US Treasury Report on Nonbank Financials, Fintech and Innovation
On Tuesday 31 July, the United States Department of the Treasury issued its report on Nonbank Financials, Fintech, and Innovation. This is the fourth and last scheduled report on financial market regulatory reform in response to Executive Order 13772. It makes about 80 recommendations for improvements to the regulatory landscape that will better support nonbank financial institutions, embrace financial technology, and foster innovation.
In summary, these cover the following four major areas:
- Rethink data use regulations. Adapting regulatory approaches to changes in the aggregation, sharing, and use of consumer financial data, and supporting the development of key competitive technologies;
- Streamline regulatory framework. Aligning the regulatory framework to combat unnecessary regulatory fragmentation, and account for new business models enabled by financial technologies — potentially including harmonization of state regulatory and supervision regimes; implementing the OCC special purpose fintech national bank charter and encouraging the bank partnership model with fintech firms;
- Update regulations for new technology. Updating activity-specific regulations across a range of products and services offered by nonbank financial institutions, many of which have become outdated in light of technological advances; and
- Facilitate regulatory sandboxes. Advocating an approach to regulation to enable responsible experimentation in the financial sector, improves regulatory agility, and advances American interests abroad.
This report includes only a limited treatment of blockchain and distributed ledger technologies. These technologies, as well as digital assets, are being considered separately in an interagency effort led by a working group of the Financial Stability Oversight Council.