A leading House Republican on financial technology issues said April 25 he is working with a Senate Democrat on a revised “permanent beta test” bill to prod regulators to foster fintech innovation.
“You must have a default ‘yes’ to new innovation,” Rep. Patrick McHenry (R-N.C.) said in a speech at the American Action Forum in Washington.
McHenry introduced the Financial Innovation Act in the House in 2016 for what he said were discussion purposes. It did not advance last Congress.
The 2016 bill directed a dozen federal regulatory agencies to set up offices of innovation, and it created a mechanism for innovators to win relief from some regulation in the early stages of product development and marketing.
McHenry said the 2017 version of the act would include “significant changes and revisions,” but he declined to discuss those. He also declined to identify the Democratic senator with whom he is working. He said he hopes to introduce the new bill in two months.
“Our whole federal regulatory footprint is so onerous, costly and extensive that it is stifling innovation,” he said.
“It’s time that regulators see innovation not as a threat but as a real opportunity for Americans.”
An application for regulatory relief would spell out what new product or service the applicant wanted to test and what regulations should be relaxed to promote the effort, under the version of McHenry’s bill introduced last Congress.
The applicant also would have to show that if allowed to go forward under the looser regulatory structure, the innovation would serve the public interest, expand access to financial services and promote consumer protection, without exposing the financial system to risk.
Fintech companies have complained that the U.S. lags the U.K. and some other countries in encouraging innovation. The companies have pointed to the creation by U.K. regulators of a “sandbox,” a carve-out from some regulation for new products and services.
“America has fallen behind,” McHenry said. “If you really want to listen to fintech innovation, it has a British accent.”
McHenry has taken an active role in introducing legislation under the Innovation Initiative, a loosely defined program of the Republican majority in the House to foster technological experimentation and development.
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