SEC Launches FinHub to Connect with Public and Industry on FinTech Matters

The Securities and Exchange Commission launched the Strategic Hub for Innovation and Financial Technology (FinHub) on October 18, 2018, to facilitate greater interaction between the SEC, the public and industry participants on FinTech-related matters and developments, including distributed ledger technology and digital assets, automated investment advice, artificial intelligence and machine learning, and digital marketplace financing. Notably, trading issues were not listed as being part of FinHub’s mandate. In addition, FinHub will also be used by the SEC to disseminate information about current FinTech-related matters throughout its internal divisions and continues the work of – or replaces – existing internal SEC efforts. 

According to the announcement, FinHub is expected to serve in part as a portal through which the public and industry participants can communicate “innovative ideas and technological developments” directly with the staff of the SEC. The SEC will also publish information on FinHub’s website about its FinTech-related initiatives and other activities, and further enhance public engagement through publications and events, including a FinTech Forum planned for 2019 on digital assets and distributed ledger technology. 

The SEC further indicated that the information obtained from the public through FinHub will be disseminated across its internal divisions, and that FinHub will connect the SEC with other regulatory agencies, both domestic and international, that oversee technological developments in “financial, regulatory, and supervisory systems.” 

In the announcement, SEC Chairman Jay Clayton affirmed that the SEC was “committed to working with investors and market participants in new approaches to capital formation, market structures, and financial services” with a view towards enhancing investor protection. To that end, Chairman Clayton stated that FinHub will serve as a focal point for the SEC’s “efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute [the SEC’s] mission.” 

Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director of the Division of Corporation Finance, will lead the new FinHub. Associate Director Szczepanik indicated that the SEC hopes FinHub will “provide a clear path for entrepreneurs, developers, and their advisers to engage with the SEC staff, seek input, and test ideas.” 

In connection with the FinHub launch, the SEC has replaced the email address previously used for communicating FinTech matters to the SEC, FinTech@sec.gov, with a new form on the FinHub website that may be used to seek a meeting with the SEC staff or request other assistance. 

In launching FinHub, the SEC is following on the heels of the CFTC, which launched LabCFTC in May 2017 to make the regulatory agency more accessible to FinTech innovators and serve as a mechanism for informing the agency of new technologies. Both FinHub and LabCFTC reflect efforts by the two regulatory agencies to balance investor protection with a desire to minimize their role in impacting technological innovation.