Research: US Treasury submits report in support of blockchain sandbox

Source: Xinhua Finance

Xinhua Finance, Washington, November 29 (Reporter Xu Yuan) The concept of "regulatory sandbox" has been highly regarded and evaluated by the industry since it was proposed by the UK's Behavior Regulatory Authority in March 2015. But as of now, most countries are still watching the regulatory sandbox, and the regulatory sandbox has not yet become an inevitable choice or universal model for fintech regulation. Even in the United States, where the financial industry and fintech are most developed, the regulatory sandbox model has not been adopted as a whole. Constrained by its own regulatory framework and laws, the US regulatory sandbox practice has not only progressed slowly, but its effects have been insignificant. More generally, it still adopts a more general model of innovation center.

At present, the regulatory sandbox has only sporadic practices at the state level in the United States, and has little influence. For example, Arizona, which has been at the forefront of cryptocurrency adoption, became the first US state government to implement a fintech regulatory sandbox in July 2018. The regulatory sandbox is managed by the Consumer Protection and Advocacy Department of the Arizona Attorney General's Office, and takes prompt action when necessary to stop fraud and protect consumers.

The introduction of the regulatory sandbox mechanism has enabled related companies in Arizona to test products and services with up to 10,000 customers for two years before applying for a regulatory license, helping fintech innovative companies in the state to save redundancy and high regulatory costs. The state attracts many fintech innovation companies.

At the same time, in early July of this year, Utah, the United States also launched a fintech regulatory sandbox to provide flexible regulatory space for more innovative financial service trials, which will attract credit extensions, P2P loans, transfers, blockchain and cryptocurrencies. Companies in various fields.

At the federal government level, Secretary of the Treasury Steve Mnuchin suggested in a report to US President Trump this August that measures be taken to support fintech and financial innovation, including the implementation of a regulatory sandbox. This report analyzes the current monetary system and proposes a thorough reform of cryptocurrencies to foster new technologies in a weakened regulatory environment.

This report covers a wide range of fields, many of which are highly relevant to the cryptocurrency industry. In the report, the U.S. Treasury acknowledges the rise and rapid development of cryptocurrencies and blockchain technology, and states that blockchain and distributed ledger technologies are currently under the direct management of the U.S. Financial Stability Oversight Board, and the U.S. government supports this technology He also stated that enacting regulations to promote the growth of emerging industries is crucial to the entire regulatory system.

At the same time, the U.S. Treasury Department also discussed technologies that could simplify the payment system, and mentioned the development of regulatory sandboxes to stay ahead of competition in countries and regions such as the United Kingdom, Singapore and Hong Kong. According to the report, internationally, many countries and regions have established “innovation mentor” positions and introduced various forms of regulatory sandboxes. Due to the nature of the US financial regulatory system, direct copying is more difficult. "Our Treasury Department is committed to establishing a unified solution with federal and state financial regulators to achieve these goals. In essence, it is the regulatory sandbox."

In addition, the Consumer Financial Protection Bureau of the United States has also conducted active research on the implementation of federal-level regulatory sandboxes, and announced the proposed rules at the end of 2018. The bureau plans to restrict relevant regulatory measures by issuing a "No Motion Letter" to promote the development of innovative products and services that benefit consumers.

However, the regulatory sandbox has not been endorsed by all US regulators. Republican Hester Peirce, a member of the Securities and Exchange Commission, believes that the regulatory sandbox has put regulators too close to the regulated.

Mario Vullo, head of the New York Department of Financial Services, also believes that allowing companies to evade protecting consumers, markets and financial services risks is ridiculous. The New York Department of Financial Services is the regulatory body that manages cryptocurrency companies in New York State. Its cryptocurrency license system (Bit License) for the approval and registration of cryptocurrency startups has caused major controversy. Its extremely strict cryptocurrency regulatory standards have also Criticized by the industry.