WASHINGTON, D.C. – The Financial Technology Association (FTA) outlined recommendations to strengthen investor access and facilitate capital formation in response to the House Financial Services Committee’s request for feedback. FTA highlighted the powerful role fintech plays in catalyzing innovation and expanding access to investment opportunities for millions of Americans.
“When we invest in the future of financial innovation, we invest in the American economy,” said Penny Lee, President and CEO of the Financial Technology Association. “We applaud the House Financial Services Committee for considering bipartisan efforts to increase access to capital and investment opportunities and strengthen our public and private markets. These policies will help more Americans benefit from investment opportunities previously only available to the wealthy.”
Fintech is transforming capital access and formation by leveraging technology to offer responsible, accessible, affordable, and timely investment opportunities. Technology helps break down traditional financial barriers and expand investment opportunities for a broader range of individuals and businesses. It also reduces transaction costs, increases transparency, and accelerates financial transactions, benefitting businesses seeking capital.
FTA outlined several policy recommendations to encourage innovation in capital markets, including:
- Modernizing the Accredited Investor Definition, which would allow sophisticated, but not necessarily “wealthy” individuals to responsibly participate in private markets. Wealth alone is not an accurate measure of financial acumen, and expanding pathways for individuals to qualify as accredited investors is essential.
- Increasing retail investor participation in private markets through opportunities like crowdfunding, pooled investment structures, and secondary market development while maintaining appropriate investor protections. Retail investors face significant barriers to accessing private markets, as investment opportunities are largely limited to institutional and high-net-worth investors.
- Cutting red tape for startups and small businesses to access capital by increasing the size and investor limits for qualifying venture capital funds and expanding the definition of qualifying venture capital investments to include fund-of-fund investments and secondary transactions. Expanding investment pathways through pooled investment structures and secondary markets could help close the gap in access to capital.
- Modernize retirement policy to encourage long-term savings by expanding Roth catch-up contributions and building on provisions in the SECURE 2.0 Act of 2022 that expanded automatic enrollment in retirement plans and allowed student loan payments to qualify for 401(k) matching contributions. In addition, including digital investment advisory models in retirement plans and ensuring these receive the same standing as traditional investment options could further reduce costs and increase accessibility.
- Encourage the use of responsible AI to further enhance investor services and offerings, which can improve accessibility, lower costs, and promote sound investment decision-making to the great benefit of investors and markets.
Click here to read FTA’s full list of capital markets policy recommendations.
ABOUT US
The Financial Technology Association (FTA) is a network of fintech leaders shaping the future of finance. We champion the power of technology-driven financial services to catalyze innovation and advocate for modernized policies and regulations that reflect the digital transformation.