The FinTech industry’s future could depend on the outcome of a fight between the Office of the Comptroller of the Currency (OCC) and states, according to a report in TechCrunch.
TechCrunch said the fight between states and the OCC centers on a proposal made by the OCC in December, in which it details a program that enables FinTechs to apply for charters to become special purpose national banks. The charter is optional for FinTechs and is aimed at providing a stamp of approval by the OCC for having good compliance practices.
In essence with the charter, the government could weed out the good FinTechs from the bad ones. While the OCC thought the rule would elicit little backlash, it has actually prompted a ton of objections from different parties. Some are concerned the OCC is hurting innovation, while others think it’s overstepping its limits. Other concerns are that the OCC doesn’t understand FinTech and therefore shouldn’t regulate it.
Among the states that have issue with it are New York, Florida, Ohio and California.
Take New York as one example. TechCrunch reported DFS Superintendent Maria T. Vullo in January penned a letter to the OCC in which she said banks with national charters don’t have to abide by state lending rules, and that the new charter could allow payday lenders to sign up for protections meant for tech companies.
Meanwhile Florida OFRC Commissioner Drew Breakspear said the charter is a solution to a problem that doesn’t exist, and California’s Jan Lynn Owen, the commissioner of the CA DBO, argued that the proposal would complicate the DBO’s efforts to compile data on online marketplace lenders. Meanwhile, senators from Ohio and Oregon told the OCC the charter would complicate existing FinTech laws and initiatives already in place at the state level.