FinTech Regulation in the United States: Past, Present, and Future

41 Pages Posted: 2 Mar 2022 Last revised: 1 Sep 2022

See all articles by Jillian Grennan

Jillian Grennan

Santa Clara University, Leavey School of Business; Santa Clara University School of Law; University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Date Written: August 31, 2022

Abstract

Research on regulating emerging financial technologies (``FinTech") has been siloed to individual branches. Instead, I present a high-level view of various FinTech branches and analyze the economic incentives of each. By focusing on the dynamics and parallels between the branches, I offer new insights for optimal regulation that balances the costs and benefits as use cases expand. DeFi, which combines advances from the AI and blockchain branches, reduces the cost of coordinating complex financial services. Yet the efficiency gains intertwine with potential legal risks associated with liability, financial crime, dispute resolution, jurisdiction, and taxes. To ensure financial stability, effective regulatory solutions include adapted definitions and safe harbors, regulatory sandboxes, self-regulatory organizations, and/or policing misleading characterizations (e.g., regarding the extent of decentralization or agreed to data uses).

Keywords: Regulation, Rules, Securities and Exchange Commission, Commodity Futures Trading Commission, FinTech, Cryptocurrency, Tokens, Blockchain, Decentralized Finance, DeFi, Decentralized Autonomous Organizations, DAOs, Automated decision-making, Artificial Intelligence, Big Data, Data Mining, Privacy

JEL Classification: K22, K23, K24, G23, G28, G38, O38

Suggested Citation

Grennan, Jillian, FinTech Regulation in the United States: Past, Present, and Future (August 31, 2022). Available at SSRN: https://ssrn.com/abstract=4045057 or http://dx.doi.org/10.2139/ssrn.4045057

Jillian Grennan (Contact Author)

Santa Clara University, Leavey School of Business ( email )

Santa Clara, CA 95053
United States

Santa Clara University School of Law ( email )

500 El Camino Real
Santa Clara, CA 95053
United States

University of California, Berkeley, Haas School of Business, Institue for Business and Social Impact

Berkeley, CA 94720
United States

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