Under the proposed bill, companies could apply for an “enforceable compliance agreement” with offices at federal financial agencies that would allow for a regulatory path forward.
North Carolina Representative Patrick McHenry, the current ranking member of the House Financial Services Committee and chair starting in January, has reintroduced legislation aimed at creating innovation offices within government agencies dealing with financial services.
In a Dec. 19 announcement, McHenry said he had reintroduced the Financial Services Innovation Act — a bill he previously pushed in 2016 and 2019. The legislation was aimed at creating offices within existing federal financial institutions that could help innovators — including those dealing with crypto and blockchain — a path towards regulatory clarity in the United States.
According to McHenry, companies could apply for an “enforceable compliance agreement” with the offices at agencies like the Securities and Exchange Commission and Commodity Futures Trading Commission that would allow for a legal path forward without “out-of-date or unduly burdensome” regulations. He suggested the legislation had been modelled on North Carolina’s regulatory sandbox program.
“It’s critical for our regulatory process to work with financial innovation, instead of against it,” said McHenry. “My legislation will help financial institutions and entrepreneurs get innovative products and services to market sooner, while maintaining critical consumer protection safeguards [...] Committee Republicans will continue to work toward an up-to-date regulatory framework that gives fintech firms clear rules of the road for success.”
I'm proud to reintroduce my bill to help spur financial innovation and inclusion.— Patrick McHenry (@PatrickMcHenry) December 19, 2022
The Financial Services Innovation Act follows the same model as North Carolina's successful regulatory sandbox program.
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Other federal agencies including the Office of the Comptroller of the Currency have already announced they planned to establish innovation offices with a focus on fintech. The SEC launched a Strategic Hub for Innovation and Financial Technology, or FinHub, in 2018, with the center becoming an independent office in 2020. The CFTC’s fintech research unit LabCFTC made a similar move in 2019.
California Representative Maxine Waters currently chairs the House Financial Services Committee, but McHenry will take over in January following Republican lawmakers winning majority control by 222 to 213 in the House of Representatives. Under Waters and McHenry, the House committee has made many bipartisan efforts in addressing the collapse of crypto exchange FTX and potential actions against former CEO Sam Bankman-Fried.