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A joint report by The Cambridge Centre for Alternative Finance, the World Bank and the World Economic Forum, has found that while 12 out of 13 fintech sectors reported year-on-year growth during the first half of 2020, significant discrepancies between sectors and regions remain. Digital banking, digital identity and regtech sectors showed a more modest growth increase of 10% compared to their counterparts in digital payments, digital savings, wealthtech and digital asset exchanges which saw transaction volumes grow in excess of 20%. Procyclical digital lending fintechs saw an average 8% decrease in transaction volumes. Fintechs based in Emerging Markets or Developing Economies saw higher average growth in transaction numbers and volumes (15% and 12% respectively) than those in Advanced Economies. https://www.jbs.cam.ac.uk/faculty-research/centres/alternative-finance/publications/2020-global-covid-19-fintech-market-rapid-assessment-study/

"The Monetary Authority of Singapore has started using an advanced data science tool named Apollo to help enforcement officers detect misconduct in financial markets, the central bank said in its inaugural enforcement report."

This BIS paper argues that asset tokenisation and underlying distributed ledger technology (DLT) open up new ways of supervising financial risks. It then puts the case for "embedded supervision", ie a framework that allows compliance with regulatory goals to be automatically monitored by reading the market's ledger, thus reducing the need for firms to actively collect, verify and deliver data.

The European Insurance and Occupational Pensions Authority (EIOPA) published a discussion paper on blockchain and smart contracts in insurance which aims to provide a high-level overview of risks and benefits of blockchain and smart contracts in insurance from a supervisory perspective. It found that blockchain has the potential to reduce duplication of processes, increase process automation and efficiency, enhance customer experiences, and improve data quality. On the other hand, it may trigger new risks to insurers, supervisors, and consumers.

The World Bank Group and the Cambridge Centre for Alternative Finance published a survey containing responses from regulators in more than 110 jurisdictions around the world on their approaches (and challenges) to the regulation of peer-to-peer lending, equity crowdfunding, and initial coin offerings.

According to the report, 90 percent of regulators "mentioned benchmarking and lessons learned from other jurisdictions as key triggers prompting changes in regulation more frequently than any other trigger." The survey also found that less than a quarter of respondents formally regulate peer-to-peer lending and initial coin offerings, while less than 40 percent of respondents have frameworks in place to regulate equity crowdfunding. Respondents also noted that new innovations and models are stretching regulatory resources. Regulatory resources dedicated to equity crowdfunding and initial coin offerings since 2017 have grown by over one-third and one-sixth for peer-to-peer lending. The survey also questioned the extent to which "light touch" regulatory frameworks are applied across those three areas. Lastly, the study finds that low-income jurisdictions are catching up to high-income jurisdictions, especially in regard to the regulation of peer-to-peer lenders. Here, low-income areas "are almost three times as likely as high-income ones to review their regulatory frameworks for peer-to-peer lending (43% vs. 16%)." However, as the study further shows, low-income jurisdictions are far less likely to have active regulatory innovation initiatives in place (innovation offices, sandboxes, RegTech/SupTech programs).

The Monetary Authority of Singapore (MAS) has launched a S$35 million Productivity Solutions Grant (PSG) for the financial services sector to help smaller financial institutions adopt digital solutions for more streamlined data reporting to MAS. The grant is currently applicable to banks and will be subsequently expanded to include insurers and capital market intermediaries. The PSG provides funding support for financial institutions with no more than 200 employees, to adopt regulatory reporting solutions from pre-approved managed service providers.

The Bank for International Settlements (BIS) Innovation Hub announced Project Ellipse, a proof of concept (POC) to explore how supervision could become insights-based and data-driven using an integrated regulatory data and analytics platform. If implemented, regulatory authorities, as the ultimate end users of the platform, would be able to digitally extract, query and analyse a large quantity of data from diverse sources. These data could then be relevant to current events in real time and visible via dashboards, informing them of early supervisory actions that may need to be taken. In Phase 1, partnering with the Monetary Authority of Singapore, the Bank of England and the International Swaps and Derivatives Association, the concept of cross-border digital regulatory reporting, using a machine executable data model, will be explored.

"Emtech, an African provider of central banking infrastructure, introduced its Central Bank Digital Currency (CBDC) Innovation kit last month. The kit caters to fintechs and financial service providers interested in experimenting with solutions and business models based on digital currencies pioneered by central banks."

The European Commission has reportedly put out a tender for a study on embedded supervision of decentralised finance. The study will entail a six month pilot project to develop, deploy and test a technological solution that would enable regulatory bodies to automatically monitor compliance by reading public blockchain data.

The Bank of England (BoE) published a discussion paper that sets out its proposed regulatory framework for systemic payment systems using sterling-denominated stablecoins and related service providers. It was published alongside a discussion paper from the Financial Conduct Authority (FCA) on their regulatory approach to stablecoin issuers and custodians, a letter from the Prudential Regulation Authority (PRA) to bank Chief Executive Officers on innovations in the use by banks of deposits, e-money and stablecoins, and a roadmap paper, which sets out how the various regimes interact together. Notably, the BoE discussion paper favors stablecoins fully backed by central bank deposits as the most appropriate for systemic payment systems using stablecoins.

The Bank for International Settlements (BIS) Innovation Hub Singapore Centre and the Monetary Authority of Singapore (MAS) have developed a new prototype platform that integrates regulatory data and analytics. Known as Project Ellipse, the platform successfully demonstrates how regulatory and other data, such as articles and news, can be integrated into a single platform to help regulatory authorities identify potential risks to individual banks and the banking system. The new prototype is the first to be published on BIS Open Tech, a new platform for sharing software as public goods for further testing, customizing and scaling.