SEC Spins off FinHub Unit into Stand-Alone Office

Coming off a recent no action letter in the token space that is more permissive than any of the handful issued to date, the Securities and Exchange Commission (“SEC”) signaled its continued focus on digital assets and disruptive technologies by announcing on December 3, 2020, that its Strategic Hub for Innovation and Financial Technology (“FinHub”), originally established within the Division of Corporate Finance, will become a stand-alone office.  

With an emphasis on industry engagement, FinHub has been instrumental for the past few years in the SEC’s efforts to balance fostering innovation with investor protection in its work with rapidly evolving areas in the financial sector, with a particular focus on blockchain and distributed ledger technology as well as digital assets. FinHub has also focused efforts on automated investment advice, digital marketplace financing, and artificial intelligence and machine learning to date.

This move signals that by consolidating the agency’s efforts, the SEC expects FinHub to pay an expanded role in shaping and developing SEC policy across the agency for constantly evolving financial technologies. As stated by FinHub’s director, Valerie Szczepanik, in the SEC’s press release “[t]he scope and complexity of FinHub’s work has continued to evolve and expand as technology itself has evolved,” … [t]his organizational shift will facilitate the agency’s agility and flexibility to work with market participants and regulators worldwide, and to encourage leading-edge innovation that will shape the intersection between the federal securities laws and technology.”

Attorney Advertising. Prior results do not guarantee a similar outcome. This publication is provided as a service to clients and friends of Harter Secrest & Emery LLP. It is intended for general information purposes only and should not be considered as legal advice. The contents are neither an exhaustive discussion nor do they purport to cover all developments in the area. The reader should consult with legal counsel to determine how applicable laws relate to specific situations. ©2020 Harter Secrest & Emery LLP