CFPB Announces The New Office of Innovation
Last week the Consumer Financial Protection Bureau (CFPB) issued a press release assigning the new Director for the Office of Innovation, Paul Watkins, a FinTech regulator from Arizona’s Office of the Attorney General. Similar to the FTC’s Blockchain Working Group and LabCFTC, the Office of Innovation will engage experts in the field of Financial Technology from both the private and public sector. While researching the FinTech market and current regulations the CFPB plans on facilitating new product creating while protecting consumers, as their press release stated,
“Acting Director Mulvaney recently created the Office of Innovation to focus on encouraging consumer-friendly innovation, which is now a key priority for the Bureau. The work that was being done under Project Catalyst will be transitioned to this new office. The Bureau intends to fulfill its statutory mandate to promote competition, innovation, and consumer access within financial services. To achieve this goal, the new office will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.”
Previously Project Catalyst was in charge of FinTech innovation, but with only one online lending company endorsed by the program, compliance risks took priority. The new Office of Innovation will take over the role under new leadership looking to facilitate business growth. Watkins oversaw Arizona’s FinTech Regulatory Sandbox, the first in the nation, to promote innovative companies a trial at a portion market space with limited regulations. Acting Director Mick Mulvaney express confidence that under Watkins’ leadership “the Office of Innovation will make significant progress in creating an environment where companies can advance new products and services without being unduly restricted by red tape that belongs in the 20th century.”
Office of Innovation to Promote Blockchain and Cryptocurrency
The same day of the CFPB press release The Wall Street Journal published an interview with Mulvaney in which he declared the new Office of Innovation will take a closer look at cryptocurrency and, “other financial technologies based on blockchain, private currencies and microlending, or lending by individuals rather than institutions.” He argued such novel technology offers new ways to protect consumers by seeing what’s happening in “real-time” as opposed to the complaint hotline. Companies and businesses have argued that CFPB complaints are only one sided jeopardizing the companies’ reputation. Mulvaney explained that he wants the CFPB to be held in the same “gold standard regulator” as the Securities Exchange Commission or the Federal Deposit Insurance Corp. He continued, “Everything we’ve done is pointed in that direction and part of that includes being innovative.” The article author, Yuka Hayashi, hinted the new Office of Innovation could explore outside traditional credit score methods, such as mobile payments and consumer behavior online for credit decisions.
Felix Shipkevich is a principal of Shipkevich PLLC. His practice focuses on providing counsel to FinTech and financial services firms, including financial technology, payments and emerging digital currency space. He has spoken at national panels in the money transmitter space and payments industry. Mr. Shipkevich’s payments practice has brought him into contact with money transmitter registration requirements in all fifty U.S. States.
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