Earlier this week, Acting Director Mulvaney announced the creation of a new “Office of Financial Innovation,” and appointed Paul Watkins, an official who led the Arizona Attorney General’s fintech initiatives, to lead the Office. The new Office, which will now do the work formerly done under the Bureau’s Project Catalyst, “will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, and reviewing outdated or unnecessary regulations.” The Bureau’s announcement also described the encouragement of “consumer-friendly innovation” as a “key priority” for the agency.
The announcement may be notable for its mention that Watkins had “managed the FinTech Regulatory Sandbox” for Arizona, the first state fintech sandbox in the country. This might possibly presage Bureau efforts to offer its own form of a “sandbox,” which in theory would allow a company limited access to the marketplace in exchange for relaxing some regulations. Another point to watch for will be whether the Bureau follows this announcement with any proposal to revise its “No Action Letter” policy. That policy, though aimed specifically at providing financial innovators with more regulatory certainty, is viewed by many as restrictive and has resulted, to date, in only one No Action Letter in the two years of the Policy’s existence.