Florida regulator seeks financial services modernisation reform

A top financial regulator from Florida is hoping to modernise the state’s policy stance on cryptocurrencies, banking and securities to become more competitive.

Russell Weigel heads the state’s Office of Financial Regulation and claims he has presented a range of ideas to lawmakers on the stated topics, that are now going through various stages of the legislative process, according to a report from Miami Today.

He added lawmakers have ‘picked up’ on a few of his proposals, with bills relating to cryptocurrency and banking modernisation making their way through the State House and Senate. For the next session, Weigel claims the goal is for legislators to take up a larger Securities Act reform that addresses three key areas, which will create a ‘financial ecosystem’ Florida does not currently have.

For the current session, Weigel highlighted the legislature will most likely focus on regulating cryptocurrencies, the report claimed. In addition, the legislature has also taken up two banking programmes. The first would enable a ‘limited exception’ to Florida’s Sunshine law, which places applications for new bank charters on public record – potentially jeopardising an individual’s employment. This exception would help to prevent a ‘chilling effect’ on new bank start-ups, Weigel remarked.

Meanwhile, the second bill – which Weigel claims could take longer to get through – could enable banks to exist without a brick and mortar location and operate from anywhere within Florida.

Weigel told Miami Today, “The current regulatory scheme for banks is based on them applying to be a charter with a brick and mortar geographic focus. That’s part of the business plan that all banks in the state of Florida have to present. This bill untethered them from having to present a geographic footprint.”

In the next session, Weigel said he hopes the state legislature can take up a ‘three-tiered’ draft bill to aid the creation of a capital market for small business finance. He professed that without measures to make funding easy to obtain, start-ups can turn to states such as California to find investors and relocate there – taking important jobs with them.

The first part of this bill would enable Florida to manage a disclosure-based system for securities offerings. Currently, the Office of Financial Regulation is required to review firms that want to register an offering to investors. Through the new model, a company vying for capital would have to disclose all material information to investors, with investors deciding if they want to invest.

Secondly, the bill would put forward crowdfunding reform. Florida currently requires firms to go through a state-registered portal, laws which ‘don’t work’ according to Weigel. To tackle this, he claims one way to incentivise portal creation would be to enable firms to function as limited function brokers, which handle marketing instead of money but are limited to only crowdfunding. An alternative idea would enable businesses to use the internet instead of going through a portal at all.

The final part of the bill would provide Florida with the power to licence ‘finders’, which are another type of limited-function brokers. The finders would work similar to portals in making introductions but would not handle capital, while the Office of Financial Regulation would be responsible for the running of background checks.

Weigel concluded, “There’s a number of consequences that come with stepping into this realm, but we need to do it because digital assets are coming, there’s no stopping it, and Florida needs a reasonable policy.”

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.