What Are Some of the Most Significant FinTech Bills that – if Passed – Would Transform Financial Services?

Published: Jul 15, 2019
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In this segment, Dina Ellis Rochkind, Of Counsel, Paul Hastings, discusses the regulatory activity on Capitol Hill with respect to fintech, blockchain and cryptocurrencies. She underscores the most significant bills that, if passed, could lay the groundwork for modern finance.

Transcript

Dara Albright: I love your regulatory updates and it seems like they have increased in their frequency. So we're starting to see a lot of activity in the fintech space on Capitol Hill. Are you? I mean, that's how it feels to me. Is that what you are seeing and experiencing?
Dina Ellis Rochind: Yeah, I think there is a lot of interest in fintech, crypto and blockchain. It's an emerging space. There's just a lot of interest in technology overall as you can see from larger companies where people are concerned about privacy and other issues. But you have activity on Capitol Hill. The main bill is the Token Taxonomy Act, which provides clarity as to when something's a security or when it's a utility. Now the legislation is very important because it creates a dialogue and a discussion, and it's also very important because the agencies (SEC, CFTC, etc.) are interconnected with the Hill. And when I say that, I mean Capitol Hill influences what the agencies do and vice versa, or they put pressure on each other to do things. But from a more concrete standpoint, the SEC, CFTC and other agencies are chock full of former Hill staffers.

For example, Hester Pierce (aka Crypto Mom) used to work on the Senate Banking Committee and is now a leading voice when it comes to cryptocurrency and blockchain. The Senate, in terms of how it's legislating, is always extremely relevant because many appointees want to move up and be appointed to something else, and you always need to have the support of the Senate to get confirmed again. Legislatively, what you're seeing a lot out there on token taxonomy is the main bill. There are some other smaller bills. There's a lot of discretion on Capitol Hill about anti-money laundering and know-your- customer legislation. When it comes to blockchain, there's that discussion and Treasury as well. There are some offices and some people within the administration who understand that it's actually easier to trace funds on a blockchain than it is a $100 bills in the bag.

There are others who are fearful of the technology and think that it's an easier way to move money around for terrorists or illicit finance. There are a lot of bills that are studies on cryptocurrency and on blockchain. Some of those bills will probably pass. And the research that's done will lay the groundwork for further legislation. The one place that I think we could see more from is the White House, because we're talking about financial services, cryptocurrency and blockchain. And there is the alphabet soup of the regulators. But blockchain and distributed ledger technology affect almost every sector. And the only way that the U.S. is going to play a leading role is to promote the technology and standardization. Only the White House can coordinate that type of effort. Other countries are already doing that like China. We're a little different in that we have this robust private sector, which innovates. I don't think we should stop that, but I do think that the U.S. should play more of a leadership role.