Here is a short video from April 2020, with the Commissioner of the US Securities and Exchange Commission, on the value of providing US based startups a 'cross governmental sandbox' for Fintech.
Conclusions for Pineapple jurisdiction, are as follows:
United States: We are a US company that builds software. However the US has complicated regulations for a non bank financial institution. Specially since our customer market is mostly outside the US we are considering other alternatives before we fully release the beta application.
Unless we partner with a bank or charter one ourselves, we do not see a way to independently grow a truly bank challenging deployment. We will need to severely limit our product to the point where we would not have a unique advantage.
At this point our priority is to open our beta and start servicing the first clients who have signed up.
Europe, Singapore or Hong Kong: Pineapple has looked at most potential jurisdictions which could be fruitful for a challenger fintech. We found Estonia to be unique due to several factors, including ease of compliance, great regulations, tax regime and all processes completely online. We decided to apply and got selected for a startup viza from the government of Estonia.
The parallel options we are exploring are Singapore which has a regulatory sandbox.
Hong Kong has a great money transmitter regulations process. UK has a great sandbox too.
Pineapple now has options, before we start processing customer revenue.
As we consider jurisdictions other than the United States,
we have addressed this issue of lack of clarity with the regulator, at the highest level.
For a later stage we see potential for a US bank sandbox in Nevada and Wyoming. However to expect one from the federal regulator at any time soon is not practical. Pineapple is underway, moving jurisdiction.
Regulations are absolutely necessary to run a balanced economy where both the businesses and it's customers are protected. But as an entrepreneur one also has to be super conscious about how servicing those regulations is going to impact one's business.
Some countries have regulatory frameworks that are more accommodating than others. For a Fintech startup with a world wide market, making the right choice of jurisdiction is a highly important decision.
Pineapple's seriousness about navigating regulations responsibly, is expressed in the podcast below. It was recorded in November 2018 in San Francisco, at a thrilling but turbulent time, when Bitcoin and ICOs (initial coin offering) were crashing after seeing an all time high.
Pineapple did not do an ICO, in fact we learnt extensively from the blockchain and cryptocurrency movement on the forefront with practitioners. To arrive at conclusions we now see with Pineapple in 2020.