Digital Assets SubCommittee Chair Supports "Fit for Purpose" Regulatory Approach
Commentary by Steven Lofchie
House Financial Services Digital Assets Subcommittee Chair Bryan Steil advocated for a regulatory framework for financial technology that prioritizes activity-based risks to encourage innovation and consumer well-being.
In remarks before a Subcommittee hearing, Mr. Steil argued that the government must ensure the regulatory framework is "fit for purpose." He emphasized that a well-functioning framework should focus on the risks associated with specific activities, rather than the business model or identity of the provider. He called for clear legal pathways for FinTech products that encourage innovation while ensuring consumer protection and promoting financial well-being.
Mr. Steil supported Earned Wage Access, which allows "workers the flexibility to access their wages as they earn them." Mr. Steil claimed that this flexibility allows families to handle unexpected costs, such as medical bills, and helps businesses improve worker retention and productivity. He also affirmed that banks and lenders serve as vital partners to FinTechs by providing liquidity, credit, and infrastructure. He suggested that these partnerships allow small and community institutions to deploy cutting-edge tools and enhance their offerings.
Commentary
Mr. Steil's statement, similar to Senator Warren's letter (see above), goes to the question of regulatory authority.
Senator Warren asks why the regulators do not discourage cryptocurrency investments, even in the absence of legislative authority to do so. Mr. Steil asks why, under the prior Administration — and without authority — the regulators (particularly the CFPB) seemed to discourage products such as Earned Wage Access, as they appeared to act out of a policy belief that any financial product meant to serve retail investors was a scam. The "protections" the former regulators imposed could be harmful, with the discouragement of EWA a paradigm example.