WASHINGTON — The Consumer Financial Protection Bureau is developing a regulatory sandbox for fintech firms, with help from the Commodity Futures Trading Commission, acting CFPB Director Mick Mulvaney said Tuesday.
Mulvaney provided little detail about the sandbox project, but said the bureau is looking at what some states have done and is working "very closely" with the CFTC. In his remarks, Mulvaney also addressed his previous comments about the CFPB complaint database.
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“We are ... in the process of putting together, for lack of a better word ... a fintech sandbox,” Mulvaney said in a speech to the Women in Housing and Finance group.
“We recognize that so often the case with new technology, there is a needle you have to thread,” he added later. “If you don’t give any regulation at all, it has the chance to go off the rails and completely burn itself out, which is where I was fearing bitcoin was going to a couple months ago if they haven’t already. And at the same time, if you overregulate, you sort of tamp down that creativity and you discourage the innovation.”
The U.S. has trailed the U.K.'s Financial Conduct Authority in providing a launching ground for new fintech startups. The FCA's regulatory sandbox has been praised in helping companies move new products and services more quickly to market. Individual states are also employing the concept. Arizona became the first state to adopt a regulatory sandbox in March, and Illinois lawmakers have been considering legislation to establish a similar framework.
Under the Dodd-Frank Act, the CFPB was authorized to take steps to foster innovation, and created the agency's Project Catalyst to encourage innovation efforts. In September, the bureau announced its first "no-action" letter, establishing that it was not planning any supervision or enforcement of the underwriting and pricing models of the California-based Upstart Network. But those efforts by the CFPB to promote innovation have largely been criticized as inadequate.
Mulvaney also revisited his recent comments pointing out that the CFPB is not required to make its consumer complaint database public. He indicated Tuesday that the agency has not made a final decision on that issue.
"I guess I made some news in the past when I pointed out that the statute does not require in any place to keep that public," Mulvaney said. "So we are reviewing how we make that information public, because we do, ... whether or not the way that it is used is consistent with the intentions of the statute."
