Patrick McHenry’s Push for Innovation

House Representative Patrick McHenry from North Carolina, who is set to step into the chair of the House Financial Services Committee come January, has thrown his hat back in the ring with a renewed commitment to financial innovation. On December 19, 2022, he reintroduced the Financial Services Innovation Act — a bill he first championed in 2016 and brought back in 2019.

The Aim of the Innovation Act

So, what exactly does the Innovation Act propose? Essentially, it seeks to plant the seeds for innovation offices within federal financial institutions. Think of these as friendly guides for fintech innovators, especially in the realms of cryptocurrency and blockchain, who are navigating the oft-treacherous waters of regulatory clarity.

Enforceable Compliance Agreements

• Innovators could apply for an “enforceable compliance agreement” with agencies like the SEC and CFTC.
• This agreement would provide legal pathways that bypass the usual maze of outdated regulations.
• McHenry believes this model draws inspiration from North Carolina’s successful regulatory sandbox, a clever little setup designed to test and foster innovation.

Why This Matters

McHenry argues passionately, “It’s critical for our regulatory process to work with financial innovation, instead of against it.” In other words, the current regulations shouldn’t play the role of the grumpy neighbor who yells at kids playing in the street. Instead, they should facilitate a safe and innovative landscape where financial services can flourish while keeping consumer protections intact.

Bipartisan Cooperation and the Road Ahead

The legislation comes at a time when bipartisan cooperation is essential. With the recent Republican majority win in the House—222 to 213—McHenry is ready to usher in a new wave of regulations that can help financial institutions and entrepreneurs get their innovative products and services to market without delay.

A Broader Approach to Financial Services

It’s not just McHenry’s bill that points to a changing landscape; other agencies are following suit too! The Office of the Comptroller of the Currency has plans for innovation offices, and the SEC established its FinHub back in 2018. Even the CFTC is getting in on the action, evolving its LabCFTC into an independent entity in 2019. Clearly, the winds of change are blowing through Washington!

Conclusion – Looking to the Future

As McHenry takes over, all eyes will be on the House Financial Services Committee to see if they can truly deliver a regulatory framework that not only inspires innovation but also offers clarity and assurance to emerging fintech firms. Let’s hope this act becomes less of a “wait and see” and more of a “let’s get this party started.” After all, time is money, especially in the world of finance!