Next year, could see more enforcement actions – and possibly some new regulations – when it comes to fintech that involves financial advisors.
For instance, Jeffrey Neuburger, an attorney at Proskauer Rose, told ThinkAdvisor that regulators are already “very focused on the fintech area, and it is likely that we will see more regulation in 2018 in this area.”
Similarly, Gregory Hesse, an attorney at Hunton & Williams, predicts that “certain segments of fintech will have some new regulations” in 2018.
The blockchain, cryptocurrency and robo-advising are among the sectors to watch.
(Related: TD Ameritrade Jumps Out of Gate With Bitcoin)
This year, cryptocurrency, such as Bitcoin, saw skyrocketing prices and some projections predict that will continue into 2018. Those higher prices could lead regulators to increase their scrutiny on the sector.
“The blockchain and cryptocurrency area is one where we expect a number of new developments, though it is very likely that such developments will take the form of enforcement-type actions rather than new regulations,” Anthony Tu-Sekine, an attorney at Seward & Kissel, told ThinkAdvisor.
“Because this area is still fairly new, regulators are wrestling with applying the existing regulatory scheme to these new types of assets,” he said.
He offers the example how the SEC has applied “existing interpretations and regulations to determine whether any cryptoassets, such as cryptocurrency or cryptotokens, are securities.” Similarly, the Commodity Futures Trading Commission “declared years ago that all ‘virtual currencies’ are commodities, and therefore the CFTC claims jurisdictions over certain contracts that involve bitcoin and other cryptocurrencies,” Tu-Sekine said.
In the short term, more compliance policies and procedures are expected, and longer term, regulatory agencies will likely issue rules, Tu-Sekine said. Also, state regulators, such as the New York Department of Financial Services, also may issue regulations.
Furthermore, James Fanto, a professor at Brooklyn Law School, concurred regulators are “no doubt watching blockchain and cryptocurrencies with trepidation out of concern that these technologies are, or might be, used to evade regulations. For example, cryptocurrencies could constitute an effort to raise capital outside the federal securities laws, and blockchain, among other things, could be used to get around anti-money laundering laws.”
“I think that we will see more enforcement actions in these latter two areas as regulators and their enforcement officials first try to understand the possible threats that users of these products or methods pose,” he said. “Regulations may follow those actions.”