The US Securities and Exchange Commission (SEC) announced October 18 that it has taken an important step in engaging with blockchain technology, and the startups driving it forward. Their new FinHub division “will play an important role in facilitating the SEC’s active engagement with innovators, developers, and entrepreneurs,” according to an SEC press release.
Led by Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director in the SEC’s Division of Corporation Finance, the regulatory agency will be equipped to communicate its stance on issues and facilitate beneficial innovation. And this engagement goes both ways – the startups have better lines of communication to seek input and test ideas with the securities regulator as well.
In addition to distributed ledger technology, the division will also serve as a resource on automated investment advice, digital marketplace financing, and artificial intelligence/machine learning. The SEC is even planning for a FinTech Forum with a focus on blockchain tech in 2019.
Collaboration is the Name of the Game
The United States continues to be a top global contender when it comes to innovation. It’s even known to have the best intellectual property environment, according to Statista. However, the US might not hold the top spot for long – China is pushing ahead with blockchain technology patents – and while the US is well-known for entrepreneur-friendly culture, it’s turning out different for blockchain. Countries like Malta have shown proactive thinking vis-a-vis regulating the technology. In the USA, however, crypto-friendly policies in some states are in contrast with the suspicion of the federal authorities.
So what can the US do? Blockchain technology is new. It’s also rapidly evolving. As such, regulators need insights to help them in formulating pragmatic regulations. A systematic approach is needed, and this is where FinHub comes in. Blockchain experts can better communicate with the SEC, much like Cryptic Labs is doing using their economic advisory board, allowing the industry and policymakers to interact more.
All in all, getting all entities on the same page would help. With the SEC getting more involved the blockchain market through FinHub, that overarching clarity could prevail. Blockchain logistics company ShipChain, for example, had received a ‘Cease and Desist’ order which was later overturned by the South Carolina Securities Division. A single regulatory environment should prevent such uncertainties. The SEC can clamp down on blockchain-crypto scams as they did for the Tomahawk ICO. Even the US courts recognize the SEC jurisdiction on ICOs.
New technology is sometimes confusing, but regulation and better communication help. FinHub will likely provide that much-needed impetus to the SEC financial technology collaboration effort, resulting in wider-spread adoption and more efficient technological cooperation across the globe.