Disentangling the “FinTech-Jungle”: A Legal Handbook concerning Innovative Digital Financial Services – co-authored by the OC FinTech experts Tanja Aschenbeck, (LL.M.) and Thorge Drefke – published on 29 October 2018.

The authors of the handbook not only reveal the secrets surrounding the numerous “mysterious” FinTech terms such as “Robo Advice”, but also describe their current and future European and German legal framework as well as the importance and planned influences of the various digital financial services on the financial markets.

In the chapter on Crowdfunding, Tanja Aschenbeck and Thorge Drefke contribute their professional expertise and deal with both current legal regulation and the question of how more suitable regulations could be designed in the future.

The Crowdfunding industry has experienced strong growth in recent years and has thus attracted the attention of the legislator. With the introduction of the Small Investors Protection Act (“Kleinanlegerschutzgesetz – KASG“) in 2015, the German legislator subjected the previously unregulated Crowdfunding market to regulatory regulations. At the same time, a number of special exceptions in favour of Crowdfunding platforms have been created, which are yet linked to certain conditions. If these conditions are met, Crowdfunding platforms are exempted from the prospectus requirement, which now applies in principle.

In the absence of uniform EU regulations, the crowdfunding markets are subject to the applicable national regulations  – such as the KASG in Germany. This leads to a “patchwork” of national laws. However, in order to better reconcile the conflicting interests – being the effective investor protection on the one hand and the exploitation of market potential on the other – the authors believe that uniform European regulation is indispensable. The OC experts feel that the financial market is likely to remain on the move, especially due to the recent (July 10, 2018) extension of the securities prospectus exemption to EUR 8 million in Germany.

In addition the OC experts deal with the innovative forms of non-cash payment in their second chapter “Digital Payment”. The competent legislators are again presented with new challenges arising from Cashless payment in digital space with the help of electronic tools.

The European legislator responded by adopting the EU Payment Services Directives – the first Payment Services Directive (“PSD I“) and the newly revised Payment Services Directive (“PSD II“). According to the authors, both the PSD II and the national implementation of the Directive – the Payment Services Supervision Act (“Zahlungsdiensteaufsichtsgesetz – ZAG“) – lack sufficient precision. Imprecise definitions concerning the scope of application as well as the very general nature of the statutes pose new challenges to practitioners.

Due to the resulting legal uncertainty, the national supervisory authorities feel compelled to participate in the regulatory landscape by publishing binding interpretative letters (“verbindliche Auslegungsschreiben”). In the authors opinion, the “quasi legislative power” of the supervisory authorities endangers the harmonisation of the European payment markets the legislator was originally striving for.

Nevertheless, the OC experts feel that the implementation of the PSD II will have a positive effect on the payment market.

This is not least due to the newly established obligation of banks to make their online banking infrastructure available – free of charge –  to third-party service providers (=competitors), which the authors consider to be an unprecedented intervention in the banking monopoly, paving the way for numerous further innovative technological developments in the payment market.

The Legal Handbook Digital Financial Services is indispensable for all those FinTechies who want to obtain a comprehensive overview of FinTech-Innovations as well as their European and (national) German legal framework. The work will soon be published by Beck-Verlag – unfortunately only in German – and can be ordered here.