Chicago Startup Fintank Aims to Launch a Crypto Self-Regulatory Organization

Chicago-based fintech startup FinTank aims to launch a national self-regulatory organization, or SRO, in the United States.

Headed up by former Chicago Board Options Exchange, or CBOE, trader David Carman and partner George Vukotich, FinTank’s SRO “will help regulate the global crypto industry,” Carman told Cointelegraph. As much of the crypto world looks toward the U.S. regulatory scene, such an SRO could impact the crypto industry worldwide.

Regulation is unclear in the crypto space, even after 10 years

Although regulations from the U.S. Securities and Exchange Commission, or SEC, and the Commodity Futures Trading Commission, or CFTC, have tightened over the past three years, the crypto industry still sits in limbo as far as clear guidelines go.

The SEC has cracked down on numerous ICOs, calling them unregistered securities offerings. The commission, however, has not put out a ruling on the countless other crypto assets that could be deemed securities, including third-ranked market cap asset XRP, as seen in a recent lawsuit.

“Both the SEC and CFTC have made it clear that an SRO is necessary to have a healthy regulatory environment,” Carman said. 

Essentially, SROs can govern certain sectors or niches instead of existing regulations, or alongside them.

The FinTank head labeled two primary issues with current regulation in the crypto space. “There’s not enough of it, especially regarding spot exchanges overseas,” Carman said of regulation. Additionally, “There’s confusion and a lack of clarity especially regarding the issuance of tokens,” he noted as the second main issue.

The SRO aims to provide clarity

Carman described the SRO as a national endeavor, not just a Chicago-local project. Detailing the SRO’s plans, Carman said: 

"We will act with accountability, transparency and integrity to develop and promulgate the highest professional standards and best practices; provide awareness, education, training, and other resources to build human and technical capacity; and advocate for a regulatory environment that facilitates innovation and protects consumers, stakeholders and the broader public interest worldwide.”

Carman’s whole movement began as something else

Carman gathered many crypto space participants for a meeting in downtown Chicago in March 2019 to discuss Chicago as a crypto trading hub. “We began with 5 committees to establish Chicago as ‘The Crypto Trading Capital of the World,’” Carman said. Those committees saw participation from 35 volunteers.

“After 6 months of committee meetings, it became clear to me that we should focus all our efforts on launching a SRO,” Carman explained. Mentioning an Illinois-based regulatory testing ground as one of the original initiatives, Carman said, “The State of Illinois is not ready for a FinTech sandbox and the other 3 committees have been merged into the SRO committee.” The SRO endeavor now touts more than 125 volunteers.

Although FinTank remains heavily involved in the movement, the SRO will operate under a different name, Carman said. He also added that he is still unsure of his and partner’s future roles in the SRO after the initiative officially launches.

Hester Peirce, one of the SEC’s commissioners, has not shied away from talking about the crypto space, leading to her nickname, “Crypto Mom.” Carman said he and his team had a private meeting with Peirce earlier this year, during which the commissioner answered several SRO-related questions.

Without regulatory clarity, crypto will face continued government roadblocks, stalling progression until clear rules and guidelines are cemented. It appears, however, that the industry and the commission are on the right track to finding a working system.