Iran's 1st Fintech Regulatory Framework by Dec. 21

The Office of Vice President for Science and Technology Affairs will send the final version of “financial framework of knowledge-based economy” to the government by December 21, in which fintech firms have been recognized as legitimate e-commerce entities.

“The framework allows the establishment and development of fintech companies for the first time in the country. It is also set to support fintechs through a specific insurance coverage and provide finance [to developers],” Alireza Daliri, a vice presidential deputy, was quoted as saying by IRNA.

“The framework has been developed in collaboration with the Central Bank of Iran and the Ministry of Economy,” he added.

Unofficial reports show that about 50 fintechs are operating in Iran, all of which have developed in the past three years. The recent move has raised hopes among experts and innovators, as lack of proper supervision has been posing major challenges for the operation of fintechs in Iran.

 The official noted that the Cabinet had tasked the Vice Presidency for Science and Technology to develop the framework back in October, which aims to speed up “the commercialization of knowledge-based companies”.

“Investment guarantee is the investors’ main concern while contracting such startups,” he said. “The framework will ease knowledge-based companies’ access to financial resources and guarantees.”

Improving knowledge-based firms’ relationship with banks and capital markets, and expanding the firms’ operations in the stock market are the other objectives of the framework, according to Daliri.

Much emphasis has been laid on venture capital funds.

“We have been developing a specific model for risky investments in knowledge-based companies, which would help attract more investments to the sector,” he said.

Daliri added that the office has also developed a mechanism for using “crowdfunding” as a modern financing tool, which has been rarely used in Iran.

Shaparak II for Fintechs

Morteza Husseini, CEO of Mabna Kart Aria, believes that fintechs should be supervised by a single body, “in such conditions, we could expect the development of fintech industry in the country”.

There has been much dispute over the operation of non-bank fintech firms in recent months.

“The single body should make use of other countries’ experiences in regulating fintechs, as hasty measures have damaged the sector,” IBENA quoted him as saying on Monday.

Husseini called on the Central Bank of Iran to establish another company like Shaparak, the payment network’s regulator, specifically for supervising fintech firms.

“Fintech regulations should cover a wide range of issues,” he said.

Back in October, Nasser Hakimi, the head of CBI’s IT Department, said the CBI allows fintech firms to continue to operate as long as they are not involved in money creation, currency exchange, offering payment tools (like cards) and  attracting deposits. Shaparak, an affiliate of the Central Bank of Iran, which is in charge of regulating payment network, announced earlier that it only authorizes fintech firms affiliated with banks or PSPs.