FSA Launches Payment Innovation Project (PIP)
The Financial Services Agency established the "FinTech Proof-of-Concept Hub" in September 2017 to help resolve hesitations and concerns that FinTech companies and financial institutions tend to have when attempting unprecedented proof-of-concept experiments, by supporting their experiments through the clarification of related laws and regulations interpretations and compliance/supervisory response issues.
Recently, progress has been observed domestically and internationally in the advancement of payment systems utilizing blockchain technology, such as the efficiency improvement of cross-border remittances and DvP settlement of security tokens, with some moving to the proof-of-concept phase. As this is a rapidly evolving technological field, it is anticipated that cases may arise where parties are uncertain about how to proceed with proof-of-concept experiments, including interpretations of related laws and regulations.
In light of these considerations, the FSA has launched the "Payment Innovation Project" (PIP) within the FinTech Proof-of-Concept Hub, specializing in the payment field. PIP has strategically assigned staff members with deep expertise in blockchain technology, related laws and regulations, and overseas trends to the support team to assist individual proof-of-concept experiments.
Applications received will be evaluated by the Financial Services Agency against the FinTech Proof-of-Concept Hub/Payment Innovation Project (PIP) checklist items (below) to determine whether support under this scheme is possible.
Checklist Items
- The experiment content and issues are clearly defined (Clarity)
- The realization of the service is expected to improve user convenience and corporate productivity in Japan (Social Significance)
- The service to be realized demonstrates innovation (Innovation)
- When general users participate in the proof-of-concept experiment, appropriate measures for user protection, including explanations to users, must be taken (User Protection)
- The necessary resources such as funds and personnel to conduct the proof-of-concept experiment are secured (Experiment Feasibility)
Even if the above checklist items are met, in cases where many applications are received at the same time, the FSA may prioritize certain projects by comprehensively considering the nature of the projects and applicants (such as the versatility of products/services, the scale of those expected to benefit, and the degree of contribution to improving Japan's financial system and financial services standards).
Points to Note
- For applications received, hearings may be conducted as necessary.
- For projects receiving support from the Payment Innovation Project (PIP), company names and project summaries (excluding sensitive information related to business ideas, etc.) will be published on the Financial Services Agency website after consultation.
- After the completion of proof-of-concept experiments, experiment results and conclusions, including compliance and supervisory response issues clarified through the experiment, and practical issues related to legal interpretations that may arise when providing services to general users, will be published on the Financial Services Agency website after consultation, with consideration given to publication timing and sensitive information related to business ideas.
- The Payment Innovation Project (PIP) does not exempt the application of existing laws and regulations.
Norbert Gehrke
