On November 14, 2016, the SEC hosted a panel discussion entitled the "Impact of Recent Innovation in Capital Formation," as part of its public forum on financial technology (Fintech) innovation held in Washington, D.C., and webcast over the SEC's website. Mr. Sebastian Gomez Abero, Head of the Office of Small Business Policy of the SEC's Division of Corporation Finance, moderated the panel.
Panelists discussed the relationship between financial innovation and capital formation, the dynamic between Fintech and investor protection, and the risks, challenges and opportunities facing borrowers, lenders, intermediaries and regulators engaged in the online marketplace lending and crowdfunding spaces. The panelists said that, overall, they see the recent growth in peer-to-peer online lending and crowdfunding technologies as positive developments, particularly in expanding the availability of and access to affordable credit and capital to traditionally underserved markets, including small business owners and entrepreneurs. Another common theme identified by the panel is the need for greater clarity, standardization and consolidation in the regulatory structure. A panelist commented that, at the moment, there were about 25 federal agencies involved in consumer finance and much more at the state level, with overlapping jurisdictions. Oftentimes, borrowers who wish to tap into the online marketplace lending and crowdfunding spaces are confronted with the daunting task of navigating through a complex and overlapping regulatory landscape, with multiple regulators to deal with. Notwithstanding these challenges, the panel expressed confidence that online marketplace lending and crowdfunding are poised to grow and develop in the coming years. The SEC has also reported that in less than six months since the regulations became effective, more than 140 companies have started an offering using the new Regulation Crowdfunding.
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