The FinTech stock trading and investing app, Robinhood, has come under the spotlight amid the recent GameStop saga. Robinhood’s slogan is “Investing for Everyone,” and its role in the GameStop media frenzy signals the impact of the growing Financial Services Technologies sector, otherwise known as FinTech. It is increasingly obvious that the Biden Administration and U.S. Congress will have to lead with urgency in designing FinTech policies that protect customers and the market.
Growth in FinTech businesses has accelerated during the coronavirus pandemic due to innovations that responded to critical needs. For example, the FinTech community created an efficient technology to allow the prompt distribution of U.S. Small Business Administration coronavirus relief funds to millions of struggling eligible businesses. In a series of executive actions signed by U.S. President Joe Biden in the first days of his administration, the president has echoed, along with others, the priority given to equity. One of the innovation platforms to facilitate such equality in the areas of access to capital and financial services is FinTech. Israel, a recognized leader in FinTech innovations worldwide, could serve a pivotal role in this evolving landscape in the U.S. as new policies are formed.
For the most part, government policies that affect FinTech in the U.S. receive bipartisan support. In the aftermath of the GameStop stocks frenzy, U.S. lawmakers voiced bipartisan outrage at platforms that curbed trades in some companies that were benefiting from social media-fueled enthusiasm. While U.S. financial regulators determined that the infrastructure of stock and commodity markets remained resilient during the volatility in trading, questions remain about consumer protections.
Lawmakers and FinTech proponents have previously overseen efforts to boost financial innovations to be driven by President Biden’s Administration. These efforts include the use of digital dollar systems and policies to promote stronger personal ownership of digital identities. It is anticipated that the administration will also address regulatory loopholes on how financial institutions registered with the Securities and Exchange Commission handle digital assets. Finally, Biden’s administration is also expected to increase the focus on consumer protection and enforcement priorities.
Establishing a road map for a secure digital identity, which could modernize public services such as government assistance and health care, is a bipartisan priority, as evidenced by the introduction of the Improving Digital Identity Act last year. A U.S. digital dollar, which is under consideration, could gain bipartisan support. Proposals that would allow individuals to hold digital wallets through fee-free bank accounts with the Federal Reserve have also previously earned bipartisan support.
Considering that FinTech policy proposals, in many cases, have widespread support, President Biden should be able to successfully help expand and regulate the FinTech sector during his term. These policies will likely address the possible recurrence of dangerous stock trading episodes and expand access to banking services and financial products to the underserved while focusing on disparate access to and treatment by the financial system. For Israeli companies with innovative FinTech solutions, the evolving regulatory framework may present significant new business opportunities in the U.S.