US Regulators Finally Open the Door to Fintech
After years of jumping through hoops, things are starting to look better for fintech firms in the U.S. Take it away, WSJ:
Fintech got a thumbs-up from regulators on Wednesday, as a long-awaited national banking license for financial-technology firms took shape and the head of the Commodity Futures Trading Commission said he was moving quickly to see what the agency could do to foster the emerging industry.
The Office of the Comptroller of the Currency, the regulator of national banks, pressed ahead with its plan to offer a specialty license to fintech firms, a move that would allow the emerging industry to enter the federal banking system.
That’s right, as per the regulator’s licensing manual, fintech companies such as payment firms and online lenders may soon apply for a special purpose national bank (SPNB) charter, allowing them to operate under the federales and thus, skip state supervision.
Under the current regime, fintech firms need to need to apply with every state their working in, which as you may have imagined, is a little more burdensome than it should be.
The good news don’t end there though; J. Christopher Giancarlo – President Trump’s pick for CFTC chief – apparently told his staff to explore ways wherein the commission itself could help promote fintech.
“We must open wider our CFTC agency doors and regulatory minds to benefit from fintech innovation,” Mr. Giancarlo said, speaking at a Futures Industry Association conference in Florida. “The CFTC must be a leader in adopting the ‘do no harm’ approach to financial technology similar to the U.S. approach to the early internet.”
He has appointed Jeffrey Bandman, the commission’s former clearing and risk director, as the CFTC’s fintech advisor.
All that said, some people aren’t too happy with these decisions. John Ryan, president and CEO of the Conference of State Bank Supervisors, said that “the OCC has acted beyond the legal limits of its authority, bypassed and ignored bipartisan objections from Congress, and created new risks to consumers and taxpayers.” Brian Knight, a senior research fellow at the Mercatus Center at George Mason University, also had this to say: “while there are some positive aspects of this proposal it is still too vague and risks creating a needlessly burdensome process that will hamper the very innovative firms that can best utilize this type of regulatory reform.”
The Republicans on the House Financial Services Committee apparently aren’t too hot on the idea, too:
“If the OCC proceeds in haste to create a new policy for ‘fintech’ charters without providing the details for additional comment, or rushing to finalize the charter before the confirmation of a new comptroller, please be aware that we will work with our colleagues to ensure that Congress will examine the OCC’s actions and, if appropriate, overturn them.”
Despite all that though, the whole thing does look promising for America’s burgeoning fintech industry. Stay tuned.
Photo: Lorie Shaull