CoAuthored by Arry Yu/Molly Jones: Crypto Regulator Sends Strong Signal to Foster Innovation
This week, the Washington State Department of Financial Institutions (DFI) announced the creation and launch of the Center for FinTech Information (CFI) to facilitate communication between the DFI and entrepreneurs, investors, and fintech companies. While Washington aspires to be a global hub for blockchain innovation, the lack of transparency and regulatory clarity has long created challenges for innovative crypto and digital asset startups, funds, and investors in the state. The creation of this center is a welcome, positive step forward for the sector, and if effectively staffed and resourced, can help transform the experiences of crypto companies in Washington.
There is enormous potential for innovative financial services in Washington. States like Wyoming and Florida that have embraced the digital asset industry with updated regulations have seen real results in economic growth, diversification of the economy, creation of well-paying jobs, and expansion of equitable access to fiscal services to residents.
The launch of the CFI is critical to ensure Washington’s innovative financial services sector has the opportunity to share in the benefits of the digital asset industry’s success and growth, which is on an exponential trajectory. Washington is already well-situated to become a global innovative fintech hub – boasting a strong innovation ecosystem with top talent and an active venture capital network. With a regulatory system that promotes innovation while enabling consumer protection, Washington can also become a global digital asset hub. We recommend three key near-term priorities for the CFI to advance this mission:
Information and Transparency: The CFI should prioritize providing proactive guidance for businesses engaging with the DFI, as well as how to establish and maintain compliance. For many new businesses, obtaining legal counsel to establish initial compliance can be prohibitively expensive. By publicly sharing information and expanding communication with the business community, the CFI can significantly reduce these costs and remove barriers to entry for many innovators. This would include publishing contact information for DFI staff available to support new businesses in blockchain applications involving financial services, as well as interpretive letters, administrative decisions, and statements on the DFI website. These small steps would greatly facilitate business compliance efforts.
Align with National Standards: There is a lack of consistency with respect to how businesses that deal in digital assets are treated across the states and by the federal government, which creates a significant challenge for many digital asset companies in Washington. The CFI has the opportunity to standardize Washington’s regulations by adopting nationally-accepted FinCEN rules and definitions surrounding fintech and digital assets, as well as clearly outlining any departures from the national standards. This would allow the CFI to ease compliance for blockchain companies while still maintaining rigorous standards that protect consumers.
Partner with the Emerging Technology Community: As the DFI continues to pursue opportunities to bolster innovative fintech in the state, the Washington Technology Industry Association (WTIA) can bring together innovators and industry partners to collaborate on these efforts. Regular communication channels between the DFI and industry — such as the WTIA-DFI Town Hall this week — is critical to advance the dual goals of both consumer protection and innovation. The DFI should also consider organizing working groups with industry participants, quarterly forums to update the community on recent developments, and other platforms to share guidance and priorities, while also learning from industry on the latest innovations.
The WTIA Cascadia Blockchain Council (CBC) looks forward to working with the DFI and industry partners to build a thriving blockchain sector in Washington state, and we applaud the launch of this new office. The WTIA CBC stands ready to partner with the DFI to identify policies and programs that promote innovation, and we invite all emerging financial technology enterprises to join us in our work to promote a robust tech sector in a thriving community.
To learn more about the Cascadia Blockchain Council, contact Arry Yu at firstname.lastname@example.org.
Original OpEd here: www.washingtontechnology.org/crypto-regulator-sends-strong-signal-to-foster-innovation/
Geekwire article here: www.geekwire.com/2021/washington-state-launches-center-cater-potentially-regulate-crypto-fintech-companies/