The US will see an introduction of regulatory sandboxes for fintech firms to help them develop new products and services. The sandboxes are expected to hold particular promise for firms using blockchain and cryptocurrency technology.
Mick Mulvaney, acting chief of the Consumer Financial Protection Bureau (CFPB) is behind the project designed to liberalize and promote innovation in the fintech field.
Regulatory sandboxes are areas in the law where regulation is lowered in order to help foster innovation and creative problem-solving, without companies having to worry about abiding by strict regulations. The practice has been used in Switzerland to foster cryptocurrency development projects in the nation’s crypto-valley.
There is some speculation that lowering regulation will make investors vulnerable to dangerous practices in the marketplace, however Mulvaney disagrees.
“You can make a strong argument … that new technology actually offers new and innovative ways to protect consumers,” he said to the Wall Street Journal. The CFPB has also launched a dedicated complaints portal so that consumers may report problems with any companies they encounter.
“You are moving light years beyond the complaint hotline to where you can really see things happening in real time,”
The hope of the CFPB is that sandboxes will foster an open dialogue path between lawmakers and businesses. Mulvaney believes that the CFPB has not been as innovation-friendly as it could have been in the past; he is a republican and the Bureau was previously under Democrat leadership. Upon assuming the albeit temporary leadership role, Mulvaney has attempted to steer it on a new path.
“My goal was to point it in the trajectory of a gold standard regulator — to be spoken of in the same breath and with the same credibility as the SEC (Securities and Exchange Commission) and FDIC (Federal Deposit and Insurance Corp),”
The US has taken to a tune of more progressive regulation in recent months. The SEC recently announced it did not classify bitcoin or Ethereum as securities, news which was greeted with euphoria by investors and markets. Further to this, in Congressional hearings, coming from both the House Finance Services Committee and the House Committee on Agriculture, outcomes warned against overly-hasty regulation for cryptocurrencies and blockchain technology, indicating an understanding of the potential promise the technology could hold.
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