The U.S. Treasury Department Releases Fintech Report Discussing Cryptocurrency and Blockchain Developments

Earlier this week on Tuesday, July 31, the U.S Treasury Department released a fintech report titled ‘A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation.’

The report highlights some recommendation put forward proposing some sweeping changes required to foster innovation in the fintech space. The report also goes to discuss the existing monetary system and the state of cryptocurrencies but it doesn’t put any direct conclusions on them.

The Treasure Department acknowledges the developments in crypto and blockchain space while urging to streamline the regulatory frameworks surrounding crypto payments and transactions. It also talks of implementing regulatory sandboxes for fintech innovation, similar to the ones already introduced at other parts of the world like U.K, Singapore, Lithuania, Arizona State in the U.S and HongKong.

The report notes:: “It is important that state regulators strive to achieve greater harmonization, including considering drafting of model laws that could be uniformly adopted for financial services companies currently challenged by varying licensing requirements of each state.”

The Treasury Department also assigns the Financial Stability Oversight Council the job of examining blockchain and distributed ledger technologies and further guide the federal regulator on important matters.

However, the Treasury notes that it is absolutely willing to support innovation in the fintech sector and develop regulations that create a healthy environment to foster this growth further. The report notes: “Support of innovation is critical across the regulatory system — both at the federal and state levels…Treasury supports encouraging the launch of new business models … to pursue innovative technologies to lower costs, improve customer outcomes, and improve access to credit and other services.”

The Treasury Department says that the existing regulatory frameworks are outdated for the rapid blockchain revolution in the technology sector. Hence, the regulations need to be revised considering the current pace of technological developments such that it can cater to future developments as well.

The report notes: “The financial regulatory framework is not always optimally suited to address new business models and products that continue to evolve in financial services. Financial regulation should be modernized to more appropriately address the evolving characteristics of financial services of today and in the future.”

The official press release, quotes the U.S Treasury Department Secretary Steven T. Mnuchin saying: “American innovation is a cornerstone of a healthy U.S. economy. Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector. America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”