Federal Reserve talks about the future regulation of fintech in the US

6 December 2016

This week the Federal Reserve published its report in the research of the financial technologies and their impact on the national financial system, most notably, they were talking about distributed ledger technology. The US central bank provided some considerations about its intents to monitor the blockchain industry pointing to the fact of insufficient data on the possible risks and benefits of the innovation for the markets.

According to the statement in the paper issued by the Federal Reserve the knowledge of the distributed ledger technology is still in the nascent state noting that the regulators and the system need to consider a great number of challenges posed by the developments in the fintech industry, including risk management, legal issues, adoption, development and technological barriers in the existing systems.

At the moment the Federal Reserve exercises no direct power over the financial technology companies but it controls the cash flow in the electronic payment systems used by banks, and, as such, plans to thoroughly monitor the links between the banking institutions across the country with the fintech firms.

Before issuing the paper the Fed sent its officials to talk to some industry players about their business models and based on the information obtained the central bank seeks to outline the regulatory framework in the course of the upcoming discussions with the businesses.

Last week US Office of the Comptroller of the Currency (OCC) reported that it will be considering the applications from the fintech companies for a charter to become recognized nationwide without any need for complying with multiple regulations in various states.

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