Patrick McHenry announced on December 19 plans to reintroduce the Financial Services Innovation Act as he assumes leadership of the House Financial Services Committee. The bill promoted by North Carolina representatives will enable crypto firms to pursue enforceable compliance agreements from the federal financial agencies.
Implementing Regulatory Clarity
McHenry is assuming the HFSC chair position following the Republican triumph over the Democrats in house membership. The bill proposes establishing innovation offices within federal agencies with a mandate to oversee crypto innovation.
McHenry restated on December 19, reintroducing the bill he promoted in 2016 and 2019. He echoed previous submissions that the legislation will present a path for crypto and blockchain innovators to realize regulatory clarity.
Proposed Bill Provisions
McHenry decried the increased appetite for burdensome regulations. Instead, the proposed bill mirrors the Sandbox regulatory approach implemented in North Carolina. McHenry suggests the availability of enforceable compliance agreements within the federal institutions, including CFTC and SEC, will bring regulatory clarity missing in the US. He dismissed the argument supporting a restrictive regime targeting crypto operators terming them burdensome.
McHenry emphasized that the regulatory process should prioritize working with financial innovation rather than fighting it. He portrayed the proposed bill as designed to enable financial entrepreneurs to expedite getting their innovative products and services to the market. Nevertheless, the bill harbors several safeguards he considers critical to protect consumers from fraudulent innovators. He expressed optimism in garnering support in delivering the updated regulatory framework capable of orienting fintech innovators to success.
Embracing Innovation Office Idea
The bill’s reintroduction coincides with the increased scrutiny of the calamitous collapse of FTX during the reign of the embattled Bankman-Fried. The current HFSC chair, Maxine Waters, has engineered bipartisan efforts to investigate alleged fraud. The incumbent reign is characterized by increased activity to establish a regulatory framework for the crypto ecosystem.
McHenry promised to integrate Waters’ perspective of crypto regulation. His HFSC leadership coincides with various federal agencies embracing the innovation offices’ idea. In particular, the Office of the Comptroller of Currency expressed plans to establish an exclusive fintech center. Such a plan replicates the SEC decision to launch FinHub in 2018 and the LabCFTC unit started by CFTC in 2019 for research purposes.
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