Earlier this week, ranking member of the House Financial Services Committee (HFSC) and US Congressman, Patrick McHenry, moved to introduce H.R. 4767, the Financial Services Innovation Act of 2019. This would require federal regulators to create Financial Services Innovation Offices (FSIOs) within their agencies to foster innovation in financial services. During an interview with Laura Shin on the Unchained podcast, McHenry said,
“We need to have smarter regulations so you can have money brought to bear for these innovations to take place. We need some certainty out of the CFTC and the SEC, as well as the Treasury and the IRS.”
He added that the bill looks to ensure “innovation-forward” and “innovation-permissioned” regulators. In yet another post, he added that financial innovation is critical to the nation’s competitiveness, making it easier for Americans to take part in the financial system.
“From saving for college to accessing capital to start a small business, we need a more modern banking system that meets the needs of the 21st Century American consumer. Outdated government regulation should not stand in the way.”
The US Congressman claimed that this legislation would modernize the regulatory framework, ensuring financial institutions and entrepreneurs can go to the market with innovative products, while assuring consumer protection.
“Whether you are a small community bank with a new idea or an entrepreneur just trying to navigate complex financial regulations, this bill would ensure regulators reduce the barrier to innovation, keep pace with our rapidly changing banking system, and confront areas of regulatory uncertainty that hamper innovation.”
McHenry’s statement comes on the back of United States Representative, Sylvia Garcia, introducing legislation which pushed for the regulation of stablecoins under the Securities Act of 1933. The bill, which aims to remove ambiguity in areas which lack regulatory guidance, says,
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“”igital assets, known as managed stablecoins, are investment contracts and therefore are securities within the meaning given the term in section 2(a) of the Securities Act of 1933; and because issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities, it is appropriate for Congress to provide clarity by amending statutory definitions of the term security to include managed stablecoins.”
This appears to be in response to Libra, the proposed cryptocurrency project by Facebook. CEO Mark Zuckerberg plans to testify before the HFSC this week. If the bill is signed, the rule would give the Securities and Exchange Commission (SEC) full authority and jurisdiction over stablecoins, as well as those that issue them.