TechNet supports private sector efforts to empower consumers to better manage their financial lives and enjoy new, safe, secure, inclusive, and reliable financial tools. Congress and federal agencies should update outdated laws and rules in order to utilize modern financial technologies and meet consumer and business demand for innovative financial products. Overall, the federal regulatory environment must be more amenable to emerging fintech innovations.
In particular, TechNet supports the following ideals:
Open Finance and Consumer-Authorized Data Access
- Establishing a robust consumer data right through a Section 1033 rulemaking that promotes the free flow of consumer-authorized data across the financial ecosystem allowing consumers broader access to financial services and control over their financial data.
- Supporting an open finance regulatory regime through a Section 1033 rulemaking that looks to industry-developed interoperability, portability, and security standards for ensuring a seamless, standardized, and secure experience for sharing consumer data.
- Supporting an open finance regime through a Section 1033 rulemaking that provides a flexible, consent-based framework for notifying consumers of how their information will be shared, transmitted, stored, and utilized.
- Supporting a Section 1033 rulemaking that clarifies ambiguities around liability for unauthorized access, privacy, credit reporting, and data accuracy that provides clear rules of the road for consumers and ecosystem participants.
Chartering Alternatives for Fintechs
- Promote regulatory and legislative efforts to encourage fintechs to be able to expand their service offerings through risk-based regulatory regimes that embrace competition and innovation together with systemic and consumer protections, such as Industrial Loan Companies (ILCs) and National Trust Charters (NTCs).
- Streamlined rules for the online lending marketplace. Federal and state regulations fail to address the constant change, diversity, and innovation in the marketplace. Federal and state policymakers should streamline lending laws across jurisdictions to protect their constituents and to account for the innovative, digitized lending market of today.
- Policymakers should promote industry best practices that protect consumers and small businesses while maximizing diversity and innovation in lending services.
- Modernized rules for deposit-taking. Prudential banking regulators should continue to modernize outdated regulations that restrict third parties’ ability to connect consumers’ deposits and financial institutions.
- Unlock the power of financial apps. Policymakers should empower consumers and businesses to take advantage of financial applications that help them improve security, convenience, and reliability.
- Leverage technology to reduce barriers to financial services, particularly for the unbanked and under-banked. The internet, cloud computing, blockchain, and mobile innovations should be empowered to thrive in an open environment with reasonable regulatory burdens, which requires a reassessment of existing barriers to adoption along with incentives to pursue the use of innovations that promote access to financing for individuals and small businesses.
- Rulemaking that would allow for a robust consumer right to access and share their financial records. Federal regulators should establish an operational framework for secure, consumer-authorized data sharing and access through a formal rulemaking that clearly establishes the form and manner in which consumers can securely request that their financial information be accessed and shared with approved third parties.
- Promote policies for usage of open, multi-cloud solutions that allow easy portability and movement of workloads across any cloud provider.
Payment System Principles
- Promote enhanced security and convenience through continuous innovation. No one technology should be mandated for security and authentication, nor should one technology become a de facto mandate through “floor-setting.” New rules should not deter technological innovations in payment systems.
- Support policies that promote new entrants and empower consumers to utilize a broad array of financial technology products and solutions.
- Support efforts to reduce fraud in the financial industry through the empowerment of innovators and innovation.
- Legislative and regulatory policies impacting electronic payments should promote continued innovation and support free markets, not regulatory mandates that fail to set a level-playing field for the entire payment and FinTech ecosystem.
- Support efforts for faster and more efficient financial services, including the Federal Reserve’s FedNow initiative for faster payment systems, central bank digital currencies (CBDCs), stablecoins, automation to improve efficiencies, including using AI and machine learning, and automated data workloads and data sharing to facilitate faster analysis.
- Regulatory clarity for Earned Wage Access (EWA), a key area of innovation that offers consumers greater flexibility. TechNet urges the Consumer Financial Protection Bureau to engage with industry to ensure ongoing responsible development and availability of a range of EWA products that can serve different consumer needs and uses.
Federal Action Plan for Blockchain and FinTech Modernization, Legislative Tracking
- Support the U.S. government’s adoption of a coordinated approach to blockchain technology and positioning the U.S. as a global leader in blockchain innovation.
- Support and advocate for the U.S. government’s adoption of policies that safely facilitate and encourage the adoption of emerging technologies such as blockchain, and create beneficial partnerships between financial institutions and fintech companies that improve consumer access, choice, and opportunity.
- Support financial innovation initiatives around cryptocurrencies, blockchains, and “tokenization” of assets and value, and recognize these technologies as significant market transformers in the financial and technology sectors.
Anti-Money Laundering / Countering the Financing of Terrorism (AML / CFT) Compliance
- Develop clarity around compliance with AML obligations while balancing law enforcement objectives, and doing so in a way that fully utilizes and exploits benefits arising from blockchain technology analytics.
- Modernize AML/CFT/KYC regulations, taking into account the evolving landscape of financial crime, money laundering, and terrorist financing in view of blockchain technologies.
- Support artificial intelligence/machine learning (AI/ML) and blockchain technologies to improve efficient fraud and financial crime detection, surveillance, and mitigation.
Regulatory Oversight and Clarity for Digital Assets and Wallets
- Promote education regarding blockchain, digital currencies, tokens, and digitized assets.
- Provide clarity and regulatory certainty around business platforms built around digital tokens, and propose solutions to regulators and policymakers to help promote a predictable legal environment for companies working with digital tokens and digital token solutions.
- Promote universal, “self-managed”-type capabilities and controls (e.g., self-managed private keys, digital wallets, etc.) for digital tokens and digitized assets as a fundamental right, and enable individuals to engage in transactions and exchanges without a third-party intermediary.
- Promote regulatory clarity around U.S. securities law and its impacts on the blockchain industry, and develop modernized securities regulations governing tokenized securities.
- TechNet appreciates the efforts of the Biden administration and the U.S. Department of the Treasury to develop a comprehensive framework for digital and crypto assets.
- Develop frameworks for regulating and overseeing digital assets that are securities, commodities, and currencies to enable companies and platforms that use them to have a predictable legal environment. Such frameworks should originate from Congress and promote consumer protection and market stability while enabling U.S. companies to innovate and thrive in a global marketplace.
Taxation and Accounting Treatment of Digital Assets
- Advocate for clear tax treatment audit and accounting standards for digital assets to enable appropriate compliance with regulatory requirements. The absence of such hinders companies seeking to invest and innovate in this technology.
Regulations and Policies Should Support Decentralized, Open Blockchain and Proof of State (or Proof of Work) Systems
- Ensure that proposed rules and regulations remain technology neutral to enable continued innovation with blockchain and distributed ledger technologies (DLT).
- Educate policymakers about various types of blockchain and DLT networks and their legal and regulatory issues.
Promoting the Use of Blockchain in Business and Working with Innovators to Grow the Industry
- Develop resources for innovators and entrepreneurs interested in implementing blockchain technologies.
- Ensure policies and initiatives support and encourage responsible innovation in financial services at all levels of the economy (e.g., from startups to large banks).
- Identify applications and promote stablecoins as enablers of consumer choice and payment efficiency.
- Developing sensible policies to support and adopt activities involving crypto-assets with appropriate guardrails. Some of these guardrails would focus on transparency and disclosure requirements for cryptocurrencies, authorization and support for crypto-asset service providers, a protection mechanism for crypto-asset holders, and allocating funds toward supporting the development and deployment of innovative technologies’ infrastructure that facilitates the use of crypto-assets.
Federal Financial Regulator Office of Innovation
- TechNet supports efforts that will enable each of the innovation offices of financial regulators to foster innovation among the entities they regulate. TechNet encourages these offices to promote regulatory clarity for digital assets and ensure that agency rules and guidance keep pace with marketplace innovation. This includes the newly-established blockchain and cryptocurrency specialist at the Office of Science and Technology Policy established by the CHIPS and Science Act of 2022.
Artificial Intelligence in Financial Services
- Artificial intelligence and machine learning are core to fintech operations, and TechNet supports federal financial regulators’ efforts to better understand how fintechs utilize artificial intelligence and machine learning to power innovation, expand access to financial services, and meet consumer and business demand.
- TechNet supports ongoing engagement with federal financial regulators in working to ensure that fintechs have clear expectations from regulators regarding the utilization of artificial intelligence and machine learning in a manner that is compliant with relevant federal laws regarding credit access, privacy, and other federal consumer protection laws.
- We support efforts to promote responsible AI design and use by the private sector consistent with flexible and clear principles articulated by regulators on important AI/ML topics such as model governance, transparency, bias reduction, and fairness. TechNet’s principles on AI/ML can be found here.