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U.S. Regulation of FinTech - Recent Developments and Challenges

Regulation of financial technology (or Fintech) providers, products, and services serves many important policy objectives. The rapid development of Fintech products and services, and the dramatic entry of numerous new participants in the market that are not regulated like traditional financial institutions, have presented challenges for regulators around the globe. In the U.S., the financial regulatory apparatus is fragmented, exacerbating those challenges. That, coupled with a difficult financial regulatory environment in the U.S. in the aftermath of the financial crisis and other issues endemic to the Fintech sector, make for strong headwinds for both financial regulators and Fintech providers as they try to strike the right balance between regulation and flexibility to allow innovation to occur. There are a variety of potential paths to address some of those challenges and headwinds, but none are a panacea and a combination of solutions will need to be implemented to strike that balance appropriately.