The US Department of the Treasury has outlined improvements to the regulatory landscape in support of FinTech innovation.

“Creating a regulatory environment that supports responsible innovation is crucial for economic growth and success, particularly in the financial sector,” said secretary Steven T. Mnuchin. “We must keep pace with industry changes and encourage financial ingenuity to foster the nation’s vibrant financial services and technology sectors.”

The Treasury’s fourth report comes in response to president Donald Trump’s February 2017 executive order calling for the identification of laws and regulations that are inconsistent with its core principles for financial regulation.

In drafting the report, the Treasury consulted a wide range of stakeholders focused on consumer financial data aggregation, lending, payments, credit servicing, financial technology and innovation.

Its recommendations are designed to facilitate innovation by streamlining and refining the regulatory environment for US firms, so they can more rapidly adopt competitive technologies, safeguard consumer data and operate with greater regulatory efficiency.

• The report identified just over 80 recommendations that are designed to:
• Embrace the efficient and responsible use of consumer financial data and competitive technologies;
• Streamline the regulatory environment to foster innovation and avoid fragmentation;
• Modernise regulations for an array of financial products and activities; and
• Facilitate regulatory sandboxes to promote innovation.

On consumer data, the report called for rules to make it easier for people to give third parties access to their information, in a way that it is being embraced in Europe through PSD2. The Treasury also wants a federal data security and breach notification law to make sure consumers know when their data has been breached.

The report also backed the Office of the Comptroller of the Currency’s plans for a FinTech charter - something which has been opposed by state regulators, including the New York State Department of Financial Services.

The Treasury also wants to update regulations in areas such as lending, payments and financial planning, to make life easier for FinTech startups.

And on the development of regulatory sandboxes, the Treasury called on federal and state regulators to design a system that ensures a unified approach, facilitates coordination and makes for “meaningful experimentation” by both new and established financial services firms.

Last month, the US Consumer Financial Protection Bureau appointed Paul Watkins to lead its new Office of Innovation. He joined from a role heading up FinTech initiatives for the Arizona Office of the Attorney General, in particular managing the first state sandbox in the country, which allowed companied limited access to the marketplace in exchange for relaxing some regulations.

However, not everyone in the US financial authorities is behind the sandbox idea. In May, Securities and Exchange Commission commissioner Hester M. Peirce stopped short of committing to the FinTech sandbox approach pioneered by the UK’s Financial Conduct Authority and adopted by other regulators around the world.

“Talk of sandboxes is welcome, and my fellow regulators’ sandboxes have already yielded great dividends,” she stated, nothing that she would rather talk about beaches. “On a beach, the lifeguard watches over what is happening, but she is not sitting with sandcastle builders monitoring their every design decision.”

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