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As we’ve seen in other industries transportation (Uber) and hospitality (Airbnb), it’s a short step from envying start-ups to applying pressure on the regulators to throw the book at them. Even fintech start-ups trying to play by the rules have come undone by the complexity and expense of multiple layers of conflicting regulatory oversight.
Some fintech companies have foundered on the rocks by hewing too close to regulated activities and inviting the sudden and devastating wrath of the watchdogs. You think you’re just offering investment information, but the SEC sees it as unlicensed financial advice. You create a start-up to facilitate crowdfunding, until a state regulator bans it as the illegal sale of unregistered securities. Bitcoin and other payment innovators are already under the gun as alternative forms of currency — or, from the regulator’s perspective, as fronts for electronic money laundering.
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