Financial technology, or “FinTech,” refers to the use of technology to facilitate financial services. The industry has seen an explosive proliferation of high technology in recent times, and technology-focused companies are seeking to disrupt how transactions are processed in areas as wide-ranging as retail investments and payments, and the nature of money itself. However, many financial institutions and fintech companies are discouraged from innovation and entrepreneurship due to the time and cost required to register and comply with regulations. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Fintech is a broad term, encompassing cryptocurrencies, blockchain technologies, online lending, mobile banking, and more. As new technologies develop, market participants, legislators and regulators are grappling with how to update a legal framework for financial matters largely erected before computers existed. Lobbying information for the first quarter of 2019 shows a broad range of industries and lobbying groups focused on financial technology issues, including the Association of National Advertisers, Intuit, Mastercard, Alibaba, FreedomWorks, IBM, the Entertainment Software Association and the U.S. Public Interest Research Group. . In the United States, regulation of financial transactions occurs primarily at the federal or state level. Each of the 50 state governments, as well as the governments of the District of Columbia and various U.S. territories, has equal authority to regulate markets within its jurisdiction, and no legal authority to regulate them outside that jurisdiction. There are numerous federal and state authorities capable of regulating fintech products and services. Some regulators include: Federal Deposit Insurance Corporation (FDIC): federally insured depository institutions Primary regulator of state banks that are not members of the Federal Reserve System and state-recognized savings institutionsFederal Reserve: bank holding companies and certain subsidiaries (e.g. foreign companies), financial holding companies, securities holding companies, and savings and loan holding companies Primary regulator of state banks that are members of the Federal Reserve System, foreign banking organizations operating in the United States, Edge Corporation, and any business or payment system designated as systemically significant by the FSOC Office of the Comptroller of the Currency (OCC): national banks, U.S. federal branches of foreign banks, and federally recognized savings institutions National Credit Union Administration (NCUA): credit unions federally recognized or federally insured Federal Housing Finance Agency (FHFA): Fannie Mae, Freddie Mac, and Federal Home Loan Banks Federal Financial Institutions Examination Council Financial Crimes Enforcement Network SEC: Stock exchanges, broker-dealers; clearing and settlement agencies; investment funds, including mutual funds; investment advisors, including hedge funds with assets exceeding $150 million; and Consumer Financial Protection Bureau (CFPB) investment firms: Mortgage-related nonbank firms, private student lenders, payday lenders, and larger “consumer finance entities” as determined by the CFPB Commodity Futures Trading Commission. At the state level, relevant regulators usually include: state banking departments; consumer protection agencies;secretaries of state; and state securities commissions. A federal judge's ruling in October 2019 impacted Fintech's access to the traditional banking system. The New York judge ruled that the Office of the Comptroller of the Currency (OCC), the regulator that issues the cards, does not have the authority to create a special card for non-bank fintech companies. The OCC first proposed the route in 2015 as a possible avenue for fintech companies to access the nation's financial system without having to obtain licensing in all 50 states. Tech startups trying to become banks, with this ruling, will follow a slower and more traditional path to becoming banks. The “Fintech Charter” aimed to speed up the process by allowing a start-up to offer lending or payment products without having to accept FDIC insurance or comply with state-by-state banking regulations. This “Fintech Charter” would have increased competition by allowing new entries into the financial system. This ruling was a victory for state regulators, who want to block fintechs and were likely supported by larger banks. While the OCC does not have statutory authority to issue federal bank charters to nonbanks, only Congress can make that decision, especially because the charter creates public policy implications that must be discussed in Congress. The Financial Services Innovation Act of 2016, which did not make it to a vote and was not subsequently reintroduced, would have created a system to reduce regulatory barriers to new products. While regulators abroad have found ways to foster innovation through nationally coordinated strategies that prioritize consumer protection, the United States has fragmented institutional frameworks that do not adequately set regulators' priorities or address consumer needs in the entire financial system. The situation should change in the United States. Fintech companies should actively lobby the federal government to create laws that encourage innovation and competitiveness, thereby allowing the industry to grow and be competitive in domestic and global markets. In the domestic market, complying with the laws of multiple states can be an uphill battle, especially for startups and smaller companies that lack the resources to achieve or maintain required compliance. It could also lead companies to structure activities to change their regulatory profiles that may or may not actually be beneficial to the company and the industry. Some non-bank lenders, for example, partner with banks to make loans to avoid having to register and comply with each state's lending law requirements. This arrangement is an artificiality and has little competitive advantage beyond facilitating regulatory compliance.1 Exhibit 1 provides a set of regulatory issues for community banks working with fintechs and the cost of regulatory actions involving fintechs in 20172. While there are benefits to multiple regulators, such as competition among regulators to craft better regulations, transparency, and broader democratic engagement, it is the drawbacks that cripple the industry as a whole. Inconsistent philosophy or methods applied by each state, uncertainty and control by the most restrictive regulator are the main issues facing technology companies and new entrants. Chart 2 provides a picture of the overlapping regulatory burdens, in particular the key players impacting the sector. Can who regulates an industry be as important as what the regulation is or how it is structured? It will also change as you go along.