fintech

Fintech industry pursues clarity on ‘token’ regulation
Advocates are finding a sympathetic ear in Congress

Rep. Warren Davidson, R-Ohio, is planning to reintroduce with Rep. Darren Soto, D-Fla., legislation that would further define the term “digital token.” (Bill Clark/CQ Roll Call file photo)

Financial technology advocates are seeking an answer from regulators on when things like digital tokens should be deemed to be securities, and they’re gaining a sympathetic ear in Congress.

Further clarity from regulators would encourage more U.S. growth in digital assets, the advocates say.

Data privacy bill faces long odds as states, EU move ahead
Most tech companies agree laws on how to collect and use consumer data are essential, but the specifics are still being debated

Sens. Roger Wicker, R-Miss., right, and Debbie Stabenow, D-Mich., are seen in the basement of the Capitol before the Senate policy luncheons on Sept. 25, 2018. (Tom Williams/CQ Roll Call file photo)

Lawmakers want to pass a federal data privacy bill before 2020 to put Washington on par with Europe and ahead of several U.S. states. But those efforts could be delayed because of differences between technology companies and Congress over how powerful the law should be and how it should be structured.

A delay in enacting a uniform federal law could leave technology giants and startup app makers trying to meet a latticework of standards set by multiple regulations passed by many states as well as a growing international set of rules being modeled after the European Union’s General Data Protection Regulation, or GDPR. Companies also could be liable for fines and face consumer lawsuits allowed by state laws.

Regulators warn Congress not to pre-empt state fintech rules
“Investor protections must not be diminished at the state or federal levels”

The North American Securities Administrators Association is calling on lawmakers to be cautious when implementing fintech laws. (Dan Kitwood/Getty Images file photo)

State securities regulators are concerned Congress could pre-empt state laws governing financial technology such as blockchain and cryptocurrency that are designed to protect consumers.

The North American Securities Administrators Association on Wednesday issued its legislative priorities for the 116th Congress, calling on lawmakers to be cautious when implementing fintech laws.

Frequent cryptocurrency theft gives rise to new area of insurance
But crypto-insurance is so new, many regulators aren’t sure how to treat it

The D Las Vegas advertises in January 2014 that it now accepts bitcoin. (Ethan Miller/Getty Images file photo)

Hackers stole $1.7 billion worth of cryptocurrency last year, a massive rate of theft and a big hit to the financial technology’s reputation.

A rising industry could mitigate the problem: crypto-insurance, which offers the promise that big financial firms will feel secure enough to take wider stakes in financial products based on bitcoin or other cryptocurrencies.

European regulatory chief wants new cryptocurrency rules
Aim is to prevent ‘substantial risk’ to consumers

The chairman of the European Securities and Markets Authority reportedly supports applying financial instrument regulation to cryptocurrencies. (Dan Kitwood/Getty Images file photo)

The chairman of the European Securities and Markets Authority has indicated he supports applying financial instrument regulation to assets such as bitcoin to help protect investors.

Without new rules, Steven Maijoor said, digital assets will likely fall outside of the regulation of Europe’s securities laws.

States, consumer groups blast CFPB’s fintech protections
But financial industry groups are rallying behind bureau’s plan

New York’s Letitia James led 22 other Democratic state attorneys general in a letter to the Consumer Financial Protection Bureau that slammed the agency for its plans to allow banks and technology firms to develop untested fintech products and services without fear of reprisals from regulators. (Gary Gershoff/Getty Images for Housing Works, Inc., file photo )

State attorneys general, consumer advocates, community activists, and banking regulators are criticizing proposed legal protections for banks and technology firms that develop “innovative” financial products.

The protections would come from the Consumer Financial Protection Bureau, which in December unveiled what it calls a “regulatory sandbox” that will allow firms to develop untested fintech products and services without fear of reprisals from regulators. While the criticism rolls in, financial industry groups are rallying behind the plan, even asking the CFPB to expand the legal safe havens.

House bills would revisit regulation of cryptocurrencies
The bill would clarify which virtual currencies qualify as commodities, provide optional regulatory structure

Rep. Darren Soto, D-Fla., participates in a press conference on Thursday, April 26, 2018. (Bill Clark/CQ Roll Call file photo)

House bills with bipartisan support would direct regulators to examine new ways to oversee digital assets and protect them from manipulation, as some lawmakers strive to make financial technologies more mainstream.

One bill would direct the Commodity Futures Trading Commission, consulting with the Securities and Exchange Commission and other agencies, to report to committees including Senate Banking and House Financial Services on how cryptocurrencies are regulated in the U.S. and other countries and detail the benefits of cryptocurrency and blockchain technology.

Treasury official doubts fintech needs payment system overhaul
Analysis appeared in blog

Matt Swinehart, a senior counsel at the Treasury Department, says a massive “regulatory rethink” for financial technology won’t be required. (Bill Clark/CQ Roll Call file photo)

A senior Treasury Department official is challenging the idea that rapidly evolving financial technology will require a sweeping overhaul of rules governing payment services and the electronic transfer of funds between consumers, banks, merchants and others.

In a recent analysis, Matt Swinehart, a senior counsel at Treasury, said a massive “regulatory rethink” of payment services won’t be required because many rules and standards governing payments are what he called technology neutral. The analysis appeared on a blog about the intersection between financial technology and government policy. Swinehart and the Treasury Department declined an interview request about his statements.

SEC seeks private vendors to translate blockchain data
The commission wants to hire a private vendor to gather data from the “most widely used blockchain ledgers” to help it police digital assets

Reps. David Kustoff, R-Tenn., and Claudia Tenney, R-N.Y., talk before a House Financial Services Committee hearing in Rayburn Building titled “Oversight of the U.S. Securities and Exchange Commission” on June 21, 2018. (Tom Williams/CQ Roll Call file photo)

The Securities and Exchange Commission wants to hire a private vendor to gather data from the “most widely used blockchain ledgers” to help it police digital assets.

The agency didn’t name the ledgers but its requirement that they be widely used suggests the SEC would include those underpinning cryptocurrencies such as bitcoin and ethereum.

Crypto-based funds crawl toward mom and pop
They’ll get there ‘eventually’ says one SEC commissioner

Commissioners have proceeded with caution on bitcoin markets, questioning their trading volume and ability to safeguard proprietary information. (Dan Kitwood/Getty Images file photo)

A fund based on cryptocurrency will eventually pass muster at the Securities and Exchange Commission despite the agency’s denials of all previous efforts, predicts its lone Democratic commissioner.

Robert J. Jackson Jr. expects some applicant to meet the minimum requirements for a cryptocurrency-based fund that could be traded by ordinary investors. A number of cryptocurrency-based applications await the agency’s decision, he said in an interview, though he wouldn’t speculate on whether one of those will get approval, or when.