TECHNOLOGY

SEC called on to create blockchain regulation

New York-based FinTech firm petitions for regulation of blockchain and digital based-assets.

By Hayley McDowell hayley.mcdowell@strategic-i.com May 19, 2017 12:32 PM GMT

A FinTech firm has written to the Securities and Exchange Commission (SEC) calling for the regulation of blockchain and digital-based assets.

Ouisa - a New York based broker-dealer and FinTech company - currently uses blockchain for its alternative trading system (ATS), but said in a letter there is a lack of regulatory clarity on the technology.

The letter outlined three suggestions for the SEC, publishing a concept release on the regulation of FinTech and blockchain, implementing specific rules around digital assets and adopting a sandbox for firms.

Currently the SEC evaluates digital assets in the same way as traditional assets and has only provided a ‘degree’ of regulatory guidance within enforcement actions.

Ouisa noted a speech made by former chair at the SEC, Mary Jo White, which stated: "One key regulatory issue is whether blockchain applications require registration under existing [SEC] regulatory regimes..."

CEO at Ouisa, Vincent Molinari, concluded the firm encourages the SEC "to take the necessary steps to provide FinTech firms with sufficient guidance through a concept release and rulemaking".

Ouisa is not the only market participants anticipating regulatory input on blockchain. A survey conducted in February found almost 25% of senior-level financial professionals are waiting for regulatory guidance before taking action on blockchain.

Earlier this year, the SEC’s UK counterpart expressed the need to regulate blockchain in a consultation paper.

The Financial Conduct Authority (FCA) has historically decided against regulating the technology because it considers itself to be ‘technology neutral’.

However, the FCA explained blockchain currently does not fit with certain regulations it imposes despite still achieving its desired outcomes.

"We may, therefore, need to consider whether our rules prevent or restrict sensible development that would benefit consumers and hence whether changes may be needed," the consultation paper said.