US Regulations: OCC Puts End to State-By-State Compliance Mess
Attorney and Bitcoin advisor Marco Santori has hailed “the end of state-by-state licensing” following news that fintech startups will no longer face “patchwork” local compliance procedures.
OCC Wants ‘Level Playing Field’
The Office of the Comptroller of the Currency (OCC) announced Friday that limited bank charters will be available for fintech companies. This, Comptroller of the Currency Thomas Curry said, would “level the playing field” in terms of regulatory compliance in the US.
“It will be much better for the health of the federal banking system and everyone who relies on these institutions if these companies enter the system through a clearly marked front gate, rather than in some back door, where risks may not be as thoughtfully assessed and managed,” he stated.
Fintech companies, including those handling digital currencies, have so far faced a headache trying to operate in US markets. Compliance obligations vary state by state, resulting in considerable time and expense for country-wide operators.
Additionally, some states have produced draconian laws – such as New York with Bitlicense – which have effectively priced new fintech startups out of the market.
Reacting to the OCC announcement, Santori invited the community to “say hello,” indicating the new framework is a step in the right direction.
— Marco Santori (@msantoriESQ) December 2, 2016
Curry, however, was quick to mention that other rules such as those pertaining to KYC requirements and the Bank Secrecy Act would need to be fulfilled by all businesses.
The Bank Secrecy Act is the background to the US Internal Revenue Service’s current investigation of Coinbase transaction records, something which has drawn criticism from cryptocurrency circles.
‘It Simply Won’t Work’
The OCC move has thus unsurprisingly already received mixed reviews. Commentator Frank Dashwood responded to Santori’s tweet by saying the changes “simply won’t work.”
— Frank Dashwood (@DJ_Erock23) December 2, 2016
The exact nature of the rework have meanwhile yet to be finalized. However, a paper drafted by the OCC means it can already use its power to effect change, American Banker reports.
“The reality today is that the 4,000 fintech companies out there are already competing with national and state banks, without regard to any of the national bank responsibilities and under a patchwork of supervision,” Curry added.
In some ways, [creating a charter] levels the playing field because statutes that by their terms apply to national banks would apply to all special purpose national banks, even uninsured ones.
What do you think about the OCC announcement? Let us know in the comments below!
Images courtesy of shutterstock, medscape.com