US Secretary of the Treasury Steven Mnuchin, gestures during a press conference in Buenos Aires, on July 22, 2018, at the end of the G20 Finance Ministers and Central Bank Governors meeting. (Photo by EITAN ABRAMOVICH / AFP/Getty Images)
After 18 months of anticipation, the Treasury Department released on Tuesday a seminal report examining the barriers to financial technology and innovation in the United States and proposing a sweeping set of recommendations designed to cut red tape and foster continued experimentation.
While the report only mentions cryptocurrency and blockchain technologies in passing, many of the current problems it highlights and recommendations it proposes are highly germane to the crypto industry and nonbank financial entities of all stripes.
These include calls for the streamlining of complex and convoluted financial regulation frameworks for activities such as money transmission and payments, and for further implementation of fintech regulatory sandboxes, such as those that have been successfully deployed in places like the United Kingdom, Singapore and Hong Kong internationally, as well as Arizona in the U.S. - which will officially launch on August 1.
“Financial regulation should be modernized to more appropriately address the evolving characteristics of financial services of today and in the future,” the report states, emphasizing:
“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.”
It goes on to specifically recommend that “the states work to harmonize money transmitter requirements for licensing and supervisory examinations.”
Money transmission licensing rules have been a perpetual thorn in the side of cryptocurrency companies operating in the U.S., as the activity is regulated on a state-by-state basis and no license passporting structure exists as it does in places like the European Union.
Aaron Stanley Contributor