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71 Vand. L. Rev. 1167 (2018)
Regulating Fintech

handle is hein.journals/vanlr71 and id is 1211 raw text is: 








                 Regulating Fintech


                         William Magnuson*

       The financial crisis of 2008 has led to dramatic changes in the
way  that finance is regulated: the Dodd-Frank Act imposed broad and
systemic regulation on the industry on a level not seen since the New
Deal. But the financial regulatory reforms enacted since the crisis have
been premised  on an outdated idea of what financial services look like
and  how  they are provided. Regulation has failed to take into account
the rise of financial technology (or fintech) firms and the fundamental
changes  they have ushered in on a variety of fronts, from the way that
banking  works, to the way that capital is raised, even to the very form of
money  itself. These changes call for a wide-ranging reconceptualization
of financial regulation in  an era of  technology-enabled finance. In
particular, this Article argues that regulators' focus on preventing the
risks  associated with  too big  to fail institutions overlooks the
conceptually  distinct  risks associated  with  small,  decentralized
financial markets. In many  ways, these risks can be greater than those
presented by large institutions because decentralized fintech markets are
more   vulnerable to  adverse  economic  shocks, less transparent  to
regulators, and more  likely to encourage excessively risky behavior by
market  participants. The Article concludes by sketching out a variety of
regulatory responses that better correspond to fintech's particular risks
and  rewards.

INTRODUCTION....        ..................................................... 1168
I.     W HAT  IS FINTECH?.......................................................... 1173
       A.     Asset M anagem  ent ............................................... 1175
       B .    Crow dfunding  ...................................................... 1179
       C.     Virtual Currency  .................................................. 1183
II.    FINANCIAL   REGULATION   AND  SYSTEMIC  RISK...........  1187
       A.     Systemic Risk..........................           1188

   *   Associate Professor, Texas A&M University School of Law; J.D., Harvard Law School;
M.A., UniversitA di Padova; A.B., Princeton University. The author wishes to thank Howell
Jackson, Donald Langevoort, Holger Spamann, Elisabeth de Fontenay, John Coyle, Rory Van Loo,
Yesha Yadav, Michael Coenen, Jacob Eisler, Vanessa Casado Perez, and Jane Magnuson for
helpful advice and guidance.
                                 1167

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