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Faced with new technologies that confound existing financial regulatory structures, regulators around the world have been experimenting with new approaches to regulating fintech. The most prominent of these experiments have been innovator-focused programs that provide guidance (and in the case of regulatory sandboxes, regulatory relief) to private sector firms, in order to help them navigate a confusing thicket of financial regulation that might otherwise impede their innovation. These innovator-focused programs can improve efficiency and competition in the provision of financial services, but can – at best – only make incidental contributions to the financial regulatory goals of consumer and investor protection, and the promotion of financial stability. This Essay argues that when regulatory resources are scarce, the priority should be experimentation by the regulators in order to advance these core financial regulatory goals of protecting investors, consumers and the financial system. This Essay therefore surveys recent technological experimentation by financial regulators (known as “SupTech”), and concludes that while the experimentation to date has been valuable and may improve the execution of longstanding financial regulatory functions, further experimentation is needed to address the new problems and risks created by the rise of fintech technologies.



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