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

share save 171 16 - 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

 

ADB Institute | March 25, 2020 Policy makers and researchers recently met at ADBI for a workshop examining green infrastructure investment, policy challenges, and economic implications in Asia. Marco Schletz from the United Nations Environment Program Technical University of Denmark Partnership was among the experts featured at the event. Afterwards, Schletz sat down with Asia’s Developing Future to discuss how blockchain and tokenized securities could revolutionize green finance and inclusive development in the region. The views in this podcast do not necessarily reflect the views and policies of the Asian Development Bank Institute (ADBI). Read the transcript bit.ly/2QIe9TH Policy makers and researchers recently met at ADBI for a workshop examining green infrastructure investment, policy challenges, and economic implications in Asia. Marco Schletz from the United Nations Environment Program Technical University of Denmark Partnership was among the experts featured at the event. Afterwards, Schletz sat down with Asia’s Developing Future to discuss how blockchain and tokenized securities could revolutionize green finance and inclusive development in the region. See:  Blockchain and Tokenized Securities: The Potential for Green Finance Marco Schletz from the United Nations Environment Program Technical University of Denmark Partnership Blockchain is an innovative data structure that is used to verify ...
Read More
Marco Schletz - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Harvard Business Review | Marco Iansiti and Greg Richards | March 26, 2020 As workplaces mandate that employees work from home, universities shift fully to online teaching, restaurants transition to online ordering and delivery, and automakers shut down their plants, we’re seeing the most rapid organizational transformation in the history of the modern firm. Yes, companies have dealt with financial crises like the 2008 Great Recession or the dot-com bust of the early 2000s. And many have endured wars and terrorist attacks, election surprises, and previous health crises. But never before have established and evolved economies faced this kind of shock. And nothing quite compares to the physical-digital divide Covid-19 is revealing and how it affects the nature of work. In some ways, you can trace what’s happening today to a huge digital transformation that’s already well underway. Firms have been moving to an increasingly digital core based on software, data, and digital networks for years, requiring a fundamentally new operating architecture. From Ant Financial to Facebook, the new digital firm gains its competitive advantage in three ways: by producing more at a lower unit cost (scale), by achieving a greater production variety (scope), and by pushing for improvement and innovation (learning) ...
Read More
covid and digital transformation - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
NCFA Canada | March 25, 2020 JOIN US ON A STORYTELLING JOURNEY EVERY FRIDAY. Mar 25:  Why identity matters in an evolving online environment HOST: Tristram Waye, Fintech Friday's podcast episode GUEST: DAVID LUCATCH, President & Director – KABN Systems North America Inc. (Linkedin) KABN Links:  kabnsystemsna.com | liquidavatar.com About this episode: David Lucatch of KABN Networks North America joins Tristram Waye for this episode of Fintech Friday. David discusses why identity is a foundational element of the evolving online and data environment, and why KABN Networks North America has developed a business around it. During this episode he will also discuss: How KABN ID works and why it’s a foundational technology The suite of products KABN Networks North America has developed around identity and why Their vision of the future including the release of Liquid Avatar BIO: David Lucatch has spent more almost 35 years in the international marketing arena and over 25 years of that developing technologies and taking them to market.  David has held senior management posts and directorships at both private and public technology and media firms. David is an active supporter of numerous non-profit organizations and has been recognized and awarded internationally for his service and community ...
Read More
FF EP38 KABN Systems North America - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Guest Post | Pankaj Raghav | March 25, 2020 The entire world is dealing with the havoc of the coronavirus pandemic. Naturally, it will have a wreaking impact on the economy. The big events are being cancelled, flights are non-operational, and all sports leagues have been postponed. Almost every country across the globe is putting travel restrictions with an aim to keep the virus out of their home border. To combat the disease, the hospitals are bracing day in and day out, and public health officials are doing the best they can. Sadly, it isn’t easy being calm or optimistic in this dark time of crisis. However, as for the business owners, trying to be calm under crisis is a pivotal quality of their job description. So, if, as a business, you employ some proactive steps right away, you can get your business to be more safe and secure to recover faster post the crisis. China, the original epicenter of the Coronavirus, has started coming up with measures that are depicting clear signs of economic recovery. So, we have come up with 4 important steps and strategies that you need to implement to help your business recover post this pandemic ...
Read More
Coronavirus impact to your business - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
The Globe and Mail OpEd | Cato Pastoll | March 24, 2020 No one planned for this. COVID-19 has brought the global economy to a standstill. With many provinces closing non-essential businesses, and consumption and consumer confidence decreasing, many Canadian small businesses are looking at extinction. Businesses surveyed by Lending Loop, on average, have less than 30 days of cash on hand to weather this storm. This is not a new finding. In 2016, a JP Morgan study showed that the average restaurant, retailer and manufacturer had 16, 19 and 30 days of cash on hand, respectively. As revenue declines continue in the coming weeks and months, their futures look incredibly bleak. By all accounts, the federal government knows small and medium-sized businesses constitute the backbone of our economy because they support at least 70 per cent of all jobs in Canada. Yet, the majority of our governments’ efforts are dedicated to supporting individuals and not businesses. While the enhanced Employment Insurance programs are helpful measures, the disappearance of our businesses would mean there would be no jobs to return to once the pandemic is over. See:  Lending Loop Surpasses $50 million Milestone and helps thousands of Canadian Businesses and ...
Read More
small business empty covid19 - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
BCG Henderson Institute | Martin Reeves, Lars Faeste, Kevin Whitaker, and Mark Abraham | March 15, 2020 A rebound of demand is inevitable, and using high-frequency data proxies for the movement of goods and people, production and confidence, we can see that it is already beginning to happen in China. (See Exhibit 2.) Given the complexity of rebooting companies and supply chains at different speeds in different places, the time to begin preparing a rebound strategy is now. Over the past 100 years, epidemics have only temporarily deflected the economic cycle with short, sharp shocks. Of course, this time could be different. A bear market (technically a 20% decline) does not guarantee a recession but indicates a high probability of one. Prudent companies will prepare for this possibility. Our analysis shows that 14% of companies across all sectors actually grow top and bottom lines during recessions and downturns. Those who flourish share the common traits of preparation, preemption, growth orientation and long term transformation. They take a long term view and place growth bets when competitors are retrenching. And even after the epidemic recedes, and even in the case of recession, there will be opportunities and needs to reimagine business ...
Read More
light and forest trees - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Techopedia | Claudio Buttice | March 13, 2020 Before AI and the rise of FinTech, very few industry giants had the bandwidth to deal with the inherently quantitative nature of our now tech-savvy world. These AI use cases detail some of the ways AI has been a game-changer for FinTech. Banks alone are expected to spend $5.6 billion USD on AI and Machine Learning (ML) solutions in 2019 — just a fraction of what they’re expecting to earn since the profits generated may reach up to $250 billion USD in value. From automating the most menial and repetitive tasks to free up the time to focus on higher level objectives, to assisting with customer service management and reducing the risk of frauds, AI is employed from back-office tasks to the frontend with nimbleness and agility. 1. Fraud Detection and Compliance According to the Alan Turing Institute, with $70 billion USD spent by banks on compliance each year just in the U.S., the amount of money spent on fraud is staggering. And when the number of reported cases of payments-related fraud has increased by 66% between 2015 and 2016 in the United Kingdom, it’s clear how this problem is much more ...
Read More
AI winter is over - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Micky | Ali Qamar | March 21, 2020 The State of Hawaii has recently introduced a pilot program dubbed as the ‘Digital Currency Innovation Lab’ aimed at being a ‘testbed for innovation in the digital currency space.’ On March 17, Hawaii’s governor office revealed that the state’s very first state-initiated blockchain and cryptocurrency incubator is in the works. This initiative is in collaboration with three government agencies: Department of Commerce and Consumer Affairs (DCCA) Hawaii Technology Development Corporation (HTDC) Division of Financial Institution (DFI) See:  10 ways regulators need to change in 2020 The main aim of the project is to assist digital currency issuers to do business in Hawaii without acquiring any sort of money transmitter license in the course of the effective period of the pilot program. The sandbox will remain in operation for the next two years. Furthermore, the program outlines three objectives: Create economic opportunities for Hawaii and foster early adoption of cryptocurrency Offer consumer protection and provide guidance to crypto entrepreneurs Provide data to shape crypto legislation in the state Sandbox participants protected against unlicensed regulation Iris Ikeda, Commissioner of Financial Institutions, highlighted that the DFI has issued a “no-action message” against unlicensed money transmission ...
Read More
Hawaii - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
Betakit | Meagan Simpson | March 20, 2020 A survey conducted by Toronto-based FinTech startup Lending Loop has found that Canadian small businesses have seen an average revenue decline of more than 63 percent amid the COVID-19 pandemic. Lending Loop has been collecting data over the past few days from over 100 companies on the impact the COVID-19 outbreak is having on small businesses across Canada. In a Tweet on Thursday, Lending Loop CEO Cato Pastoll noted that the initial findings highlight the severity of the current situation. See:  Covid-19: Resources and Guides for Businesses and Individuals The small businesses surveyed have an average of 10 employees and according to the survey results have seen immediate impacts amid the current global situation. Those surveyed reported that their business has seen an average revenue loss of $1,141,310, leading to an average revenue decline of 63.3 percent. More than 65 percent of small businesses surveyed reported a revenue decline of more than 50 percent. With 92 percent concerned about their monthly obligations. The industries that have seen the largest hit are education services and restaurant and food services. Following closely behind are finance and insurance, as well as retail and wholesale trade ...
Read More
small business survey lending loop covid19 - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization
American Banker | Penny Crosman | March 18, 2020 The coronavirus pandemic could be devastating for many companies, but it's also shining a spotlight on the power of fintechs. They seem to be responding to the sudden challenge, though uncertainties lie ahead. The virus-driven moratorium on travel and the trend of companies encouraging people to work from home are changing the way people behave and communicate, and some of these changes could become permanent. “The behaviors that people can execute from their living room or from their den are going to grow, and behaviors that require face-to-face interaction or getting out into the community are going to diminish,” said Nigel Morris, managing partner of QED Investors and a co-founder of Capital One. “What does that mean? You should have greater mobile apps and digital adoption in general. If I had been holding off on signing up for PayPal, for instance, I might just do that.” Fintechs that help people do things remotely, like communicate about work, apply for a mortgage or make electronic payments, appear to be thriving, at least so far. Digital mortgages The digital mortgage software provider Blend, which has 230 bank clients, has also seen spikes in ...
Read More
digital mortages - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization

 

share save 171 16 - US Department of Treasury Report on Fintech Makes Recommendations to Boost Innovation, Advocates on Behalf of Regulatory Harmonization