The office of the Commonwealth Secretary of Massachusetts, which oversees the state securities regulator, has formed a fintech advisory group, according to the American Banker banking trade publication on March 7.
Reportedly, the office of Secretary William Gavin has formed a group composed of representatives of the Eastern Bank of Boston, a blockchain law firm called Arwen, academics and legal experts, and other law firms. The group will focus on the evolution of the finishing technology industry, including digital currencies. said Gavin:
“This working group includes key players from a broad spectrum of the fintech community, from innovation centers to financial institutions, this collaboration will help advise securities regulators on how to meet the new demands of this rapidly growing space.”
Sharon Goldberg, the executive director of Arwen, told American Banker that the group’s purpose was not simply to crack down on the offending companies, but to provide clarity to companies operating in the fintech space:
“Personally, I would not be doing this if all that came out of it was more enforcement action, the enforcement actions are fine, but first we need to know what the rules are.”
Goldberg added that companies can incur significant expenses to make sure they are not breaking the law, stating that “[It is] very difficult because they are afraid of breaking a rule and may not really know what that rule is.”
Ethan Silver, president of the Lowenstein Sandler brokerage firm, said many Fintech firms hire teams of lawyers and consultants to make sure they are not breaking any laws accidentally.
Secretary Gavin has been very critical of cryptocurrencies like Bitcoin (BTC). In December 2017, he declared that Bitcoin is a bubble that will eventually become a “product without value”. Gavin also said that the blockchain is an incipient technology that is “subject to changes, errors or criminal activities” and that Bitcoin is “fertile ground for investment scams and other financial frauds.”
In March 2018, Gavin issued consent orders that demanded the permanent suspension of five initial offers of currencies (ICO), citing that the companies were selling unregistered securities. The Massachusetts Securities Division ordered ICO issuers to send rescission letters to investors and reimburse them within 45 days of the order.