WASHINGTON — The government should encourage the development of the fintech sector but should not grant a safe harbor for such firms, Sen. Mark Warner, D-Va., said Thursday.
During a discussion on fintech at the Brookings Institution, Warner said fintech products have considerable potential, including addressing the challenges faced by the growing ranks of workers who lack job stability.
"Because of this change in the workforce, what we have now is enormous income volatility," Warner said. "Could some of these tools, accessed by your phone, be a way to help folks manage through this changing nature of work?"
He said government's role is to "encourage innovation" but warned that at the moment the industry "is a little bit of a Wild West space."
Warner also expressed interest in the potential of blockchain to improve the speed of transactions.
"It took me a long time to wrap my head around it, and how that gets implemented," he said. "It is crazy in the 21st century that it takes four days for a check to clear."
But the Virginia Democrat emphasized that consumer protection must be part of fintech's DNA and expressed skepticism about a potential safe harbor for such firms.
"You can see bad products arrive very quickly," he said. "Getting this balance right between innovation and consumer protection is a fine [line] … I don't know what the silver regulatory change is going to get it right."
Instead, he encouraged regulators to communicate more with fintech companies and ensure they have the right talent to tackle evolving technologies.
"The banking regulator always starts with prudential safety and soundness," he said. But "the world is going to change a lot faster than regulators recognize."