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24 Yale J.L. & Tech. 1 (2022)

handle is hein.journals/yjolt24 and id is 1 raw text is: The New Fintech Federalism Benjamin T. Seymourt American law has struggled to accommodate the rise of fintech. The United States has labored under a division of regu- latory authority between the state and federal governments de- signed for a financial landscape comprised of banks and large, systemically important shadow banks. To catch up to the market, state and federal officials have undertaken a diverse array of initiatives. Numerous regulators have relied on the prevailing paradigm of the past century, seek- ing to extend its already stretched logic into the realm of fintech and exacerbating its many shortcomings in the process. But sev- eral regulatory initiatives of the past decade have broken with prior thinking and charted a different path. That path redefines the relative realms of the federal and state governments and promises a legal regime suited to the technological realities of twenty-first century finance. This emergent paradigm-the New Fintech Federalism- constitutes a radical reversal of the prior division of authority between state and federal actors. Through both cooperative and unilateral initiatives, the states are increasingly adopting an en- tity-based approach rooted in interstate reciprocity that internal- izes the benefits of jurisdictional competition and reduces the costs of redundant mandates. Meanwhile, by focusing on finan- cial activities, the federal government is pursuing a consumer protection framework less prone to arbitrage and a view of pru- dential risk suited to the fragmentation of fintech. This Article is the first to identify the New Fintech Federal- ism, examining how its disparate set of legal experiments could revolutionize U.S. financial regulation. It also details a statutory intervention that would promote the interests of entrepreneurs and consumer protection advocates alike by codifying this emer- gent approach. Far from jettisoning federalism, this Article's proposed legislation would harness the distinctive strengths of t Yale Law School, J.D. 2021; Financial Services Group, Covington & Burl- ing LLP, Washington DC. The views expressed in this Article are entirely my own.

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