New Regulations for FinTech Startups?
Recently, the Trump administration has been putting forth efforts to establish core principles that can govern the overall financial system. Treasury Secretary, Steve Mnuchin, laid out a treasury report that could change the way FinTech startups are governed and supported. According to the report, FinTech financing reached $22 billion in 2017 – which is up 13 times from 2010.
The report was officially released in July 2018, and it speaks to federal regulations, state laws, and data breach protections that will help with FinTech growth. It also urged the removal of legal and regulatory uncertainties, which would allow for some standardization of data sharing and security measures. It recommended that artificial intelligence (AI), machine learning, and cloud technology should be promoted and there should be an effort to develop digital identity and sandboxes which could help merchants become more secure and competitive.
Mnuchin’s treasury report recommended that Congress enact data security and breach notification efforts nationwide which would enhance security across the country. Currently only 13 states have these laws in place and the national mandates would pre-empt state laws. According to the Treasury, the states should “harmonize” money transmitter requirements that stretch across licensing and supervisory efforts.
The report also asks the Office of the Comptroller of the Currency (OCC) to allow FinTech companies to operate across every state – just like banks operate today.
The report said that the U.S. Federal Reserve should work on a faster payments system – with a real-time settlement service in place for smaller financial institutions and credit unions. The report also states that regulators should look at blockchain as a “technological tool” that can be used across the financial system.
The Bipartisan Policy Center recommended reforms that focus on boosting liquidity for smaller firms, which would ease their financing woes and help startups get the capital they need.
According to pymnts.com, the Task Force on Main Street Finance has said the federal government should improve efforts to gather data on financing flows and examine existing regulations. The proposals would shift small business lending data collection and storage from the Consumer Financial Protection Bureau to the Office of Financial Research.
The Task Force on Main Street Finance also wants a national commission to look at the current financial laws – in hopes that a pilot program would eventually be created to make sure the efforts are acceptable.
Learn More About Industry Regulations:
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