Non-depository fintech firms involved in banking in the USA can now apply to the Office of the Comptroller of the Currency (OCC) for national bank charters.
The green light from OCC was given several hours after the main regulator - Treasury Department has released a detailed recommendation paper, encouraging regulators and authorities to set the laws that will help them to work with non-banks, including fintech firms and data aggregators. The OCC will accept applications from non-depository fintech companies for a special purpose national bank charter.
The permission to chart fintech on the list of national banks is concordant with numerous efforts on both government and state level. The regulators think it will “improve financial services to consumers, businesses, and communities.”
Every new application will go through the individual evaluation. Financial technologies companies looking to be charted with OCC will have to follow the same rules as national banks. One of the rules makes sure they provide the regulator with the “acceptable contingency plan to address significant financial stress that could threaten the viability of the bank“. This should include clear strategy for “restoring the bank’s financial strength and options for selling, merging, or liquidating the bank in the event the recovery strategies are not effective”. All non-depository companies will go under close supervision after being listed.
Joseph M. Otting, the Comptroller of the Currency, reckons that banks and the government banking system provided ground for colossal development during the last years. To appeal to today’s client and his needs, they have to continue developing and absorbing innovations. A way to do that is to allow non-depositary firms to become a full member of the system. In his opinion, this way it will still “serve as a source of strength” for the country's economy.
WHY IS IT IMPORTANT?
- Currently, the U.S. has no federal framework regarding fintech companies. This makes complying with laws much harder as they have to abide by the rules of each state.
- The new OCC regulation will provide the federal framework that allows fintech firms to operate in a unified manner.