Among the bustle of crypto-related activities in Washington this week, an important announcement surfaced from Mick Mulvaney, acting director of the Consumer Financial Protection Bureau (CFPB).
In a press release, on July 18, 2018, Mulvaney announced Paul Watkins as the head of the newly formed office of innovation. Mr. Wakins’ appointment and the launch of the new office coincides with the agency’s implementation of a “regulatory sandbox” intended to spur novelty in the burgeoning fintech field.
Crypto Could Get a Strategic Boost
Fintech – the intersection of finance and technology, includes cryptocurrencies and blockchain technology, and the CFPB’s actions are intended to expand in these sectors.
Within the industry, the term “regulatory sandbox” indicates a rapidly developing regulation that aligns with the fast-paced development of the sector. The CFPB’s initiative strives to create an open dialogue between developers and government officials charged with compiling regulatory assignments while mitigating unintended negative consequences.
In fact, Mr. Mulvaney views fintech developments as integral to his agency’s ability to protect consumers. In comments to The Wall Street Journal, he explains,
“You can make a strong argument…that new technology actually offers new and innovative ways to protect consumers.”
However, the office of innovation isn’t only about protections and has a growth mandate as Mr. Mulvaney looks to foster new ideas in the tech sector. Citing the agencies charge to encourage competition and consumer access, Mr. Mulvaney is making a strategic to facilitate advancement in the digital sphere.
Initially, the office will focus on crypto assets and blockchain technology. The WSJ reports,
“he expects the bureau’s new innovation office to look closely at cryptocurrencies, other financial technologies based on blockchain, private currencies and microlending, or lending by individuals rather than institutions.”
By supporting an initiative that’s intentionally aimed at growth, the CFPB seems to be taking a different approach than other federal officials.
Common Themes But Different Approaches
In many ways, the CFPB’s attempts to introduce a streamlined regulatory approach to fintech development aligns with the sentiment from Congressional hearings earlier this week that were focused on devising intentional and timely regulation for cryptocurrencies.
Two Congressional hearings, by the House Finance Services Committee and the House Committee on Agriculture, cautioned against overly hasty regulation for cryptocurrencies and blockchain technology, but they stopped short of issuing the type of implicit endorsement that Mr. Mulvaney’s announcement included.
Instead, the Congressional hearings concluded that further understanding is required before regulatory action can be adequately considered.
Fortunately, neither institution is wholly endorsing or rejecting a technology that they, admittedly, know very little about. However, all these events in Washington make it clear that the U.S. government is interested in supporting blockchain technology and cryptocurrencies in a responsible, business-friendly way while protecting consumers.
Cover Photo by Luke Stackpoole on Unsplash