Facilitating Innovation and New Technology so Entrepreneurs Create and Hire Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1491 To establish a FinTech Council to designate a single primary regulator of eligible FinTech startups, to create the Offices of Financial Innovation, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 4, 2019 Mr. DAVID SCOTT of Georgia (for himself and Mr. LOUDERMILK) introduced the following bill; which was referred to the Committee on Financial Serv- ices, and in addition to the Committees on Agriculture, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the juris- diction of the committee concerned A BILL To establish a FinTech Council to designate a single primary regulator of eligible FinTech startups, to create the Of- fices of Financial Innovation, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Facilitating Innovation 4 and New Technology so Entrepreneurs Create and Hire 5 Act of 2019’’ or the ‘‘FINTECH Act of 2019’’. 6 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 2 •HR 1491 IH SEC. 2. FINTECH COUNCIL. 1 (a) ESTABLISHMENT.—There is established within 2 the Department of the Treasury the FinTech Council, 3 which shall determine which Federal financial regulator 4 or regulators should be the Designated Financial Regu- 5 lator of an eligible FinTech startup. 6 (b) PETITION TO AGENCY.— 7 (1) IN GENERAL.—An eligible FinTech startup 8 may submit a petition to the FinTech Council, in 9 such form and in such manner as the Council may 10 require, to request a determination on which Federal 11 financial regulators have enforcement authority with 12 respect to the eligible FinTech startup. 13 (2) CONTENTS.—In a petition submitted under 14 this subsection, the eligible FinTech startup shall 15 demonstrate that the eligible FinTech startup is of- 16 fering or intending to offer a financial innovation 17 that— 18 (A) will serve the public interest; 19 (B) improves access to financial products 20 or services; 21 (C) does not present systemic risk to the 22 United States financial system; 23 (D) is a new technology or is an innovative 24 use of existing technology; 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 3 •HR 1491 IH (E) does not pose a risk to consumer pro- 1 tection; and 2 (F) will not permit unfair, deceptive, or 3 abusive acts and practices. 4 (3) MULTIPARTY PETITIONS.—One or more eli- 5 gible FinTech startups that offer or intend to offer 6 similar financial innovations may jointly submit a 7 petition under this subsection. 8 (c) DETERMINATION.—Upon the request of an eligi- 9 ble FinTech startup, the FinTech Council shall— 10 (1) determine which one or more Federal finan- 11 cial regulators should be the regulators primarily re- 12 sponsible for oversight of the eligible FinTech start- 13 up; 14 (2) designate such agencies as the Designated 15 Financial Regulator of the eligible FinTech startup; 16 and 17 (3) notify the eligible FinTech startup and each 18 Federal financial regulator of such determination. 19 (d) SOLE ENFORCEMENT AUTHORITY BY DES- 20 IGNATED FINANCIAL REGULATOR.—Except for the Des- 21 ignated Financial Regulator, the Federal financial regu- 22 lators may not take any enforcement action against an eli- 23 gible FinTech startup. 24 (e) AUTHORITY TO REVIEW DESIGNATION.— 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 4 •HR 1491 IH (1) IN GENERAL.—With respect to an entity 1 that has had primary regulators designated under 2 subsection (c)(2), the FinTech Council may review 3 the designation on an annual basis, or pursuant to 4 a request made under paragraph (2), to determine 5 whether— 6 (A) there has been a material change in 7 the business model of the entity; 8 (B) the entity is no longer an eligible 9 FinTech startup; 10 (C) there are material unseen risks that 11 weren’t present at the time of the application; 12 or 13 (D) the entity can no longer demonstrate 14 that it meets the requirements described under 15 subsection (b)(2). 16 (2) RECOMMENDATION OF REVIEW.—If a Fed- 17 eral financial regulator determines that it would 18 have, but for the prohibition under subsection (d), 19 taken an enforcement action against an entity that 20 has had primary regulators designated under sub- 21 section (c)(2), the Federal financial regulator may 22 recommend that the FinTech Council review such 23 designation under paragraph (1). 24 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 5 •HR 1491 IH (3) AUTHORITY TO RESCIND DESIGNATION.—If, 1 in reviewing a designation under paragraph (1), the 2 FinTech Council makes a determination under sub- 3 paragraph (A), (B), (C), or (D) of paragraph (1), 4 the FinTech Council may rescind the designation. 5 (4) REAPPLICATION PERMITTED.—An eligible 6 FinTech startup that loses its designation under this 7 section may reapply for designation. 8 (5) NOTICE.—If the FinTech Council rescinds 9 a designation under this section, the Council shall— 10 (A) immediately notify the entity that was 11 the subject of the designation and the Congress; 12 and 13 (B) upon making a final determination, 14 publicly provide a written explanation of the 15 basis for the Council’s decision with sufficient 16 detail to provide the public with an under- 17 standing of the specific basis of the Council’s 18 determination, including any assumptions re- 19 lated thereof. 20 (f) TWO-YEAR LIMITATION.—After the end of the 21 two-year period beginning on the date an entity first has 22 a primary regulatory designated under subsection (c)(2)— 23 (1) any such designation is terminated; and 24 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 6 •HR 1491 IH (2) the entity is not eligible for any future des- 1 ignation under subsection (c)(2). 2 SEC. 3. OFFICE OF FINANCIAL INNOVATION. 3 (a) ESTABLISHMENT.— 4 (1) IN GENERAL.—Each Federal financial regu- 5 lator shall establish an Office of Financial Innova- 6 tion (‘‘Office’’). 7 (2) DIRECTOR.—The head of each Office shall 8 be a Director, who shall be appointed to a 5-year 9 term by, and report to, the head of the Federal fi- 10 nancial regulator. 11 (3) STAFFING.—The head of each Federal fi- 12 nancial regulator shall ensure that the regulator’s 13 Office is adequately staffed at all times. 14 (b) DUTIES.—The duties of the Office are to— 15 (1) draft a mission statement, which shall in- 16 clude the phrase ‘‘responsible innovation’’; 17 (2) coordinate and make publicly available ef- 18 forts made by Designated Financial Regulators re- 19 lated to covered actions so as to reduce the regu- 20 latory burden for eligible FinTech startups; 21 (3) establish and maintain an easily-accessible 22 website, which shall include the Office’s mission 23 statement and a portal where eligible FinTech 24 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 7 •HR 1491 IH startups can submit questions or request meetings 1 with the Office; 2 (4) respond to questions and meeting requests 3 described under paragraph (3) in a timely manner; 4 (5) implement recommendations from the Advi- 5 sory Council of FinTech Directors; 6 (6) conduct outreach to eligible FinTech 7 startups when a covered action is made public or fi- 8 nalized; and 9 (7) provide support for the Director of the Of- 10 fice with respect to the Director’s duties on the Ad- 11 visory Council of FinTech Directors. 12 (c) INCLUSION IN RULEMAKING.—Each Federal fi- 13 nancial regulator shall, throughout the development of a 14 new rule, including prior to the publication of a notice of 15 proposed rulemaking in the Federal Register, work with 16 the Office in assessing the potential effects of the rule on 17 eligible FinTech startups. Each Office shall also advise the 18 applicable Federal financial regulator on possible alter- 19 natives that may lessen the burden on eligible FinTech 20 startups without meaningfully affecting the rule’s ability 21 to achieve its purpose. 22 SEC. 4. REGULATORY HARMONIZATION FOR FINTECH. 23 (a) HARMONIZATION.—Each Designated Financial 24 Regulator shall, in taking any covered action, harmonize 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 8 •HR 1491 IH and coordinate with the other Designated Financial Regu- 1 lators in order to eliminate duplication and conflicting reg- 2 ulations that will impact eligible FinTech startups. 3 (b) ADVISORY COUNCIL OF FINTECH DIRECTORS.— 4 (1) ESTABLISHMENT.— 5 (A) IN GENERAL.—There is established the 6 Advisory Council of FinTech Directors, which 7 shall consist of— 8 (i) the Director of each Office of Fi- 9 nancial Innovation; and 10 (ii) an independent member appointed 11 by the Secretary of the Treasury, having 12 State-banking regulatory expertise. 13 (B) COMPENSATION.—All members of the 14 Advisory Council who are officers or employees 15 of the United States shall serve without com- 16 pensation in addition to that received for their 17 services as officers or employees of the United 18 States. 19 (2) PURPOSE.—The purpose of the Advisory 20 Council is to provide each Federal financial regu- 21 lator with advice on its rules, regulations, and poli- 22 cies with regard to how financial innovation is re- 23 shaping the regulatory landscape of the financial 24 services marketplace and whether there is any dupli- 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 9 •HR 1491 IH cation in supervision or material failure in super- 1 vision of eligible FinTech startups that is limiting 2 responsible innovation for eligible FinTech startups. 3 (3) DUTIES.—The Advisory Council shall func- 4 tion solely as an advisory body. Its duties shall ex- 5 tend only to providing advice, including advice in the 6 form of recommendations, to each Federal financial 7 regulator. Each Federal financial regulator shall re- 8 tain full authority to determine actions to be taken 9 and policies to be expressed with respect to matters 10 within its jurisdiction upon which the Council may 11 provide advice. 12 (4) REPORTS.— 13 (A) ANNUAL REPORT.—The Advisory 14 Council shall annually report to Congress on 15 the activities of the Council and any significant 16 financial market and regulatory developments 17 that might impact eligible FinTech startups. 18 (B) ADVICE.—The Advisory Council shall 19 provide its advice to the Federal financial regu- 20 lators through the Secretary of the Treasury. 21 The Advisory Council need not reach consensus 22 on every issue, and may choose to provide the 23 Federal financial regulators with differing views 24 or a range of view. 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 10 •HR 1491 IH (5) MEETINGS.—The Advisory Council of 1 FinTech Directors shall meet at the call of the Sec- 2 retary of the Treasury or a majority of the members 3 then serving, but not less frequently than annually. 4 (6) RECORDKEEPING.—The official records 5 generated by or for the Advisory Council shall be 6 handled in accordance with General Records Sched- 7 ule 6.2, or another approved agency records disposi- 8 tion schedule. These records shall be available for 9 public inspection and copying, subject to section 552 10 of title 5, United States Code (commonly known as 11 the ‘‘Freedom of Information Act’’). 12 SEC. 5. DEFINITIONS. 13 For purposes of this Act: 14 (1) COVERED ACTION.—The term ‘‘covered ac- 15 tion’’ means any regulations, guidance, interpretive 16 rules, interim final rules, bulletins, statement of pol- 17 icy, letters, examination manuals, frequently asked 18 questions, notices, directives, or any other authori- 19 tative action that would impact an eligible FinTech 20 startup. 21 (2) DESIGNATED FINANCIAL REGULATOR.—The 22 term ‘‘Designated Financial Regulator’’ means— 23 (A) any Federal financial regulator or reg- 24 ulators that have been designated under section 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 11 •HR 1491 IH 2(c)(2) with respect to any eligible FinTech 1 startup; and 2 (B) with respect to an eligible FinTech 3 startup, the specific Federal financial regulator 4 or regulators designated under section 2(c)(2) 5 for such eligible FinTech startup. 6 (3) ELIGIBLE FINTECH STARTUP.—The term 7 ‘‘eligible FinTech startup’’ means an entity that— 8 (A) provides an application or product and 9 has no more than 10,000 total users of such 10 application or product; 11 (B) has no more than 15 employees; 12 (C) has received less than 5 rounds of ven- 13 ture capital; and 14 (D) has not yet partnered with an insured 15 depository institution (as defined under section 16 3 of the Federal Deposit Insurance Act). 17 (4) FEDERAL FINANCIAL REGULATOR.—The 18 term ‘‘Federal financial regulator’’ means each of 19 the Board of Governors of the Federal Reserve Sys- 20 tem, the Bureau of Consumer Financial Protection, 21 the Commodity Futures Trading Commission, the 22 Department of Housing and Urban Development, 23 the Department of the Treasury, the Farm Credit 24 Administration, the Federal Communications Com- 25 VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS 12 •HR 1491 IH mission, the Federal Deposit Insurance Corporation, 1 the Federal Housing Finance Agency, the Federal 2 Trade Commission, the National Credit Union Ad- 3 ministration Board, the Office of the Comptroller of 4 the Currency, and the Securities and Exchange 5 Commission. 6 Æ VerDate Sep 11 2014 01:59 Mar 21, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H1491.IH H1491 pbinns on DSK79D2C42PROD with BILLS