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Federal Reserve Attorney: US Not Interested in Fintech Sandboxes

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There is a report in Bloomberg Law that Federal Reserve Attorney, Gerald Tsai, has indicated the US is not that interested in creating a regulatory Sanbox or Fintech Sandbox – similar to what the rest of the world is embracing. Tsai reportedly acknowledged that the US is behind much of the world when it comes to Fintech and Regtech innovations. Tsai comments came at a American Bar Association’s Business Law Section annual meeting in Chicago that took place last week.

To quote the report and Tsai who is the Director of Applications, Enforcement and Fintech at the Federal Reserve Bank of San Francisco;

“I don’t see that sandboxes are likely going to be something that we in the United States are going to be using much in the near future,” said Tsai. “I think it is fair to point out that, maybe with the exception on China, these are much smaller economies, much smaller financial systems. I don’t think it’s fair to compare the United States … Notwithstanding the complicated regulatory environment and the sort of delayed response that we seem to be having with a number of these matters, the U.S. Fintech industry and the Regtech industry is still quite large and has been a global leader for a long time.”

Tsai apparently described the inability of regulators to act as encouraging innovation?

“..maybe our inaction at some level encourages innovation.”

Ok.

Now Tsai most certainly added the standard disclaimer that these were his opinion’s and did not represent those of the Federal Reserve, but it is hard to imagine that not creating an environment that is more conducive to financial innovation actual helps moves things along. Tsai is 100% correct that, on a regulatory level, the US is falling behind. So should policymakers sit still and not try and be more competitive? According to Tsai, that appears to be the chosen path of those appointed to represent the country. That’s a shame.