A fintech policy group has recommended U.S. regulators cooperate more with overseas counterparts to promote innovation in the field. This would bring the local fintech industry in line with “global norms”, it said.
The call comes in a whitepaper published by Innovate Finance’s Transatlantic Policy Working Group (TPWG). The TPWG wants to see more cooperation between the U.S. and U.K. on fintech regulation (often called “regtech”).
The U.S. has not yet decided whether to handle this type of regulation at a state or federal level. State level would give regional governments more leverage to attract business to their area, but also means any national or international company would need to seek approval from 50 different authorities.
Money transmission businesses must obtain licenses from every state. This has slowed the spread of bitcoin exchange businesses such as Coinbase, and others in the fintech industry.
Streamlining Regulatory Requirements in Fintech
According to CNBC, TPWG especially wants to streamline reporting procedures such as “know your customer” (KYC) laws, as well as tax and common sanctions reporting, stress tests and other filings.
Such procedures are costly for banks, and using regtech and closer communication will make compliance more efficient.
This also represents a growth opportunity, said TPWG. Regtech is a nascent and underdeveloped industry — greater cooperation and communication between governments and technology businesses internationally would be beneficial.
Daniel Morgan, director of policy and regulation at Innovate Finance, said:
“The second wave of [regtech] systems will fundamentally reduce the cost and burden of regulation and require a radical rethink of regulatory processes.”
The Transatlantic Policy Working Group
U.K.-based not-for-profit Innovate Finance launched the TPWG in February 2017. According to its mission statement, it aims to “create a single point of access across the sectors to help foster enabling policies, regulation, talent development, business growth opportunities and investment in the UK — and, most importantly, to create a global finance sector that offers services that are more sustainable, more inclusive and better for everyone.”
Innovate Finance formed in partnership with law firm Hogan Lovells. It seeks greater cooperation and regulatory harmony between the U.K., U.S. and E.U. on fintech.
“Fintech” refers to any company in the financial technology industry, whether it concerns cryptocurrencies like bitcoin or regular fiat currencies. The name generally means non-bank or institutional entities, and often to smaller startups.
Is greater cooperation in the fintech/regtech field a good idea? Let us know in the comments.
Images via Innovate Finance, Pixabay