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

Abstract

This study reviews the regulatory issues developers and users of emerging financial technologies face as use cases expand. DeFi and DAOs, which build upon advances in AI and blockchain, reduce 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. Regulatory solutions may 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). As it will take time for regulators to implement effective policies, stakeholders can still influence policy.

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