by: Grow VC Group

A ‘Fintech Sandbox’ is a technology environment where companies/firms would work in close partnership with regulators to develop their ideas and technology without the red tape that may inhibit their potential growth. In the UK, France, Singapore, Hong Kong and Australia, regulators have already or are currently laying the groundwork for a such a Sandbox environment that gives the firms the ability to test a new product or business model with a limited launch, without going through the full regulatory process.

Ideally, this would create the perfect environment to foster rapid growth for these budding firms/technologies and focus solely on the product without being impeded by the regulators. To bring the United States on par with its peer nations and allow FinTech firms in the United States the opportunity to realize their potential (whether it be in the payment space, new financial products, lending, ID verification etc), Representative Patrick McHenry (R-NC) has introduced a bill that would mirror the UK’s sandbox, requiring many federal agencies including the Federal Reserve Board, the Treasury Department and the Securities and Exchange Commission to develop an internal “Financial Services Innovation Office” where companies can seek help in testing a product.

Under the McHenry proposal, financial technology firms would be required to prove to the regulator that:

– their innovation serves a public interest,

– improves access to financial products or services,

– doesn’t pose a system risk to the financial system or consumers.

While McHenry conceded that passing the bill this year would be difficult, he emphasizes that the introduction of this bill sparks a much needed conversation and would lay the groundwork for supportive regulations and infrastructure for the future.

Read the whole article on Crowd Valley News.

US Congress finance sandbox

Photo: Wikipedia.


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