The UK's Financial Conduct Authority (FCA) says that it sees "no fundamental reason" why the firms it regulates cannot use public cloud services.
Financial services firms and regulators around the world have long struggled to weigh the benefits of using cloud services with concerns about security.
But in new draft guidance, the FCA gives its backing to companies that wish to use "IT services provided in various formats over the internet," as long as "appropriate consideration" is taken "in a manner that complies with our rules".
Explaining its thinking, the watchdog stresses its mandate to promote competition and its commitment to innovation as a way of encouraging new entrants, which could benefit from cheaper, easier-to-use cloud services.
"Our aim is to avoid imposing inappropriate barriers to firms’ ability to outsource to innovative and developing areas, while ensuring that risks are appropriately identified and managed," says the guidance.
You can read the full document, which is now open for three months of public consultation, here (PDF).