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Are you planning to open a fintech company in the Czech Republic or possibly in other European countries? This article will come in handy by explaining the main principles of fintech regulation in the Czech Republic.
The statistics for the European fintech sector are the following: Europe is becoming the leader of financial technology in the whole world. Fintech is accounting for 20% of all global investments and also makes the biggest part of the largest investment category in Europe.
Just like in other EU countries, the provision of investment services and banking can only be conducted with a license for financial activities. Simultaneously, institutions that operate with electronic money or payment services are ruled by the Law on Payment Services. This law applies two EU directives: On electronic money and On payment services.
As to the main regulation of banking and financial services in the Czech Republic, this function is performed by the Czech National Bank.
There are still activities that do not require a financial license in the Czech Republic:
In recent years, a new type of automated investment service has become trendy. They are called Robo Advisor Platforms and their function is to manage client’s stocks and bonds. Such invention allows saving costs, as the robot consultant essentially provides equal services as the human manager. Moreover, the robot’s working time does not need to be limited: it can be prepared to assist a customer any time of day or night. Also, robots do not happen to make emotional decisions.
The Law on Management Companies and Investments Funds rule all collective investment schemes. Specifically, it is the law that applies the EU Directives regulating the management of alternative investment funds, the organization of collective investment in transferable securities.
Momentarily, the Czech Republic does not regulate crowdfunding in any specific way besides cases that are related to attracting deposits or offering investment instruments.
According to the EU Directive, it is necessary to provide a connection to customer accounts to third-party payment system providers only if clients give their consent. If they do not, financial institutions are not obliged to provide data about a customer or a product to third parties. However, there is an exception to this rule: the provision of data on tax evasion, money laundering, and other illegal activities.
The fintech sector is developing quickly: it is growing flexible, first-class, fast, and adaptive. Consequently, the European fintech sector is affecting impressively the work of banking and financial institutions worldwide. As a part of the expanded European system, the fintech sector of the Czech Republic is also evolving and contributing to a new global financial structure.
To become more familiar with the European fintech legislation, arrange a meeting with specialists from COREDO. We will be happy to provide you with individual advice on fintech regulation in the Czech Republic and other legislations.