New SEC Division, FinHub, Will Engage with Crypto and Emerging Fintech Businesses

The United States Securities and Exchange Commission (SEC) has announced the launch of the Strategic Hub for Innovation and Financial Technology (FinHub), a new division that will cooperate with crypto and fintech startups. The division has been launched to ensure that these new businesses comply with regulatory standards.

The primary purpose of the division will be to inform the public of all of the SEC’s interactions with companies working with blockchain and digital assets, as well as other technologies like Artificial Intelligence. Another key function of FinHub will be to serve as a liaison to domestic and international regulators.

Individuals and companies can send in inquiries on the FinHub page and schedule meetings with officials to discuss their concerns. The hub will be led by Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director of the SEC’s Division of Corporation Finance.

Szczepanik notes:

SEC staff across the agency have been engaged for some time in efforts to understand emerging technologies, communicate the agency’s stance on new issues, and facilitate beneficial innovations in the securities industry. By launching FinHub, we hope to provide a clear path for entrepreneurs, developers and their advisers to engage with SEC staff, seek input and test ideas.

SEC Chairman Jay Clayton, who together with CTFC Chairman Christopher Giancarlo has spoken extensively about cryptocurrencies before, added:

The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission.

Investors should be pleased to hear that the SEC will be also be organizing its second fintech forum in 2019.

On the whole, it appears that the SEC has realized that engagement is a key demand in the cryptocurrency space, with both investors and businesses imploring the SEC to clear away uncertainty rather than leave market stakeholders in limbo.

SEC is Chipping Away at Regulatory Uncertainty

The U.S. SEC has made regulating the crypto space a top priority, following the explosion of ICO investments in the past year.

In 2017, ICOs raised a staggering amount of money for such a new space — $5.6 billion. In 2018, that amount was surpassed in a mere 4 months, with $6.3 billion raised by April. By June, the amount had doubled.

The increase in funds raised via ICO attracted the attention of regulatory authorities, who have repeatedly criticized the cryptocurrency market for being ripe for exploitation and riddled with scams. That said, 2018’s fundraising did not seem to be affected by the SEC’s involvement in 2017 and early 2018.

Recent months have seen the SEC take a more amiable approach to the market, delaying the decision to disapprove Bitcoin ETFs and urging knowledgeable individuals to engage with them on the subject. Some members, like Commissioner Hester Peirce, have taken a very favorable view of cryptocurrencies, arguing that the regulatory body should approve a Bitcoin ETF and promote innovation.