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Futures product to test Wall Street taste for cryptocurrencies
Startup company plans to start trading futures contracts in bitcoin

Senate Agriculture Chairman Pat Roberts, R-Kan., and ranking member Debbie Stabenow, D-Mich., have sought clarity from the Commodity Future Trading Commission on guidelines for cryptocurrencies on the futures market. (Tom Williams/CQ Roll Call file photo)

Cryptocurrencies have been viewed skeptically by some old-guard financial institutions — the head of one bank famously called bitcoin a fraud a few years back — but there’s a new plan to offer derivatives based on bitcoin that may show how deeply Wall Street is adopting new financial technology.

A startup company plans in July to start testing futures contracts in bitcoin, and begin trading them shortly after. The products, unlike cryptocurrencies themselves, aren’t designed for the masses. Bitcoin futures are meant for financial firms that want to find new ways to profit from fintech, and launching the futures contracts is essentially a bet that there’s enough demand from the big players.

This government agency wants to partner with fintech firms. But a gift rule is blocking it
U.S. is falling behind in fintech innovation, regulators warn

Commodity Futures Trading Commission Chairman Christopher Giancarlo says current rules prevent his agency from working closely with fintech companies. (Alex Wong/Getty Images file photo)

If government employees need new software to test how a financial technology project might work — software they lack expertise to write themselves — they can’t get it from the industry because rules deem such software as a gift and block the government from receiving it.

The result, according to regulators, is the rules are slowing down U.S. innovation in fintech, leaving the country to fall behind others.

2 minutes with CFTC Chairman Christopher Giancarlo
Fintech Beat's Chris Brummer talks blockchain, derivatives and Hollywood

Chris Brummer (left) of Fintech Beat interviews CFTC Chairman Christopher Giancarlo in Washington. (Jinitzail Hernández/CQ Roll Call)

New York regulator’s conflict with fintech firm spills into view
Tensions grow over enforcing rules designed for traditional financial institutions

New York state regulators in April denied applications by Bittrex for licenses to run a virtual currency business and to engage in money transmission activity. (Dan Kitwood/Getty Images file photo)

The battle over the benefits and risks of new financial technology is escalating, in the form of a dust-up between New York state and a Seattle-based virtual currency business that, to the surprise of fintech followers, took the fight public.

The disagreement between regulators at the New York Department of Financial Services and Bittrex Inc., a cryptocurrency exchange, highlights the growing tension between fintech innovators and regulators enforcing rules designed for older, traditional financial institutions.

Fintech lobby spending targets cryptocurrency taxation
Firms lobbying on fintech spent more than $42 million in first quarter

More than half of the 80 firms that reported lobbying on fintech in the first quarter of 2019 listed blockchain and cryptocurrencies among their biggest concerns. (Dan Kitwood/Getty Images file photo)

Lobbying disclosures for the first quarter of 2019 show a wide swath of industries and advocacy groups focusing on financial technology issues, including the Association of National Advertisers, Intuit, Mastercard, Alibaba, FreedomWorks, IBM, the Entertainment Software Association and U.S. Public Interest Research Group.

More than half of the 80 firms that reported lobbying on fintech in the first quarter listed blockchain and cryptocurrencies, including tax elements of the latter, among their biggest concerns. Combined, more than 80 firms lobbying on fintech reported spending more than $42 million in the first quarter of 2019.

What is jawboning, explained
Fintech Beat

Fintech Beat takes a look at what jawboning means to the financial technology industry. (Nathan Ouellette/CQ Roll Call)

A blockchain bill, backed by industry, may tie SEC’s hands
The bill would provide a safe harbor from federal securities regulations for digital currencies and other blockchain-based products

Rep. Warren Davidson, R-Ohio, leaves the House Republican Conference meeting at the Capitol Hill Club in Washington on Wednesday morning, June 13, 2018. (Bill Clark/CQ Roll Call file photo)

Even as the nation’s infant blockchain industry lines up in support of a new bipartisan bill to exempt digital tokens from Securities and Exchange Commission oversight, others warn about the dangers of Congress making the situation worse.

The bill from Reps. Warren Davidson, an Ohio Republican, and Darren Soto, a Florida Democrat, would provide a safe harbor from federal securities regulations for digital currencies and other blockchain-based products. But outside of the young sector’s backers, some worry that the bill goes too far in its current form.

4 fintech regulation issues to keep an eye on in the U.S. and abroad
 

Privacy ‘poisoning’ poses threat to companies using blockchain
Public blockchains face a one-two punch, with data privacy laws another factor

Public blockchains such as those that underpin cryptocurrencies like bitcoin are most at risk because anyone can participate. (Dan Kitwood/Getty Images file photo)

A new type of cyberattack that can render blockchain technology unusable may become a major headache for organizations that depend on it.

Known as privacy “poisoning,” the attack involves loading private data, such as names, addresses and credit card numbers, or illegal material, such as child pornography, into a blockchain, therefore putting the network in conflict with local laws. The result is that the affected chain with all of its contained data cannot be used unless expensive and time-consuming steps are taken.

Financial technology is changing how we do business, and regulators are trying to catch up
Fintech Beat

Whether you’re paying a friend for drinks on Venmo or logging in to your online banking, you’ve probably engaged with fintech.

Hunting money launderers? There’s AI for that
Banks explore artificial intelligence to better detect fraud after go-ahead from federal regulators

Last December, federal regulators issued a joint statement encouraging bankers to consider “innovative approaches” to rooting out money laundering. Above, a man walks by the headquarters of the Federal Reserve System in D.C. (Tom Williams/CQ Roll Call file photo)

Encouraged by a recent green light from regulators, the financial services industry is exploring new ways of using artificial intelligence to help them comply with banking regulations and to better detect fraudulent transactions used by criminals and terrorists.

This move toward new approaches to banking compliance comes despite growing concern that more government scrutiny could force the United States to fall behind similar efforts already underway overseas.

In a volatile crypto market, stable coins find increasing appeal
Banks, regulators mull virtual currency with less risk

JPMorgan Chase & Co. has introduced a JPM Coin, a stable coin linked to the dollar. Such a form of virtual currency has the potential to speed up payments and cut money transfer costs for consumers, advocates say. (Spencer Platt/Getty Images file photo)

The cryptocurrency rollercoaster, with its price peaks and valleys, has financial technology proponents looking to a new type of virtual currency that promises the benefits of being virtual while limiting the risk.

Banks, regulators and industry leaders are studying, or have already started to implement, so-called stable coins. They tout the potential to speed up payments, cut money transfer costs for consumers, and help citizens of foreign countries whose currencies are under duress.

Banks seek Congress’ help to block fintech path to ‘industrial’ charters
Industry group expects efforts to have bipartisan support on Hill

A bank industry group accuses financial technology firms like payment processor Square Inc. of trying to exploit a banking law loophole. (Courtesy Shutterstock)

A bank industry group is lobbying Congress to block financial technology firms, such as online lender Social Finance Inc. and payment processor Square Inc., from obtaining an obscure form of a state bank charter that would let them operate nationally with little federal supervision.

The Independent Community Bankers of America last week distributed a policy paper around Washington calling for an immediate moratorium on providing federal deposit insurance to industrial loan companies, or ILCs, which are chartered by only a few states — most notably Utah.

Fintech industry pursues clarity on ‘token’ regulation
Advocates are finding a sympathetic ear in Congress

Rep. Warren Davidson, R-Ohio, is planning to reintroduce with Rep. Darren Soto, D-Fla., legislation that would further define the term “digital token.” (Bill Clark/CQ Roll Call file photo)

Financial technology advocates are seeking an answer from regulators on when things like digital tokens should be deemed to be securities, and they’re gaining a sympathetic ear in Congress.

Further clarity from regulators would encourage more U.S. growth in digital assets, the advocates say.

Data privacy bill faces long odds as states, EU move ahead
Most tech companies agree laws on how to collect and use consumer data are essential, but the specifics are still being debated

Sens. Roger Wicker, R-Miss., right, and Debbie Stabenow, D-Mich., are seen in the basement of the Capitol before the Senate policy luncheons on Sept. 25, 2018. (Tom Williams/CQ Roll Call file photo)

Lawmakers want to pass a federal data privacy bill before 2020 to put Washington on par with Europe and ahead of several U.S. states. But those efforts could be delayed because of differences between technology companies and Congress over how powerful the law should be and how it should be structured.

A delay in enacting a uniform federal law could leave technology giants and startup app makers trying to meet a latticework of standards set by multiple regulations passed by many states as well as a growing international set of rules being modeled after the European Union’s General Data Protection Regulation, or GDPR. Companies also could be liable for fines and face consumer lawsuits allowed by state laws.