The collapse of Synapse, a bank-fintech financial institution in the digital-first ecosystem, was a stark reminder of what light-touch regulation can lead to. Almost everything that could have gone wrong did go wrong, and it all unfolded across the regulatory radar. The echoes of past mistakes that facilitated the 2008-09 Global Financial Crisis were hard to ignore.Despite more than a decade of post-crisis regulatory reforms, a year of introspection, discussion, reconciliation, rulemaking, and lawsuits yielded no real solution to the Synapse debacle. Some even call it the “close-to-worst-case scenario” for how a novel bank-fintech venture can unravel.
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