1. Short title
This Act may be cited as the “Facilitating Innovation and New Technology so Entrepreneurs Create and Hire Act of 2019” or the “FINTECH Act of 2019”.
Facilitating Innovation and New Technology so Entrepreneurs Create and Hire Act of 2019
A BILL
To establish a FinTech Council to designate a single primary regulator of eligible FinTech startups, to create the Offices of Financial Innovation, and for other purposes.
2. FinTech Council
Establishment— There is established within the Department of the Treasury the FinTech Council, which shall determine which Federal financial regulator or regulators should be the Designated Financial Regulator of an eligible FinTech startup.
Petition to agency—
In general— An eligible FinTech startup may submit a petition to the FinTech Council, in such form and in such manner as the Council may require, to request a determination on which Federal financial regulators have enforcement authority with respect to the eligible FinTech startup.
Contents— In a petition submitted under this subsection, the eligible FinTech startup shall demonstrate that the eligible FinTech startup is offering or intending to offer a financial innovation that—
will serve the public interest;
improves access to financial products or services;
does not present systemic risk to the United States financial system;
is a new technology or is an innovative use of existing technology;
does not pose a risk to consumer protection; and
will not permit unfair, deceptive, or abusive acts and practices.
Multiparty Petitions— One or more eligible FinTech startups that offer or intend to offer similar financial innovations may jointly submit a petition under this subsection.
Determination— Upon the request of an eligible FinTech startup, the FinTech Council shall—
determine which one or more Federal financial regulators should be the regulators primarily responsible for oversight of the eligible FinTech startup;
designate such agencies as the Designated Financial Regulator of the eligible FinTech startup; and
notify the eligible FinTech startup and each Federal financial regulator of such determination.
Sole enforcement authority by Designated Financial Regulator— Except for the Designated Financial Regulator, the Federal financial regulators may not take any enforcement action against an eligible FinTech startup.
Authority To review designation—
In general— With respect to an entity that has had primary regulators designated under subsection (c)(2), the FinTech Council may review the designation on an annual basis, or pursuant to a request made under paragraph (2), to determine whether—
there has been a material change in the business model of the entity;
the entity is no longer an eligible FinTech startup;
there are material unseen risks that weren’t present at the time of the application; or
the entity can no longer demonstrate that it meets the requirements described under subsection (b)(2).
Recommendation of review— If a Federal financial regulator determines that it would have, but for the prohibition under subsection (d), taken an enforcement action against an entity that has had primary regulators designated under subsection (c)(2), the Federal financial regulator may recommend that the FinTech Council review such designation under paragraph (1).
Authority to rescind designation— If, in reviewing a designation under paragraph (1), the FinTech Council makes a determination under subparagraph (A), (B), (C), or (D) of paragraph (1), the FinTech Council may rescind the designation.
Reapplication permitted— An eligible FinTech startup that loses its designation under this section may reapply for designation.
Notice— If the FinTech Council rescinds a designation under this section, the Council shall—
immediately notify the entity that was the subject of the designation and the Congress; and
upon making a final determination, publicly provide a written explanation of the basis for the Council’s decision with sufficient detail to provide the public with an understanding of the specific basis of the Council’s determination, including any assumptions related thereof.
Two-Year limitation— After the end of the two-year period beginning on the date an entity first has a primary regulatory designated under subsection (c)(2)—
any such designation is terminated; and
the entity is not eligible for any future designation under subsection (c)(2).
3. Office of Financial Innovation
Establishment—
In general— Each Federal financial regulator shall establish an Office of Financial Innovation (“Office”).
Director— The head of each Office shall be a Director, who shall be appointed to a 5-year term by, and report to, the head of the Federal financial regulator.
Staffing— The head of each Federal financial regulator shall ensure that the regulator’s Office is adequately staffed at all times.
Duties— The duties of the Office are to—
draft a mission statement, which shall include the phrase “responsible innovation”;
coordinate and make publicly available efforts made by Designated Financial Regulators related to covered actions so as to reduce the regulatory burden for eligible FinTech startups;
establish and maintain an easily-accessible website, which shall include the Office’s mission statement and a portal where eligible FinTech startups can submit questions or request meetings with the Office;
respond to questions and meeting requests described under paragraph (3) in a timely manner;
implement recommendations from the Advisory Council of FinTech Directors;
conduct outreach to eligible FinTech startups when a covered action is made public or finalized; and
provide support for the Director of the Office with respect to the Director’s duties on the Advisory Council of FinTech Directors.
Inclusion in rulemaking— Each Federal financial regulator shall, throughout the development of a new rule, including prior to the publication of a notice of proposed rulemaking in the Federal Register, work with the Office in assessing the potential effects of the rule on eligible FinTech startups. Each Office shall also advise the applicable Federal financial regulator on possible alternatives that may lessen the burden on eligible FinTech startups without meaningfully affecting the rule’s ability to achieve its purpose.
4. Regulatory harmonization for FinTech
Harmonization— Each Designated Financial Regulator shall, in taking any covered action, harmonize and coordinate with the other Designated Financial Regulators in order to eliminate duplication and conflicting regulations that will impact eligible FinTech startups.
Advisory Council of FinTech Directors—
Establishment—
In general— There is established the Advisory Council of FinTech Directors, which shall consist of—
the Director of each Office of Financial Innovation; and
an independent member appointed by the Secretary of the Treasury, having State-banking regulatory expertise.
Compensation— All members of the Advisory Council who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States.
Purpose— The purpose of the Advisory Council is to provide each Federal financial regulator with advice on its rules, regulations, and policies with regard to how financial innovation is reshaping the regulatory landscape of the financial services marketplace and whether there is any duplication in supervision or material failure in supervision of eligible FinTech startups that is limiting responsible innovation for eligible FinTech startups.
Duties— The Advisory Council shall function solely as an advisory body. Its duties shall extend only to providing advice, including advice in the form of recommendations, to each Federal financial regulator. Each Federal financial regulator shall retain full authority to determine actions to be taken and policies to be expressed with respect to matters within its jurisdiction upon which the Council may provide advice.
Reports—
Annual report— The Advisory Council shall annually report to Congress on the activities of the Council and any significant financial market and regulatory developments that might impact eligible FinTech startups.
Advice— The Advisory Council shall provide its advice to the Federal financial regulators through the Secretary of the Treasury. The Advisory Council need not reach consensus on every issue, and may choose to provide the Federal financial regulators with differing views or a range of view.
Meetings— The Advisory Council of FinTech Directors shall meet at the call of the Secretary of the Treasury or a majority of the members then serving, but not less frequently than annually.
Recordkeeping— The official records generated by or for the Advisory Council shall be handled in accordance with General Records Schedule 6.2, or another approved agency records disposition schedule. These records shall be available for public inspection and copying, subject to section 552 of title 5, United States Code (commonly known as the “Freedom of Information Act”).
5. Definitions
For purposes of this Act:
Covered action— The term “covered action” means any regulations, guidance, interpretive rules, interim final rules, bulletins, statement of policy, letters, examination manuals, frequently asked questions, notices, directives, or any other authoritative action that would impact an eligible FinTech startup.
Designated Financial Regulator— The term “Designated Financial Regulator” means—
any Federal financial regulator or regulators that have been designated under section 2(c)(2) with respect to any eligible FinTech startup; and
with respect to an eligible FinTech startup, the specific Federal financial regulator or regulators designated under section 2(c)(2) for such eligible FinTech startup.
Eligible FinTech startup— The term “eligible FinTech startup” means an entity that—
provides an application or product and has no more than 10,000 total users of such application or product;
has no more than 15 employees;
has received less than 5 rounds of venture capital; and
has not yet partnered with an insured depository institution (as defined under section 3 of the Federal Deposit Insurance Act).
Federal financial regulator— The term “Federal financial regulator” means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Commodity Futures Trading Commission, the Department of Housing and Urban Development, the Department of the Treasury, the Farm Credit Administration, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Trade Commission, the National Credit Union Administration Board, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.