At the same time, there is the need for these efficiency-inducing new technologies to be incentivised. Clearly, the entity based regulation of banks with its focus on health parameters like capital adequacy, leverage, liquidity or financial integrity requirements like KYC, AML/CFT requires to be adapted to the presence of fintech entities that are not subject to the same regulatory requirements.
If, somehow, hedge funds were barred world-wide, the American financial system would lose the benefits conveyed by their efforts, including arbitraging price differentials away. The resulting loss in efficiency and contribution to financial value added and the nation’s standard of living would be a high price to pay - to my mind, too high a price.