By Micah D. Wells J.D., LLM
Jurisdictional Rules and Regulations! To many people in the world of finance and fintech, those two words usually bring a huge negative sigh, followed by the words “here we go again”.
For many developers/entrepreneurs in the field of fintech, the regulations of the jurisdictions in which they hope to expand their product usually is a secondary thought.
Their goal is to create a product that can be launched throughout the world and disrupt the financial services sector for the benefit of the masses, while at the same time making substantial monetary gains.
This is a wonderful and achievable goal, but unless they do an analysis of the regulatory rules of the jurisdictions which they hope to operate, the success they hope to reach will be impeded.
Fintech entrepreneurs and developers should know that what is permitted in your country, may not be allowed in other European countries. Additionally, what may be allowed in Europe, may not be allowed in other parts of the world. In short, one size does not fit all.
Not only will a developer/entrepreneur have to deal with different national laws, but also the different types of laws. The one size fits all approach is not the approach to take, as there can easily be a different outcome for the same product dependent upon the jurisdiction’s use of Civil, Common or Sharia law.
Most start-ups begin their venture with limited funds and personnel. Because of this, they usually don’t have the necessary funds to maintain a legal counsel as part of their team.
Many start-ups feel lawyers are not necessary and they can figure out the “legal stuff” on their own, while others think the laws in other jurisdictions will easily adjust to their product.
Some view a lawyer as an added cost and as person that is only going to tell them what they can’t do and slow them down.
Taking these views can be detrimental in the long run. Unless the developer/entrepreneur has the legal expertise, not doing his research and understanding the jurisdictional regulations will put him at a serious disadvantage against the huge financial conglomerates which do have the financial and legal resources.