competitive landscape is not just an economic issue—it’s an innovation issue. Smaller fintechs are often the source of groundbreaking ideas that challenge the status quo. It will be up to regulators to re-level the playing field for smaller institutions to maintain access to its piece of the growing, global, digital asset pie.

Finding balance in the future of fintech

As fintech and regulation continue their intricate dance, the path forward will require careful coordination. Innovation must be encouraged, but not at the expense of stability or fairness. Regulation must adapt, but without stifling the creative spirit that defines fintech. This balance is not easy to achieve, but it is essential for ensuring that the benefits of fintech are shared widely and sustainably.

Regulation provides the structure, ensuring that each step is deliberate and aligned with the broader interests of society. Together, they navigate the complexities of the financial landscape, charting a course that is both dynamic and secure.

The $3 billion fine levied against TD Bank serves as a stark reminder of the stakes involved. For fintechs, the message is clear: robust compliance is not optional—it is a prerequisite for sustainable growth. By embracing regulation as a partner rather than an adversary, fintech companies can not only avoid costly missteps but also unlock new opportunities for innovation.

In the end, the relationship between fintech and regulation is not a battle but a partnership—a dance that, when executed with care, can lead to a future where innovation and stability coexist.

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Financial

DO FISCAL STIMULUS MEASURES SUPPORT THE US MARKET GROWTH, AND IS A DEFAULT POSSIBLE?

Published

4 hours ago

on

September 10, 2026

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With the dirham pegged to the US dollar and UAE investors exposed to global markets, decisions made by the Federal Reserve and the US government can influence local borrowing costs, liquidity, and investment
sentiment. Michael Smirnow, Chief Investment Officer, Arabian Capital Gulf
After the global financial crisis, U.S. authorities tried to stimulate the economy primarily through monetary measures: the Federal Reserve cut interest rates to zero and launched quantitative easing (QE) for the first time, purchasing assets to provide market participants with liquidity. As a result, the Fed’s balance sheet grew to USD 8 trillion by 2021. However, between 2008 and 2020, the U.S. economy did
not experience rapid growth, and inflation regularly remained below the target level. Everything changed in 2020, when the government entered the stimulus fray for the first time in many years. While the Fed’s accommodative monetary policy primarily helped large banks and market participants, at the onset of
the pandemic the U.S. government began distributing money to households and increasing budget expenditure across nearly all areas. Compared with monetary measures, these fiscal stimulus measures proved to be a significantly more powerful tool for stimulating the economy; however, they increased
government debt by the aforementioned 61%. Against this backdrop, we expect the next few years to be shaped primarily by fiscal stimulus, with
government action, rather than the Federal Reserve, becoming the key factor for investors. Indeed, while the private sector ran large deficits before 2008, the deficit now lies with the government, while private-sector indebtedness is declining. In the years following the pandemic, the largest government deficits coincided with the strongest growth in financial markets. This is unsurprising, since a public-sector deficit becomes private-sector income. This dynamic enabled the U.S. economy to remain resilient in 2023-2024 despite the Fed’s record pace of interest-rate increases. Whichever U.S. political party is in power will continue along this path;

Trump is also doing the same through legislation known as the “Big Beautiful Bill.” As long as inflation in the United States remains under control, this race will continue.
The current balance between monetary and fiscal stimulus vividly illustrates this argument. On the one hand, the U.S. Federal Reserve is adopting an increasingly neutral stance and is clearly in no hurry to cut interest rates or introduce new stimulus programmes. On the other hand, the Treasury is entering the fray: as yields on long-term U.S. bonds confidently exceed 5%, the Treasury has launched a program to buy back its long-term debt. In effect, this gives the bond market the same kind of stimulus the Fed previously delivered.

Thus, the balance of power is changing, but the direction remains the same: the United States still needs accommodative monetary conditions. If these are not achieved through monetary measures, they will be achieved through fiscal ones.
(Arabian Gulf Capital (AGC) holds a Category-1 Investment Firm license issued by the Central Bank of Bahrain and provides tailored investment solutions to individual, corporate, and institutional clients.)

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Navigating Growth and Liquidity: The Shift to Predictive Credit Intelligence in the GCC

Published

6 days ago

on

September 4, 2026

By

As GCC businesses expand into new markets and increasingly complex supply chains, traditional credit assessment is giving way to a more predictive approach. In this interview with Mohamad Jomaa, CEO and Country Manager for GCC and Egypt at Coface, we explore how real-time data, AI and early-warning intelligence are helping CFOs anticipate payment risk, protect working capital and make more confident decisions across customers, suppliers and markets.

What is driving the shift from relationship-based credit decisions to predictive credit intelligence among CFOs in the GCC?

Relationships remain fundamental to business in the GCC and will continue to be. What has changed is the speed at which companies are expanding into new sectors, markets, and supply chains. As organizations grow beyond their traditional networks, finance leaders need additional tools to assess customers, suppliers, and partners they may not know well.

Today’s CFOs are increasingly complementing business relationships with data-driven insights. They need greater visibility not only into credit risk, but also into supply chain dependencies, corporate ownership structures, payment behavior, and potential vulnerabilities across their ecosystem.

Predictive intelligence provides that forward-looking perspective. It helps businesses make faster and more informed decisions, strengthen due diligence processes, identify opportunities, and anticipate risks before they impact cash flow, operations, or growth plans.

What trends are you currently seeing in payment delays and corporate defaults across the UAE and Saudi Arabia?

The overall economic outlook in both the UAE and Saudi Arabia remains positive, supported by ambitious investment programs and continued economic diversification. At the same time, businesses continue to face uneven market conditions across sectors.

Drawing on Coface’s unique experience as a global trade credit insurer, we monitor payment behavior, claims activity, and credit events across millions of companies worldwide. What we are seeing today is not necessarily a significant increase in corporate failures, but rather signs of pressure on working capital in specific industries.

Payment delays have become more common in sectors exposed to longer project cycles, margin pressure, or supply chain disruptions. For finance leaders, the challenge is distinguishing between temporary liquidity constraints and deteriorating credit quality. This is where access to real-time payment data and early warning indicators becomes particularly valuable.

How can better credit intelligence improve cash flow, working capital, and overall financial resilience?

Better intelligence enables businesses to make more informed decisions across the entire customer and supplier lifecycle. By combining financial information, payment behavior, sector analysis, ownership data, Country Risk Assessments, Sector Risk Assessments, and ongoing monitoring, organizations gain a much clearer view of both risk and opportunity.

This has a direct impact on cash flow and working capital. Businesses can identify signs of financial stress earlier, reduce exposure to overdue accounts, prioritize collections efforts, and allocate credit more effectively. Access to real-time information and early warning indicators allows companies to act before issues translate into cash flow challenges.

Increasingly, however, financial resilience is not only about customer risk. It is also about understanding vulnerabilities across the supply chain. A disruption involving a key supplier, contractor, or logistics partner can have a significant impact on operations, costs, and liquidity. Better intelligence provides greater visibility into these critical dependencies, helping organizations identify concentration risks, assess the financial health of strategic partners, and strengthen business continuity planning.

As companies expand into new markets and engage with new customers, suppliers, and partners, they need confidence in who they are doing business with. Access to reliable data on ownership structures, financial health, payment behavior, sector outlooks, and country risk helps organizations make better-informed decisions and reduce uncertainty when entering new commercial relationships.

. What warning signs should finance leaders monitor before extending credit to new customers or entering unfamiliar markets?

Financial statements remain important, but they only tell part of the story. Finance leaders should also evaluate payment behavior, ownership structures, management stability, sector outlooks, supplier concentration, and exposure to geopolitical or regulatory risks.

One of the most valuable early warning indicators is a deterioration in payment behavior. In many cases, companies begin showing signs of financial stress long before it becomes visible in published financial statements.

Similarly, supply chain concentration risks should not be overlooked. A business may appear financially sound while remaining highly dependent on a small number of customers, suppliers, or projects. Understanding these dependencies is an increasingly important component of due diligence.

Effective credit decisions require a broader assessment of the business ecosystem rather than focusing solely on traditional financial metrics.

This is why a combination of company information, payment behavior, Country Risk Assessments, Sector Risk Assessments, and supply chain intelligence is increasingly becoming an essential part of the decision-making process.

How are AI and predictive analytics changing the way organizations assess credit risk and make financing decisions?

Financial statements remain important, but they only tell part of the story. Finance leaders should also evaluate payment behavior, ownership structures, management stability, sector outlooks, supplier concentration, and exposure to geopolitical or regulatory risks.

One of the most valuable early warning indicators is a deterioration in payment behavior. In many cases, companies begin showing signs of financial stress long before it becomes visible in published financial statements.

Similarly, supply chain concentration risks should not be overlooked. A business may appear financially sound while remaining highly dependent on a small number of customers, suppliers, or projects. Understanding these dependencies is an increasingly important component of due diligence.

Effective credit decisions require a broader assessment of the business ecosystem rather than focusing solely on traditional financial metrics.

This is why a combination of company information, payment behavior, Country Risk Assessments, Sector Risk Assessments, and supply chain intelligence is increasingly becoming an essential part of the decision-making process.

What sectors in the GCC are showing the strongest opportunities, and where are the highest risks based on your data?

Our outlook combines insights from Coface’s payment experience data, claims observations, Country Risk Assessments and Sector Risk Assessments. Together, these provide a comprehensive view of the opportunities and vulnerabilities shaping the business environment across the GCC.

We continue to see attractive opportunities in sectors supported by economic diversification strategies, digital transformation, infrastructure investment, logistics development and the energy transition. These areas are benefiting from sustained investment, strong policy support and growing regional demand.

At the same time, businesses operating in sectors facing tighter margins, elevated input costs, project execution challenges or longer payment cycles require closer monitoring. What is important to remember is that risk is rarely uniform across an entire sector. Performance can vary significantly from one company to another depending on its financial strength, competitive positioning, customer base and exposure to broader supply chain dynamics.

Looking ahead, how do you see the role of predictive intelligence evolving within corporate finance over the next three to five years?

Over the next three to five years, predictive intelligence will become an integral component of decision-making across finance, procurement, sales, treasury, compliance, and risk management functions.

We expect companies to move beyond using intelligence solely for credit assessments and begin embedding it throughout the business. This includes supplier selection, customer onboarding, supply chain management, compliance checks, investment decisions, and strategic planning.

The organizations that will be most successful are those that can combine technology, data, and human expertise to obtain a holistic understanding of their business ecosystem.

In an increasingly interconnected world, success will depend not only on knowing who you do business with, but also on understanding the risks and opportunities across the entire value chain. Access to reliable, forward-looking intelligence will therefore become a key competitive advantage, helping companies grow confidently while remaining resilient in a rapidly changing environment.

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Standard Chartered becomes first Global Systemically Important Bank (G-SIB) to launch Institutional Bitcoin and Ether spot trading in the UAE

Published

1 week ago

on

September 3, 2026

By

Standard Chartered today announced the expansion of its institutional Bitcoin (BTC/USD) and Ether (ETH/USD) spot trading in the UAE through ‘Standard Chartered DIFC’[1].

This makes Standard Chartered the first Global Systemically Important Bank (G-SIB) to offer the capability in the market and the only global bank currently offering institutional digital asset spot trading in the region. The move further broadens the bank’s regulated digital asset offering in the UAE by adding execution to its custody offering.

The capability enables eligible institutional clients to access deliverable Bitcoin and Ether spot trading through Standard Chartered’s electronic trading channels. It is integrated into the Bank’s existing platforms, enabling clients to access crypto-asset trading through familiar FX interfaces.

Clients may settle trades with a custodian of their choice, including Standard Chartered’s digital asset custody solution that was launched in September 2024.

Rola Abu Manneh, Chief Executive Officer, UAE, Middle East and Pakistan at Standard Chartered, said: “The UAE has developed a clear digital assets regulatory framework that supports institutional participation and innovation. Extending our Bitcoin and Ether spot trading capability to institutional clients is a significant step in broadening our regulated digital asset proposition in the market. By combining execution with secure custody, governance and the connectivity of a global bank, we are providing clients with a more integrated way to participate in digital asset markets.”

Christopher Parsons, Senior Executive Officer, Standard Chartered DIFC, said: “DIFC provides an established platform for international financial institutions to deploy global capabilities across markets. Extending our institutional digital asset trading capability through the Centre demonstrates the strength of that model, combining Standard Chartered’s global markets expertise and network with a regulated base from which we can serve clients across the region.”

Standard Chartered first introduced institutional Bitcoin and Ether spot trading through its UK branch in July 2025, becoming the first G-SIB to offer deliverable spot crypto-asset trading to institutional clients. The UAE launch extends that established global capability into a market where the Bank has been building its institutional grade digital assets offering.

The latest UAE capability builds on Standard Chartered’s broader digital assets strategy, which spans custody, trading and tokenisation capabilities through its Corporate and Investment Bank, while its ventures ecosystem extends these capabilities through Zodia Markets and Libeara. Together, these capabilities are designed to support institutional clients’ evolving digital asset needs through regulated infrastructure and services.

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