In this day and age of financial innovation, there is a lot of focus on the United States and Asia. But very few people are aware Great Britain is beating the US in this race, due to a more friendly regulatory framework towards investors. In fact, regulation has always been a problem in the US, particularly when the financial sector is concerned.
Financial Innovation in the US Is Very Difficult
Taking a look at the opportunity for investors to buy shares of startups and SMEs, the concept has been around since 2011 in the United States. However, these efforts have still not come to fruition to this very day, despite support from Barack Obama and several members of the government. This delay can be blamed on the regulatory framework in the US, as innovative finance is not at the top of the priority list for some reason.
To put this into perspective, the United Kingdom has embraced equity crowdfunding and other financial innovation at an early stage, whereas other countries are still playing catch-up. Granted, it took a significant revamp of the UK regulatory system to allow for this change, but the necessary steps have been taking to make it a reality. Over in the United States, however, there seems to be no light at the end of the proverbial tunnel just yet.
Financial innovation requires a modern regulatory framework, which needs to be updated and revised at regular intervals. Unfortunately for businesses in the US, that process has not taken place in the past few decades, creating the lack of financial innovation we face today. Creating a more flexible solution does not happen overnight either, but these struggles have gone on for far too long in some parts of the world.
There is the saying of “innovation will always move faster than the legislative process”, and there is a lot of merit to that statement. This had caused some issues for Bitcoin and blockchain companies as well in the past, as they launched their services before the legislation had caught up, yet were forced to adhere to new rules once the guidelines came through. BitLicense is a very good example of why being behind the curve needs to be avoided by policymakers.
It will take a lot of time until financial innovation can take place in a world where regulation and legislation have defined clear borders which allow for growth. However, the lacklustre actions by policymakers should not hinder growth in the FinTech and Bitcoin world right now. Worrying about the guidelines later is a dangerous approach, but it seems to be the only option right now.
Source: TechCrunch
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