The following is a summary of Fintech specific related topics, for the Blockchain Week in Review, please visit our sister blog post at the Virtual Currency Report.

OCC Begins Accepting National Bank Charter Applications from Financial Technology Companies

On July 31, the Office of The Comptroller of the Currency (“OCC”) announced that it will begin accepting applications for special-purpose national bank charters from fintech companies engaged in banking. A special-purpose national bank is a national bank that engages in a limited range of banking or fiduciary activities, targets a limited customer base, incorporates nontraditional elements or has a narrowly targeted business plan. The OCC’s decision to open charter applications to fintech companies comes after over two years of extensive outreach with market participants and numerous reports from the OCC staff. The application process for fintech companies would be substantially similar to traditional national banks, with the OCC supervising capital, liquidity and financial inclusion commitments. The OCC would also subject new fintech companies that become special-purpose national banks to heightened OCC supervision consistent with other newly chartered national banks. The OCC stated in its announcement that fintech companies receiving such a charter “should not be permitted to accept FDIC-insured deposits, to reduce risks to taxpayers” and that the Federal Reserve should decide whether those firms should have access to the payments system.

The new OCC charter application process provides an alternative method for fintech companies wishing to engage in certain regulated money transmission activities in lieu of the patchwork registration process with state financial regulators. Also in its announcement, the OCC recognized the role state regulators play in managing the licensing requirements across the states. The OCC also encouraged state regulators to work together to propose a more unified system for managing lending and money transmission activities.

Please click here for the press release.

New York Department of Financial Services Voices Opposition to Regulatory “Sandboxes” and OCC Charters for Fintech Companies

On August 2, the New York State Department of Financial Services (“DFS”) Superintendent, Maria T. Vullo, issued a statement in opposition of the Department of Treasury’s endorsement of regulatory “sandboxes” for fintech companies. In the statement, the Superintendent equated companies operating in regulatory “sandboxes” with toddlers: “Toddlers play in sandboxes. Adults play by the rules. Companies that truly want to create change and thrive over the long term appreciate the importance of developing their ideas and protecting their customers within a strong state regulatory framework.”

The DFS Superintendent also rebuked the Office of the Comptroller of the Currency (“OCC”) for its decision to begin accepting applications for national bank charters for fintech companies. The DFS opposition to the OCC’s decision was also predicated on the adequacy of state regulatory rules to address the needs of fintech companies. The DFS Superintendent stated that “[A] national fintech charter will impose an entirely unjustified federal regulatory scheme on an already fully functional and deeply rooted state regulatory landscape.”

Please click here for the DFS statement.

The above is a summary of one of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest.  These are the Fintech updates that ties to the post Blockchain in Review – Week of July 30 – August 3, 2018 from our sister blog, VirtualCurrencyReport.