The Illinois Department of Financial and Professional Regulation (IDFPR) has announced a new Financial Innovation Initiative focused on encouraging growth and ingenuity in the financial services industry. The initiative, which is the first of its kind at the state regulatory level, was announced at Fintech Week Chicago 2017 by Secretary of the IDFPR Bryan Schneider.
“As a regulator with a competitive objective, IDFPR seeks an active role in efforts to ensure Illinois’ regulatory approach is in step with digital innovation,” said Schneider. “With the launch of our Financial Innovation Initiative, we endeavor to support fintech businesses through regular engagement and education, while gaining real-time insight into how current laws and regulations are impacting these emerging technologies.”
The initiative will assist financial service startups and reputable companies with developing new ideas for the financial services market. This includes IDFPR officials providing assistance and guidance to fintech entrepreneurs during office hours at Illinois-based fintech and innovation incubators. Schneider tells ETHNews that the initiative is an effort to become more accessible as a regulator to pioneers in the financial service industry.
“We’re going to make ourselves available to innovators that actually need to interact with us. We took note of the fact that it is not at all uncommon, particularly for very new innovative technologies and startup companies and even mature companies, to work in financial innovation hubs. We have a couple or more here in Chicago. We’re just going to find a way to put our staff in those locations at designated times and people who have questions about regulation here in Illinois can come to the IDFPR.”
Schneider says the IDFPR is open to assisting companies that utilize a number of progressive technologies, such as blockchains; Distributed Ledger Technology (DLT); and digital currencies, in order to assist innovation in the financial services industry. To facilitate this, the IDFPR will introduce a “RegHub” that will act as a web portal, providing the resources needed to navigate state regulatory boundaries and rising trends. The RegHub will also offer opportunities to explore partnerships with federal, state, and international regulators. According to Schneider, the IDFPR is “intrigued” by the FCA’s regulatory sandbox and would eventually like to replicate it in the future.
To date, the IDFPR has actively engaged in several endeavors to embrace blockchain integration with the financial service industry, including joining R3 and partaking in the Illinois blockchain initiative. In November 2016, the IDFPR published its request for comments on its proposed “Digital Currency Regulatory Guidance,” which defined digital currencies as “an electronic medium of exchange used to purchase goods and services.” The organization found that according to the Illinois Transmitters of Money Act (TOMA), “digital currencies currently do not fit the statutory definitions of ‘money’ and, therefore, do not independently trigger the licensing requirements of TOMA.”
However, the IDFPR also found that some business undertakings that involve digital currencies do fall under the licensing requirements for TOMA. Nevertheless, Schneider states that the IDFPR is close to finalizing its regulation guidance for digital currencies, which will ultimately be integrated into the RegHub. In the meantime, Schneider anticipates that the initiative will make “Illinois the place to be” for innovation within the US financial service industry.