Mueller Jackson
Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
May 17, 2016

Welcome to the Party, U.S. Equity Crowdfunders

Equity crowdfunding went live in the United States on May 16, roughly four years after President Obama signed the Jumpstart Our Business Startups (JOBS) Act and seven months since the U.S. Securities and Exchange Commission (SEC) adopted final rules for implementing Title III of the JOBS Act. That’s right, we have now moved on from donation/rewards-based crowdfunding, such as this effort to purchase Foo Fighter’s frontman Dave Grohl. At a meeting of the International Organization of Securities Commissions in Peru, SEC Chairwoman Mary Jo White said that as “the market for securities-based crowdfunding begins to develop this year, we will no doubt receive important input from investors and companies about how the requirements could be improved.” Both the SEC (see here and here) and the Financial Industry Regulatory Authority (FINRA) have released additional guidance in the lead-up to equity crowdfunding going live.

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In related news, StartEngine announced that it received approval from the SEC and FINRA to become a Regulation Crowdfunding portal. StartEngine is one of roughly 30 platforms to seek the SEC’s blessing. Similarly, AngelList launched Republic, an offshoot company to enable non-accredited investors to participate in equity crowdfunding. Meanwhile, stakeholders are also pushing on the education front. NextGen announced a series of webinars on Title III crowdfunding, while CrowdFund Intermediary Regulatory Advocates, Crowdfund Capital Advisors and the Small Business & Entrepreneurship Council marked the implementation of equity crowdfunding with an event at the U.S. Capitol.

Who Regulates FinTech, and How Are Millennials Contributing to Financial Innovation?

The Milken Institute has published two documents that warrant attention. The first publication (and an accompanying slide presentation) focuses on the millennial generation — who they are and how they’re changing traditional finance. You might say, “well here he goes again with this millennial business,” but in truth, we do play an important role in today’s financial innovations. But enough about millennials, as my former boss (they keep leaving me) would say. As MI’s Lord of FinTech before his vassal (me) usurped his authority, Brian Knight published an in-depth report covering the question that we are all asking: Who regulates FinTech and why does it matter? The report takes a deep dive into the types of regulators in the U.S. and the complex regulatory maze that FinTech firms often have to maneuver through. This is a must-read report for those interested in financial innovation under the U.S. regulatory system.

Domestic & International Developments

Let’s start off in the U.S., where the Department of Commerce held a roundtable "to discuss what data is needed to better measure the economic importance of the cross-border information flows that connect people and businesses across the globe." Meanwhile, Lending Club received a grand jury subpoena from the U.S. Department of Justice and has also been contacted by the SEC in the wake of the company’s internal board review that led to the resignation of CEO Renaud Laplanche.

But enough with the U.S. What is going on across both ponds (Atlantic and Pacific)? Let’s start in the UK, where the Financial Conduct Authority (FCA) and the Monetary Authority of Singapore celebrated the launch of the first "FinTech Bridge" on May 11. Separately, the FCA launched its FinTech regulatory sandbox last week, with applications for the first cohort due by July 8. Of note, outgoing FCA CEO Tracey McDermott gave what may be her final remarks on the regulatory approach to FinTech. According to McDermott, “Natural caution… can at times risk us tinkering on the margins and perhaps standing in the way of more fundamental change. In today’s era of rapid technological development and social and demographic changes, we may need to be bolder, to be prepared to re-examine and re-think the status quo.” Elsewhere in Europe, Germany and France are exploring antitrust issues (see the joint report) related to the collection and use of “big data,” while Russia’s Finance Ministry and Ministry of Justice are at odds regarding the criminalization of digital currencies.

Next, we move across the other pond to Asia, where Malaysian Central Bank Gov. Muhammad Ibrahim shared his thoughts on FinTech regulation. In Japan, all eyes are on the Diet, Japan’s parliament, where a series of virtual currency bills is being deliberated. And Japan's Financial Services Agency convenedthe first public meeting of its “panel of experts on FinTech startups,” formed in April. In Australia, the government responded to the Senate Economics References Committee report on digital currencies, agreeing with the committee’s four recommendations, including a commitment to address the current tax treatment of digital currencies. And lastly, Abu Dhabi's Financial Services Regulatory Authority published a consultation paper which, among other ideas, proposes to create a "regulatory laboratory" for FinTech firms that would resemble the FCA's sandbox initiative.

At the Barbarians’ Gates

The incumbents are coming! The incumbents are coming! Top incumbents in finance are gobbling up patents covering innovations within the financial services space. Nearly 3,000 patent applications have been filed by the largest U.S. banks and major credit card companies since 2013, according to a report. Moreover, traditional financial incumbents are moving further into mobile payments and online lending. Wells Fargo announced last week that it would launch a small business lending product, FastFlex, and Goldman Sachs recently named Steven Scherr CEO of GS Bank. The firm plans a second-quarter launch for its online lending arm, which will target both consumers and small businesses. Meanwhile, Fast Company profiled Charles Schwab’s campaign against robo-advisory startups, while Barclaysannounced plans to launch a contactless mobile payment system in June.

SWIFT on the Blockchain

At a time of finger pointing over who is at fault for the recent hack in which $81 million disappeared from Bangladesh Central Bank’s New York Federal Reserve account, the SWIFT Institute, the research arm of the Society for Worldwide Interbank Financial Telecommunication, published a report last week that tried to separate the hype from the reality of distributed ledger technology. According to the report, blockchain technology “seems to promise major change for capital markets and other financial services — some say it may ultimately prove to be as important an innovation as the Internet itself — but few can say exactly how or why.” The report further states that distributed databases “have themselves been around for many years and in the securities market context the cryptographic advances incorporated in the Bitcoin blockchain do not add any obvious value over the established approaches to ensuring security widely used in financial services.” And for the cherry on top: “Just as half a century ago DTCC required collaboration of the entire industry, so too with mutual distributed ledgers for specific process areas. There needs to be a clear-sighted focus on the necessary investments and the potential long-term gains, from both senior management and senior regulators. Otherwise the much heralded ‘blockchain’ revolution may disappoint.”

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FinTech in Focus compiles all the must-read stories about the role technology plays in the delivery of financial products and services. Get a sampling of the week's top domestic and international stories about this innovative, fast-growing sector all right here. For questions or inquiries, contact Jackson Mueller at


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