Chamber Supports Coordinated Approach Among Industry and Regulators Globally
Recently, almost a dozen global regulators came together to support regulatory harmonization across national borders. The creation of the Global Financial Innovation Network (GFIN) was designed to do just that, to: (i) establish a network of regulators; (ii) facilitate collaboration on policy work and regulatory trials; and (iii) support B2B and B2C cross-border trials. The creation of this new body with a global reach is an important signal that regulators worldwide are both understanding the significant potential of blockchain technology and actively establishing ways to support it. Challenges remain, however, in working out the details of such a collaboration.
The Chamber of Digital Commerce recently submitted comments to the GFIN’s Consultation Document, issued in August, to let the regulators know, in a unified voice, of the critical need for support as well as the regulatory lessons learned of the blockchain ecosystem.
After consultation with interested members, we stressed that adopting best regulatory practices in harmony will allow regulators around the world to better protect consumers without imposing excessive, onerous, gratuitous, or duplicative compliance requirements on the industry. Concepts such as regulatory sandboxes and harmonized policy objectives are exactly what this industry needs to rethink and revamp its oversight of growing technologies.
The Chamber supports the initiation of the GFIN as a mechanism for harmonization of best regulatory practices. Nevertheless, a problem noted in many digital environments is the concept of inconsistent and sometimes duplicative regulatory regimes across the globe. Ill-considered requirements will have the undesired consequence of crushing innovation and economic growth. Such a development would be inimical to national and global welfare and to the mission of the regulators themselves.
To this end, we cautioned that the GFIN should not serve as a mechanism to proliferate such regulations, which would neither serve the safety of consumers nor the growth of a new high-tech sector.
Among specific concerns the Chamber expressed in its comments are the large number of agencies in the United States engaged in the exercise of regulatory authority in addition to the GFIN’s primary U.S. counterpart, the Bureau of Consumer Financial Protection. We support the Bureau’s foresight and innovation in joining such a group. That said, other U.S. regulatory agencies – including the CFTC and SEC – are entirely autonomous from the Bureau. The GFIN must consider how it will cover U.S. businesses within its regulatory sandbox if its U.S. participants are subject to rules maintained outside its borders. Further, any new regulatory harmonization should simplify regulations, not create duplicate or overlapping regimes. These are challenges that are difficult to solve, but we are excited to work with the GFIN to find innovative ways to solve them.
Overall, the Chamber views the formation of the GFIN as an important signal that regulators worldwide are understanding the important potential of blockchain technology and are actively establishing ways to support it. We encourage thoughtful and meaningful steps such as these to help businesses gain a foothold, grow, and scale in this digital, global industry.
The Chamber is grateful to its members for providing their time and experience to develop this important proactive response. We look forward to providing significant ongoing support to the GFIN in making its recommended protocols optimally constructive, both in protecting consumers and fostering the development of the invaluable emerging technology of distributed ledgers and blockchain.
To review the Chamber’s comment letter to the GFIN, please click here.