The U.S. Government Accountability Office (“GAO” or the “Office”) recently published its study related to the financial technology (“fintech”) industry. Members of Congress (Hon. Sherrod Brown, Hon. Jeanne Shaheen, and Hon. Jeffrey A. Merkley) asked the GAO to review a number of issues related to the fintech industry including how fintech products and services are regulated. The GAO does not make any recommendations in this initial report, but the Office plans to issue a series of reports on fintech addressing four common subsectors of fintech (marketplace lenders, mobile payments, digital wealth management platforms, and distributed ledger technology) and each subsector’s regulatory oversight. This initial report attempts to define each subsector, explain how it works, who uses it, benefits and risks, industry trends, and regulation and oversight. The GAO provided a draft of the report for review and comment to the CFPB, CFTC, CSBS, FDIC, the Federal Reserve, FINRA, FTC, NCUA, OCC, SBA, SEC, and Treasury. The Office incorporated technical comments from these agencies as appropriate. The GAO conducted this study from July 2016 to April 2017 in accordance with generally accepted government auditing standards. The GAO reported, as an example, that depending on services provided a marketplace lender may be subject to: federal regulation (e.g., Federal Reserve, FDIC, OCC), state licensing and regulation, securities offering registration (e.g., SEC), and/or enforcement actions (e.g., CFPB, FTC). The GAO noted that each subsector’s regulation depends on (1) the extent to which the firms provide a regulated service and (2) the format in which the services are provided.
