US Consumer Finance Watchdog Opens Regulatory Sandbox to Blockchain

The CFPB is launching a regulatory sandbox to encourage innovation in new tech such as blockchain, acting head Mick Mulvaney announced Wednesday.

Jul 19, 2018 at 2:20 p.m. UTC
Updated Sep 13, 2021 at 8:11 a.m. UTC

The Consumer Financial Protection Bureau is launching a regulatory sandbox to encourage blockchain and other financial technology innovation, acting head Mick Mulvaney announced Wednesday.

The CFPB wants to assist companies developing these new technologies, as well as the "products and services" offered by them, the Wall Street Journal reported.

Mulvaney told the newspaper that the new office spearheading the initiative will specifically examine cryptocurrencies, blockchain-based platforms, other private currencies and individual "microlending." The agency may even look into alternatives to traditional credit scores.

He continued:

"You can make a strong argument ... that new technology actually offers new and innovative ways to protect consumers. You are moving light years beyond the complaint hotline to where you can really see things happening in real time."

The new office will notably be led by Paul Watkins, who previously assisted in helping Arizona launch its own state-level regulatory sandbox for blockchain and cryptocurrency technologies, according to the WSJ.

This is not the first time Mulvaney has supported blockchain technology. Last month, the Office of Management and Budget director said at a conference that regulators need to find the "sweet spot" in encouraging financial technology without allowing scams and hacks to proliferate.

At the time he hinted towards the need for new regulatory frameworks, saying "if ... the only way we can look at you is through the lens of the bricks and mortar financial institution, and because we do that it has this perverse or absurd result, that's what we're trying to identify and to prevent."

U.S. flag image via Shutterstock

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