During a session of state legislation, Florida’s chief financial regulator Russell Weigel hopes to modernize state policy on issues such as cryptocurrency, banking and securities reform to make it more competitive with other states.
The former Coral Gables-based securities lawyer, who now heads the state’s Office of Financial Regulation, says he presented a number of ideas to lawmakers that are now in various stages of the legislative process.
At this session, he said, several of his proposals were picked up, and some laws are breaking through the House and Senate regarding cryptocurrency and bank modernization. Mr Weigel’s goal for the next session, he said, is for lawmakers to undertake a major reform of the Securities Act that addresses three key components that will create a “financial ecosystem” that Florida does not yet have.
At this session, he said, the legislature is likely to take the first step toward regulating a cryptocurrency like Bitcoin, which is already included in the state money laundering law but not in its money transfer law. Adding cryptography to the latter law, he said, would effectively allow the state to regulate it, which will raise a host of new questions.
“There are a number of consequences coming into this area,” Mr Weigel said, “but we have to do it because digital assets are coming, it can’t be stopped, and Florida needs a sensible policy.”
Questions like whether banks can keep crypto as a means or customers can keep it in their bank accounts are just some that will need to be addressed if this item passes.
The legislature, Mr. Weigel said, has also launched two banking initiatives. One, he said, would allow a “limited exception” to Florida’s Sunshine Act aimed at preventing a “cold effect” on new banks. Currently, he said, applications for new bank charters are a public record – meaning that individuals who want to set up banks with authority in Florida can avoid it because it could jeopardize their employment. The proposed exception, he said, would “cover up” the application while it is being considered and “drive” it after the verdict.
“I am cautiously optimistic that the bill will be found at this session,” he said, “but I don’t want to stumble on it.”
He said another bank account could take longer to pass. This “Law on Modernization of Banks,” he said, could allow banks to exist without a fingerprint and to operate anywhere in the state or via the Internet.
“The current regulatory scheme for banks,” he said, “is based on them applying as charters with a geographical focus. It’s part of a business plan that all banks in the state of Florida must present. This account freed them from the need to present (geographical footprint). “
At the next session, Mr. Weigel said, he hopes the legislature will pass a three-tier bill that will “create a capital market for small business finances” and protect and secure jobs in Florida. Without measures to make it easier to raise funds for startups in Florida, he said, many companies are turning to states like California to find investors and be able to relocate there with valuable jobs.
“We have a lot of financial resources at our disposal,” he said, “but we don’t have an organized way to connect investors with local companies.”
The first principle of this law, Mr. Weigel said, would allow Florida to adopt a disclosure-based system for offers of securities such as the one used by the SEC. Currently, he said, the Financial Regulations Office is required to review companies that want to register an offer to attract investors. According to the proposed model, he said, “a company seeking capital must disclose all material facts to potential investors, and investors decide whether they want to invest.” In this way, he said, the office is not required to measure the merits of companies in the private sector.
The second part, he said, is crowdfunding reform. Florida laws on the matter, which require companies to go through a state-registered network portal, do not work and have never been used because there are no registered portals or incentives to run, he said. Mr Weigel said one possible way to encourage the creation of portals would be to allow them to function as limited-function brokers, dealing with marketing, not money, but not limited to group funding efforts. The second idea, which he said requires more legal research, would allow companies to use the internet on their own, instead of going through the portal at all.
The third part of the law, Mr. Weigel said, will allow Florida to license another type of broker with a limited function called “inventors,” which will represent companies and investors. California and Texas, he said, already allow this position. The inventors, he said, would function similarly to portals when presenting, but would not handle cash, and the Financial Regulatory Office would be responsible for conducting background checks.
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