A leading association of state banking regulators is trying to replace the US national banking regulator on the issue of the fintech registry.
According to a presentation on December 22nd State Bank Supervisors (CSBS) conference says Figure Technology’s upcoming approval of Figure Technology’s banking charter is a mistake. Figure operates loan and securities services powered by blockchain technology. At the beginning of November he announced a law at the office of the currency auditor. At that time the CEO Mike Cagney noted that a national charter is relatively desirable, saying: “We will have more than 200 state licenses next year without such a letter”.
The OCC, the tax office responsible for the national banks, Under the then Comptroller Thomas Curry, the idea of special banking regulations for fintech companies was first introduced in 2016. State regulators, including the CSBS and the New York Treasury Department (NYDFS), immediately amassed proposals to violate the definition of “bank” and go beyond the OCC’s own bylaws. The CSBS, for example, strongly describes the work of the OCC as a “non-bank charter program”.
From a CSBS perspective The situation only got worse in July 2018When the then Comptroller Joseph Otting said that the OCC was open to applications. CSBS filed another lawsuit later that year.
The court ultimately dismissed the case on the grounds that: “CSBS still lacks prestige and its claims remain immature”. In this decision, however The court attributed this “lack of maturity” to the fact that no fintech had requested, let alone received, a letter.
A month later, in the final ruling on the New York Department of Defense case, A Manhattan judge ruled that the OCC’s regulator “will be overridden in relation to all fintech applicants who apply for national bank status and do not accept deposits.”what a blow to the OCC.
But while the OCC appealed the NYDFS case to the second circuit, CSBS uses the Figure app to attack the entire program and looks for:
“Declarative and judicial exemption that makes the OCC non-bank charter program and the Figure Charter illegal and prohibits the OCC from soliciting, accepting, or approving non-bank charter applications, including the Figure Charter application”.
Margaret Liu, CSBS senior vice president and assistant general counsel, told Cointelegraph that Figure’s particular business isn’t the problem. The company is just the first fintech company to go that far in licensing the OCC. which “made the problem more than mature”And I add: “The timing is related to the fact that a company has submitted a final application. It’s not about figure. “
The central element of the argument is When a financial institution that has no deposits, such as B. Figure, can be viewed as a bank and is therefore subject to the national competence of the OCC. In 2018 Otting’s announcement argued that the OCC was already empowered to “create companies that perform one of the basic banking functions (paying checks, lending money, or receiving deposits)”.which did not necessarily require these banks to accept deposits. This exempts these banks from requirements like FDIC insurance and possibly Federal Reserve Board oversight.
CSBS disagrees. “We’re suing for the same reason we sued him all along,” Margaret Liu told Cointelegraph. “Being a regulator doesn’t mean you can redefine what a bank is.”. Yesterday’s complaint states:
“It is well established by precedents, Bundesbank laws, and historical charter practices that a national bank must at least participate in deposit receipt and submit and receive applications in order to legally begin ‘banking’ under the NBA deposit insurance scheme.”
In September, CSBS announced a new program designed to simplify the registration process for domestic companies applying for licenses in many states. At that time, Brooks congratulated the conference on:
“Given what we’ve been saying for years, it makes little sense for domestic financial services companies to have a patchwork of regulation and oversight. While efforts alleviate the inherent challenges of a system based on 50 state laws and licensing systems. Just the law and the single legal framework it provides deal fully with these issues. “
Clear, CSBS and OCC have different ideas about what a uniform legal framework means.
Brooks for his part, has made the OCC a beacon of crypto regulation at the federal level since joining the office of Coinbase’s legal team in March. Although President Trump recently named him full computer, the appointment is still pending Senate confirmation. With a new Congress convened in less than a month, it is not yet known whether the Senate deems it appropriate to plan it.