US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization

Crowdfund Insider | | Jul 31, 2018

US treasury - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory HarmonizationThe US Department of the Treasury has published its long anticipated report on Fintech. This is the fourth in a series of reports emanating from Treasury that address emerging innovations in finance.

Secretary Steven T. Mnuchin commented on the reports release stating “American innovation is a cornerstone of a healthy U.S. economy.”

“Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector. America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”

The report seeks to identify areas within the regulatory landscape that could be updated to better empower changes in financial services to keep the US competitive with other jurisdictions that are doing the same. Treasury says the document benefited from a wide range of stakeholders focused on consumer financial data aggregation, lending, payments, credit servicing, financial technology, and innovation.

See:  Nov 20, 2017: NCFA Canada Welcomes Competition Bureau’s recommendations to encourage competition and innovation in Canada’s financial services sector

Overall, Treasury made 80 different recommendations for the government to consider. The authors note that rapid advances in technology, the digitization of the economy and an ample supply of risk capital is fueling Fintech innovation. Treasury estimated that the flow of investments into global Fintechs is very large and that U.S. firms accounted for nearly half of the $117 billion invested from 2010 to 2017.

Treasury’s recommendations broadly covered the following four categories:

  • Adapting regulatory approaches to changes in the aggregation, sharing, and use of consumer financial data, and to support the development of key competitive technologies
  • Aligning the regulatory framework to combat unnecessary regulatory fragmentation, and account for new business models enabled by financial technologies
  • Updating activity-specific regulations across a range of products and services offered by nonbank financial institutions, many of which have become outdated in light of technological advances
  • Advocating an approach to regulation that enables responsible experimentation in the financial sector, improves regulatory agility, and advances American interests abroad.

Importantly, Treasury tackled the biggest problem in regard to fostering Fintech innovation. The problematic regulatory fragmentation that has undermined the ability for Fintechs to provide improved services to consumers and businesses while harming global competition.

The report states:

“Many statutes and regulations addressing the financial sector date back decades. As a result, the financial regulatory framework is not always optimally suited to address new business models and products that continue to evolve in financial services. This has the potential negative consequence of limiting innovation that might benefit consumers and small businesses. Financial regulation should be modernized to more appropriately address the evolving characteristics of financial services of today and in the future.”

Treasury advocates that harmonization of state oversight would be beneficial in encouraging emerging Fintech services. The document also encourages the Office of the Comptroller of the Currency (OCC) to “further develop its special purpose national bank charter” or Fintech Charter as it is popularly called. The OCC Fintech Charter has been languishing for years now as special interests have blocked its advancement.

See:  NCFA: Canada Needs a Harmonized Securities Environment as Current Provincial Approach is a Fintech Innovation Killer

Treasury recommends that the OCC “move forward with prudent and carefully considered applications for special purpose national bank charters.” But the report adds that OCC special purpose national banks should not be permitted to accept FDIC-insured deposits.

Treasury explains a portion of the enigma;

“Nonbank lenders that operate in multiple states must acquire lending or credit licenses for each applicable state. As a result, geographic expansion can only generally be accomplished through repeated licensing efforts, each with a state-specific regulatory regime.”

A Long and Complex History of State and Federal Regulation in Financial Services

This unnecessary governmental overlap harms consumers and adds time and cost to aspiring Fintech firms that may challenge incumbent financial institutions. In fact, Treasury puts a number on the cost to businesses of $1 million to $30 million – a lot of money for an entrepreneurial firm. Additionally, a portion of this cost continues in perpetuity as firms must constantly monitor ever evolving state regulations and move quickly to comply when one changes.

“These cumulative challenges of operating in the state-based regulatory regime result not only in excessive regulatory costs, but also constrain the ability of nonbank firms, including start-ups, to innovate and to scale nationally.”

Treasury recommends that regulatory modernization must take place and provides their opinion on a solution. While recognizing that state based regulators play an important role, the inertia exemplified by the current regulatory morass must be addressed within the next few years:

“Treasury supports state regulators’ efforts to build a more unified licensing regime and supervisory process across the states. Such efforts might include adoption of a pass-porting regime for licensure. However, critical to this effort are much more accelerated actions by state legislatures and regulators to effectively reduce unnecessary inconsistencies across state laws and regulations to achieve much greater levels of harmonization. Treasury recommends that if states are unable to achieve meaningful harmonization across their licensing and supervisory regimes within three years, Congress should act to encourage greater uniformity in rules governing lending and money transmission to be adopted, supervised, and enforced by state regulators.” [emphasis added]

Addressing the nagging issue of Madden v. Midland, a problematic legal challenge that impacts online lenders, Treasury “recommends that Congress codify the “valid when made” doctrine to preserve the functioning of U.S. credit markets and the longstanding ability of banks and other financial institutions, including marketplace lenders, to buy and sell validly made loans without the risk of coming into conflict with state interest-rate limits.”

See:  Ontario Securities Commission “Doesn’t Really Know What’s Going On” in Blockchain Fintech, Says Lawyer

Brian Peters, Executive Director of Financial Innovation Now – an entity that represents big US tech and their interests in pursuing Fintech services, had this to say about the Treasury Fintech report;

“Financial Innovation Now advocates for smart federal policies that promote technological innovation in financial services, and we believe the Treasury Department’s report is a strong step towards modernizing antiquated financial regulations. From secure mobile payments to fast and accessible credit, FIN member companies are empowering consumers and small businesses with helpful financial tools. We look forward to working with Congress and federal financial regulators on these necessary policy updates.”

Continue to the full article --> here


NCFA Jan 2018 resize - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory HarmonizationThe National Crowdfunding & Fintech Association of Canada (NCFA Canada) is a cross-Canada non-profit actively engaged with cryptocurrency, blockchain, crowdfunding, alternative finance, fintech, P2P, ICO, STO, and online investing stakeholders globally. NCFA Canada provides education, research, industry stewardship, services, and networking opportunities to thousands of members and subscribers and works closely with industry, government, academia, community and eco-system partners and affiliates to create a strong and vibrant crowdfunding and fintech industry. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: ncfacanada.org

Click for News:

latest news - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization

 

FCA | Release | Feb 3, 2023 The Financial Conduct Authority (FCA) required firms to amend or remove 8,582 promotions during 2022 - 14 times more than 2021, a report published today shows. Social media remains a major focus for the regulator’s work in combatting misleading promotions. The FCA has worked closely with several Big Tech companies to change their advertising policies to only allow financial promotions that have been approved by FCA-authorised firms, but more needs to be done by tech companies to protect consumers. The FCA has made significant improvements to the digital tools it uses to find problem firms and misleading adverts. These improvements have enabled it to work through a much larger number of cases compared with 2021. ‘Fin-fluencers’ have also been a growing concern for the regulator. Unauthorised individuals should not advise people on the merits of certain investments, as this will likely be subject to our regulations and it could lead to action being taken against them. The FCA has already acted against several social media influencers over the past year. In one case, the FCA found a director of a regulated firm using their personal profile to promote the advice of unauthorised traders ...
Read More
Unsplash Merakist social media - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Guest Post | Feb 3, 2023 Technology advancements have allowed us to improve processes and cover previously impossible areas. For example, the latest technological advances in security have enabled our homes to remain safer daily, stay one step ahead and keep our home and loved ones safe. In this blog post, we will explore the latest tech in home security so you can know which of these innovations might be helpful for your home. Garage door security Improving garage door security is relatively simple and can be achieved through a few key steps: Upgrade your garage door with a smart opener for added convenience. With a smart opener, you can easily control and monitor the status of your garage door from your smartphone. This allows you to check if the door is open or closed and close it remotely when needed. Regular checks are recommended to maintain the proper functioning of the garage door. If any issues arise, a local garage doors professional can be consulted. Add remote access controls: Many smart garage door openers can add remote access controls, such as key fobs, which allow authorized individuals to open and close the garage door without a physical key. Install ...
Read More
Unsplash Brian Babb home security - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
MarketWatch | Dean Seal | Feb 2, 2023 Shares of Coinbase Global Inc. rose 21% to $79.50 after a federal district judge dismissed a proposed class action accusing the crypto exchange of selling tokens that qualified as unregistered securities. The suit, filed in October 2021, alleged that nearly 80 of the digital assets traded on the Coinbase exchange fit the description of a security under federal law, and that Coinbase therefore violated the law by selling the tokens without proper registration. A New York federal judge ruled Thursday that the token buyers behind the suit have made contradictory allegations between their original complaint and a later amended complaint as to whether Coinbase actually held title to or sold the tokens, rather than just facilitate their trading on its exchange, in "an apparent attempt to evade dismissal." See:  Coinbase is Cutting 950 Employees (20%) | Brother of Former Employee 10 months Sentence for Insider Trading The judge further found that the terms of Coinbase's user agreement, which state that only exchange users hold title over tokens they trade, "flatly contradict" the lawsuit's allegations.  Finding that further amendments would be futile, the judge dismissed the case with prejudice. The dismissal marks a ...
Read More
Pixabay sergeitokmakov crypto and regulation - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Tristram Waye for Bitvo | Feb 2, 2023 After a substantial lift in crypto, it begs the question, was that the bottom?  The answer, of course, is no idea.  Because bottoms are not events but rather a process.  After a challenging crypto winter, the relief is welcome, but the question of whether it’s over requires some evidence. This lift might be what is known as a bear trap. Bear traps entice buyers before heading back down. On the other hand, it might be the beginning of a new trading range for bitcoin and ether. So let’s have a look at some things that might tell us about where we are and how to use what we discover. See:  Is Crypto Bouncing Back, or Bull Trap? Be careful picking market tops and bottoms Jesse Livermore:  “One of the most helpful things anyone can learn is to give up trying to catch the last eighth —or the first. These two are the most expensive eighths in the world. They have cost stock traders in aggregate enough millions of dollars to build a concrete highway across the continent.” So on the upside, this means picking tops, getting on the short side too early ...
Read More
Dolphin - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Wilson Elser Moskowitz Edelman & Dicker | Anjali Das  | Jan 23, 2023 The recent implosion of crypto firm FTX and its affiliates provides a case study for potential crypto exposure under traditional insurance policies in this series of four articles Silent Crypto for D&O and Corporate Liability Insurance (Part I), Silent Crypto Exposure for Accountants (Part II), Silent Crypto Exposure for Lawyers (Part III), and Crime and Custody Coverage for Crypto Assets (Part IV). See:  White House Releases Comprehensive Framework for Digital Assets Highlighting 6 Key Priorities OCC Softens Stance on Banks' Cryptocurrency Activities: In the past few years, the U.S. Office of the Comptroller of the Currency (OCC) has issued a series of interpretative letters and guidance regarding the agency's loosening stance on banks engaged in cryptocurrency activities. First, OCC confirmed that banks may provide cryptocurrency custody services to customers by holding the "unique cryptographic keys associated with cryptocurrency. Second, OCC has indicated that banks also may hold reserves to support "stablecoin" transactions. Third, OCC has authorized banks to participate in cryptocurrency transactions based on blockchain or DLT, including independent node verification networks (INVNs). With advances in technology and the global financial markets, there is "increasing demand in ...
Read More
Unsplash PiggyBank dogecoin - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Accenture | Michael Abbott  | Jan 10, 2023 A combination of well-established forces and recent developments is reshaping banking. Overview: In the absence of that revenue stream, banks shifted their focus from the totality of customers’ financial needs to isolated products that continued to generate fees. At the same time, fintech innovators burst onto the scene, awash with cheap capital and valuing scale over financial returns.  Now that positive rates have returned, the constellation of banking products is drifting into a more familiar and predictable orbit. Rising rates catalyze product innovation:  It will come in the form of offerings similar to that of Amazon Prime. 2023 will see a renewed focus on branches:  Without in-person interaction most banks have struggled to maintain close relationships. Demistifying the metaverse: Just as mobile did, the metaverse is opening a new world of possibilities. It won’t be without risk—but banks were invented to manage risk. Culture and Talent:  Talent will make ever-increasing demands on banks’ leadership. If it isn’t given its due, it will become a burning platform. See:  Will Open Banking Launch in Canada This Year? Risk everywhere:  As new risks emerge, banks that focus on helping customers solve their problems, rather than on collections, ...
Read More
Unsplash Viktor Forgacs Office building - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Fortune via Yahoo Finance | Christiaan Hetzner | Feb 1, 2023 Hypersonic flight, 3D printed humanoid robots, groceries delivered by drones, molecular biomarkers for early detection of malignant tumors Report: That's the conclusion from her annual Big Ideas report published on Tuesday by her money management firm. This 153-page deep dive attempts to handicap the potential commercial opportunities awaiting those startups and incumbents quick to embrace promising new technologies set to supplant older, obsolete ones. Wood believes companies that succeed in disrupting existing industries will experience “super-exponential growth”, lifting their cumulative value by an average annual rate of 40% in the process to reach a staggering $200 trillion by 2030. To put that gargantuan figure into perspective, the International Monetary Fund estimated last April that the size of the entire world's economy would cross the $100 trillion mark in nominal GDP terms by the end of the year. See:  a16z: Big Fintech Ideas to Tackle in 2023 Forecasting winners: Instead of emphasizing spreadsheets and valuation models that often focus on short-term fundamentals like a company’s forward-year cash flow or earnings per share, her ARK Invest research team prefers a top-down analysis of what macroeconomic problems inhibit social progress before examining ...
Read More
Ark invest big ideas 2023 - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Chainanalysis | Feb 1, 2023 2022 was the biggest year ever for crypto hacking, with $3.8 billion stolen from cryptocurrency businesses. DeFi protocols by far the biggest victims of cryptocurrency hacks accounting for 82.1% of all cryptocurrency stolen by hackers — a total of $3.1 billion — up from 73.3% in 2021. And of that $3.1 billion, 64% came from cross-chain bridge protocols specifically. Bridges are an attractive target for hackers because the smart contracts in effect become huge, centralized repositories of funds backing the assets that have been bridged to the new chain — a more desirable honeypot could scarcely be imagined. If a bridge gets big enough, any error in its underlying smart contract code or other potential weak spot is almost sure to eventually be found and exploited by bad actors. See:  Do Industry Operators, Researchers, and Regulators Agree On How Big Crypto Crime Is? Double edged sword:  DeFi is one of the fastest-growing, most compelling areas of the cryptocurrency ecosystem, largely due to its transparency.  But that same transparency is also what makes DeFi so vulnerable — hackers can scan DeFi code for vulnerabilities and strike at the perfect time to maximize their theft. The core ...
Read More
Chainanalysis 2022 hacks by type - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
CNBC | Jordan Novet | Jan 31, 2023 Artificial intelligence research startup OpenAI on Tuesday introduced a tool that's designed to figure out if text is human-generated or written by a computer. Schools were quick to limit ChatGPT's use over concerns the software could hurt learning.  Sam Altman, OpenAI's CEO, said education has changed in the past after technology such as calculators has emerged, but he also said there could be ways for the company to help teachers spot text written by AI. Working on solution: OpenAI's new tool can make mistakes and is a work in progress, company employees Jan Hendrik Kirchner, Lama Ahmad, Scott Aaronson and Jan Leike wrote in a blog post, noting that OpenAI would like feedback on the classifier from parents and teachers. Far from perfect: "In our evaluations on a 'challenge set' of English texts, our classifier correctly identifies 26% of AI-written text (true positives) as 'likely AI-written,' while incorrectly labeling human-written text as AI-written 9% of the time (false positives)," the OpenAI employees wrote. Our work on the detection of AI-generated text will continue, and we hope to share improved methods in the future See:  How AI Is Disrupting The Web Development Industry ...
Read More
Sam Altman - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Variety | Todd Spangler | Jan 31, 2023 William Shatner fans bought up all the shares in the actor’s forthcoming feature-length documentary “You Can Call Me Bill” in less than a week — shelling out nearly $790,000 and topping the film’s crowdfunding goal. Legion M’s equity crowdfunding round for the Shatner documentary, exploring the life and career of the beloved 91-year-old actor, as of Monday had sold out from reservation holders before the company opened the offering to the public. Within four days, the project raised $789,655 from 1,338 investors. Distribution: The documentary has a production budget of $565,101, according to Legion M’s listing. After “You Can Call Me Bill” deducts expenses to third parties for accounting, legal, marketing and administrative fees, 100% of any revenue generated will be distributed proportionally to the film’s investors until they have recouped their initial investment. Any additional net revenue after that will be split, with 33% going to shareholders and 67% distributed to the producers of the film. With the Shatner doc, fans were able to invest directly in the Shatner documentary for a minimum of $100, subject to certain SEC restrictions, and they will recoup their money before any profits are shared ...
Read More
Wikipedia image William Shatner - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization

 

Leave a Reply

Your email address will not be published. Required fields are marked *

fifteen + nineteen =