Friday, August 10, 2018
In response to Executive Order 13772, issued in February 2017, the U.S. Department of the Treasury has been easing restrictions pertaining to key financial services sectors. The department previously published guidelines for the bank and credit union, capital market, and asset management and insurance sectors. The fourth and final report of the series, published July 31, 2018, provides guidance for fintech firms.
U.S. Secretary of the Treasury Steven T. Mnuchin said Treasury staff members who crafted the reports met with numerous stakeholders in consumer financial data aggregation, lending, payments and credit servicing sectors, and he expects ensuing recommendations to drive rapid adoption of competitive technologies, data security and operational efficiencies. The goal is to simplify regulatory standards and create a financial system that supports all stakeholders, including nonbank finance and fintechs, he added.
"American innovation is a cornerstone of a healthy U.S. economy," Mnuchin stated. "Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector."
Treasury reports, which include extensive glossaries of commonly used acronyms and abbreviations, are organized under the following core principles:
Critics appreciate U.S. government efforts to create a fintech-friendly environment but say more can be done. Forbes contributing writer Sarah Kocianski suggested proof of concept will be achieved when recommendations are implemented.
"There are many obstacles still to be overcome, such as federal and state regulators agreeing to the proposals in the first place, before you even get to a stage where they agree to work together and implement them," she wrote in "We're A Long Way Off from the U.S. Being a Utopia for Fintech," published Aug. 7, 2018. "There is also the fact that some of the recommendations, while being good for businesses, are not so great for consumers."
Kocianski cited the "Payday Rule" as an example, noting it requires lenders to determine a borrower's creditworthiness while failing to protect vulnerable consumers. This would likely "be damaging to both individuals and the economy in the longer run," she noted.
Forbes contributing writer Aaron Stanley expressed disappointment that cryptocurrency and blockchain technologies were only "mentioned in passing" in the Treasury report. "Money transmission licensing rules have been a perpetual thorn in the side of cryptocurrency companies operating in the U.S.," Stanley wrote in a July 31, 2018, article titled "What Does the U.S. Treasury Fintech Report Mean for Crypto?" Activities are regulated on a state-by-state basis, without a unified license passporting structure such as the model being used by the European Union, he added.
On the positive side, Stanley noted the report contains constructive approaches to streamlining regulations."The core theme of the 222-page report is that more governmental support for innovators and entrepreneurs is required across the board, and that Treasury is keen to provide that push when necessary within the regulatory ranks," he wrote.
A full copy of the report is available at: home.treasury.gov/sites/default/files/2018-08/A-Financial-System-that-Creates-Economic-Opportunities---Nonbank-Financials-Fintech-and-Innovation.pdf .
The Green Sheet Inc. is now a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals. Click here for more information.
Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.