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Alberta’s UCP government says finance technology companies need temporary relief from privacy and investment laws to give the province an edge in attracting business.
Finance Minister Travis Toews introduced Bill 13, the Financial Innovation Act, Wednesday, which if passed, will create a “regulatory sandbox” for financial services and financial technology, or fintech, companies.
Regulatory sandboxes are designed to make it simpler for companies to test new products and services that current security regulations were not designed to deal with, with a small set of customers.
At a news conference earlier Wednesday, Toews said the government hasn’t received any specific proposals yet, but there is strong interest from businesses, including in the cryptocurrency, or decentralized digital currency, sector.
“These are going to be products that simply would not be otherwise offered without some type of exemptive relief,” said Toews, adding that relief will be limited to two years, with government oversight and consumer protection safeguards in place.
The province’s information and privacy commissioner will need to provide approval on a case-by-case basis, companies will need to get the express permission of customers before using specific personal information, and there would be fines for those who break the terms and conditions — up to $100,000 for the first offence, or up to $200,000 after that.
Koleya Karringten, executive director of the Canadian Blockchain Consortium, said at the government news conference the bill is “a gamechanger,” as cryptocurrency exchanges provide essential infrastructure in the new digital economy.
“The current regulatory framework, it wasn’t created with cryptocurrency and additional service providers in mind. This legislation creates valuable space for development and market testing without the lengthy delays while Alberta laws catch up to our blockchain innovation,” said Karringten.
Blockchain technology is used for the record-keeping of cryptocurrency transactions across a network.
The government expects one or two companies to enter the program in the first year, but more could follow. As Alberta looks to grow its tech sector and become a leader in innovation, Toews said the bill will create new career opportunities and offer new consumer products.
“It’s also (about) the type of innovators I believe this type of legislation will attract,” said Toews, adding the initiative can also inform future regulations in the sector.
Under the bill, companies could get a break from the Loan and Trust Corporations Act, the Credit Union Act, the ATB Financial Act, the Consumer Protection Act, the Financial Consumers Act, or the Personal Information Protection Act.
Toews said those who participate, and the terms and conditions they can operate under, will be publicly disclosed. The companies will need to set up shop in Alberta or have a senior staffer living in the province.
Other jurisdictions around the world, including the United Kingdom, United States, Hong Kong, and Australia, have created similar models. Toews pointed to biometric authentication, including using your fingerprint to unlock your phone, as an example of one type of new technology tested in other sandboxes.
If the bill passes, Toews said Alberta would be the first Canadian province to set up such a regulatory sandbox.