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The U.S. Department of the Treasury released a report earlier this week which highlights the improvements needed in the regulatory landscape to better support nonbank financial institutions, embrace financial technology, and foster innovation.
The report identifies over 80 recommendations that are designed to embrace the efficient and responsible use of consumer financial data and competitive technologies; streamline the regulatory environment to foster innovation and avoid fragmentation; modernize regulations for an array of financial products and activities; and facilitate “regulatory sandboxes” to promote innovation.
The Treasury noted the international efforts in fintech by regulatory authorities. This includes setting up of regulatory sandboxes by the Monetary Authority of Singapore, the UK Financial Conduct Authority, and Hong Kong’s Fintech Supervisory Sandbox.
“Treasury recommends that federal and state financial regulators establish a unified solution that coordinates and expedites regulatory relief under applicable laws and regulations to permit meaningful experimentation for innovative products, services, and processes. Such efforts would form, in essence, a “regulatory sandbox” that can enhance and promote innovation,” the report said.
The report also touched upon the emerging technologies including blockchain and digital assets. It noted that the growing interest in crypto-assets which was further evidenced with the G20 explicitly addressing crypto-assets in the March 2018 G20 Finance Ministers and Central Bank Governors Communiqué.
The Treasury, however, said that this area is being explored separately in an inter-agency effort led by a working group of the Financial Stability Oversight Council.
“The working group is a convening mechanism to promote coordination among regulators as these technologies evolve,” it said.