Home Policy & Governance US SEC’s fintech unit to become standalone office

US SEC’s fintech unit to become standalone office

Mobile money: the SEC's move comes just over two years after FinHub's creation | Credit: TheDigitalWay; Pixabay

The US Securities and Exchange Commission (SEC) has announced that its Strategic Hub for Innovation and Financial Technology, commonly known as FinHub, is to become a standalone office.

FinHub, which was established within the SEC’s Division of Corporation Finance just over two years ago, leads in policy areas such as distributed ledger technology (DLT) and artificial intelligence (AI)

Designating FinHub as a standalone office strengthens the SEC’s ability to ‘continue fostering innovation in emerging technologies in our markets consistent with investor protection’, the SEC said in an announcement.

Valerie Szczepanik will continue to lead FinHub as its first director, reporting directly to the Washington DC-headquartered SEC’s chairman, Jay Clayton.

DLT, AI, robo-advisers and more

FinHub has led the SEC’s efforts to drive responsible innovation in the financial sector in evolving areas such as DLT and digital assets, digital marketplace financing, AI and machine learning and automated investment advice (robo-advisers).

Through FinHub, market and technology innovators as well as domestic and international regulators have been able to engage with SEC staff on new approaches to capital formation, trading and other financial services within the parameters of the federal securities laws.

“The SEC is committed to innovation in our markets, consistent with our time-tested regulatory framework,” said Clayton. “Our action to establish FinHub as standalone office furthers our commitment to facilitate the introduction of new technologies for the benefit of investors and the efficiency and resiliency of our markets.”

‘Complexity evolves as technology evolves’

The SEC launched FinHub in October 2018, replacing several internal working groups, with a remit that included liaising with other domestic and international regulators on emerging technologies in financial, regulatory, and supervisory systems; and engaging with the public through publications and events.

“By launching FinHub, we hope to provide a clear path for entrepreneurs, developers, and their advisers to engage with SEC staff, seek input, and test ideas,” Szczepanik said at the time. She was assistant director in the Division of Enforcement’s cyber unit before joining the Division of Corporation Finance.

“The scope and complexity of FinHub’s work has continued to evolve and expand as technology itself has evolved,” Szczepanik said this week. “This organisational shift will facilitate the agency’s agility and flexibility to work with market participants and regulators worldwide, and to encourage leading-edge innovation that will shape the intersection between the federal securities laws and technology.”