A major new report from the U.S[1]. Treasury Department published[2] July 31 has called for a more agile and conducive regulatory approach to innovations in the fintech sector.
The 222-page report, devoted to ‘Nonbank Financials, Fintech, and Innovation,’ only fleetingly touches upon cryptocurrencies[3] and distributed ledger technologies (DLT) such as blockchain[4], noting that these are currently being “explored separately in an interagency effort led by a working group of the Financial Stability Oversight Council.”
Overall, the document indicates a strong impetus on the part of the U.S. government to foster nascent financial technologies and to modernize existing regulatory frameworks in order to remove impediments to their evolution.
The report advocates “more streamlined and tailored oversight,” proposing a set of recommendations that suggest a strong inclination to rationalize overly complex regulations that may stymie growth. These include harmonizing unwieldy state-by-state money transmission legislation, which is notably currently applied[5] to U.S. crypto exchanges.
Noting that interest in crypto assets has “substantially increased” from financial authorities worldwide, the Treasury singles out the dedicated efforts[6] on the part of the G20[7] to set out appropriate metrics for monitoring the emerging sector.
While it notes that these include managing the “inherent risks” that crypto assets “currently pose for investor protection and anti-money laundering and illicit finance regimes,” the report cites a G20 communique from March that affirms “that technological innovation, including that underlying crypto-assets [sic], has the potential to improve the efficiency and inclusiveness of the financial system.”
The Treasury further acknowledges a range of DLT applications that are being developed by the financial services industry –– although it notes that their
