A Reasoned Approach for the Regulation of Systemic Risk Generated by FinTech: Recognize It

FinTech companies are particularly vulnerable to adverse shocks, have multiple transmission channels through which such shocks can spread among market players not only FinTech, have significant information asymmetries and their market is growing. In other words, FinTech is subject to systemic risk. All of these elements indicate that FinTech could potentially act as a catalyst for larger losses in the case of extreme events, some of which may be foreseeable and some of which may not. The possibility of such externalities and the related market failures suggest the need to elaborate an adequate regulation to contain the systemic risks generated by FinTech and prevent crisis events from originating in the sector with possible spillover effects on traditional finance and then on the real economy.