SEC Commissioner Michael S. Piwowar praised collaborative efforts between regulators and market participants on FinTech and RegTech and called for a continued focus on cybersecurity and risk management.

In remarks at the 2018 RegTech Data Summit, Mr. Piwowar underscored the precedential value of securities statutes, rules and court decisions in guiding the regulation of offerings related to new and emerging technologies. He argued that varying the traditional structure of an offering (such as by employing Distributed Ledger Technology) does not change its substance or the applicability of securities laws. Mr. Piwowar pointed to the SEC " DAO Report," which concluded that interests in virtual organizations are subject to securities laws. This report and other SEC decisions on virtual currency-related companies were largely informed by the "Howey Test" (see SEC v. W.J. Howey Co.) for determining whether a particular interest constitutes a security.

Mr. Piwowar also highlighted examples of RegTech developments that have been useful to regulators and industry members, including (i) XBLR data-reporting requirements for operating companies to enhance the usefulness of financial statements and risk/return summary information and (ii) the requirement to use HTML hyperlinks for certain information made available on the EDGAR system. Mr. Piwowar further referenced the Market Information Data Analytics System for analyzing equity market data and the Consolidated Audit Trail as areas in which the SEC has used RegTech to improve its effectiveness. He stated that the SEC hopes to continue future development to further increase its data analytics capabilities noting that the Enforcement Division, in particular, has benefited from RegTech.

Mr. Piwowar asserted that RegTech and FinTech development often takes a significant period of time, and that regulators should be willing to commit resources and to work with market participants to make necessary adjustments. He cautioned, however, that the advent of new technologies is often accompanied by the emergence of new, complex risks. Mr. Piwowar praised SEC Chairman Jay Clayton's commitment to improving the SEC's own cybersecurity infrastructure, and encouraged a continued focus on cybersecurity and risk management.

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