Archives: Fintech

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ISDA Releases Whitepaper Regarding Legal Perspectives on Smart Contracts and Distributed Ledger Technology

On August 3, 2017, the International Swaps and Derivatives Association (“ISDA”) and Linklaters LLP released a whitepaper titled “Smart Contracts and Distributed Ledger – A Legal Perspective.” The whitepaper sets out to define the terms “smart contract” and “distributed ledger,” to analyze their applications to the derivatives industry, and to highlight potential legal issues raised … Continue Reading

SEC Report of Investigation Concludes that DAO Tokens Were Securities

On July 25, 2017, the Securities and Exchange Commission (“SEC”) issued a Report of Investigation (“Report”) finding that the digital tokens offered and sold by the virtual, unincorporated organization known as “The DAO” were securities subject to the federal securities laws. The DAO sold DAO tokens in exchange for the digital currency Ether used on … Continue Reading

Acting Comptroller Noreika Addresses Challenges to the OCC’s Fintech Charter

In remarks on Wednesday before the Exchequer Club in Washington, Acting Comptroller of the Currency Keith Noreika responded to State regulators and consumer advocates who have criticized the OCC’s proposed special purpose fintech charter (the proposed charter is discussed in this Covington client alert). Acting Comptroller Noreika’s comments on the fintech charter reflect an evolution … Continue Reading

CFTC Approves Registration of Bitcoin Platform LedgerX

On July 6, 2017, the Commodity Futures Trading Commission (“CFTC”) announced that it had granted LedgerX registration as a swap execution facility (“SEF”).  LedgerX is a platform that will trade and clear options on bitcoin. LedgerX has also applied to become a derivatives clearing organization.  If approved, LedgerX “would be the first federally regulated bitcoin … Continue Reading

CFTC Acting Chairman Makes Budget Request

On June 8, 2017, Acting Chair J. Christopher Giancarlo of the Commodity Futures Trading Commission (“CFTC”) made his request for the CFTC’s budget for fiscal year 2018 (“FY 2018”) to the House Appropriations Committee Subcommittee on Agriculture, Rural Development and Related Agencies (“Subcommittee”).  Acting Chair Giancarlo is seeking an increase in the CFTC’s budget from … Continue Reading

CFTC Launches FinTech Initiative “LabCFTC”

On May 17, 2017, the Commodity Futures Trading Commission (“CFTC”) announced the launch of its financial technology (“FinTech”) initiative, LabCFTC.  Per the agency, the initiative is designed to “promot[e] responsible FinTech innovation to improve the quality, resiliency, and competitiveness of the markets the CFTC oversees.”  According to Acting Chair J. Christopher Giancarlo, LabCFTC is “intended … Continue Reading

FDIC Settles Unfair and Deceptive Practices Investigation with Bank and Institution-Affiliated Parties

On May 11, 2017, the Federal Deposit Insurance Corporation (“FDIC”) announced settlements with Bank of Lake Mills and two of its institution-affiliated parties, Freedom Stores, Inc. and Military Credit Services, LLC.  The settlements require the companies to pay restitution totaling $3 million to past and present borrowers who were harmed, impose civil monetary penalties totaling … Continue Reading

Conference of State Bank Supervisors Sues To Stop OCC Fintech Charters

On April 26, 2017, the Conference of State Bank Supervisors (“CSBS”) filed a complaint against the Office of the Comptroller of the Currency (“OCC”) and Comptroller of the Currency Thomas J. Curry to block the agency from going forward with its proposal to grant special purpose national bank charters to fintech companies. The CSBS filed … Continue Reading

OCC Issues Draft Licensing Manual for Evaluating Charter Applications from Fintech Companies

On Wednesday, the Office of the Comptroller of the Currency (“OCC”) issued a highly-anticipated draft supplement to its Licensing Manual (the “Supplement”) for evaluating applications from fintech companies for a special purpose national bank (“SPNB”) charter. The Supplement explains how the OCC will apply its existing licensing standards and requirements to these companies. The OCC … Continue Reading

OCC and CFPB weigh in on Fintech issues

In separate remarks at the Lendit USA 2017 conference on March 6, 2017, Thomas Curry, the Comptroller of the Currency, and Richard Cordray, the Director of the Consumer Financial Protection Bureau (CFPB), discussed their respective agencies’ approaches to fintech. Although neither agency head made any groundbreaking announcement, their remarks provide an up-to-date summary of the … Continue Reading

CFPB Issues Request for Information on Alternative Data and Modeling Techniques

On February 16, 2017, the Consumer Financial Protection Bureau issued a request for information (“RFI”) regarding the potential benefits and risks of relying on alternative data and modeling techniques in the consumer credit marketplace. In contrast with information that has traditionally defined a consumer’s credit history—such as debt repayment history and the existence of current … Continue Reading

FTC Enforcement Action Signals Possible Changes Coming In Unfairness Doctrine

On February 6, the FTC, along with the State of New Jersey, announced a settlement with TV-maker VIZIO related to VIZIO’s alleged data collection practices on millions of its ‘smart,’ network-connected TVs. According to the complaint, VIZIO collected information on consumers which it then shared with third parties, without sufficiently disclosing the data collection and … Continue Reading

CFTC Commissioner Giancarlo Forecasts Swap Market Reforms

On January 18, 2017, Commodity Futures Trading Commission (“CFTC”) Commissioner J. Christopher Giancarlo delivered a keynote address at SEFCON VII in which he gave an indication of the types of reforms in the swap markets he plans to implement as Acting Chair and, if nominated and confirmed, as permanent Chair.  His comments echoed a theme … Continue Reading

State Banking Regulators Oppose OCC Fintech Charter

With this week’s close of the comment period on the December 2016 whitepaper by the Office of the Comptroller of the Currency (“OCC”) regarding special purpose charters for fintech companies, which we discussed in a previous client alert, several key stakeholders have weighed in on the OCC’s plans.  Notably, on January 13, 2017, the Conference … Continue Reading

Senate Democrats Question OCC’s Proposed FinTech Charters

As discussed in our recent client alert, in a December 2, 2016 whitepaper, the Office of the Comptroller of the Currency (“OCC”) outlined its authority under the National Bank Act to grant special-purpose charters on a case-by-case basis to financial technology (“fintech”) companies that provide services equivalent to certain traditional banking activities. In the paper, … Continue Reading

OCC Finalizes Receivership Rule for Uninsured National Banks

On December 20, 2016, the Office of the Comptroller of the Currency (“OCC”) released a final rule addressing the receivership of national banks that are not insured by the Federal Deposit Insurance Corporation (“FDIC”) and therefore are not subject to receivership by the FDIC under the Federal Deposit Insurance Act (“FDIA”).  While all 52 existing … Continue Reading

CFTC Commissioner Giancarlo Delivers Speech Urging Regulatory Reform

On December 9, 2016, Commodity Futures Trading Commission (“CFTC”) Commissioner J. Christopher Giancarlo delivered the keynote address at the International Swaps and Derivatives Association Trade Execution Legal Forum.  His address included a strong rebuke of the CFTC’s swaps trading regime, stating that the “time has come for the CFTC to revisit its flawed swaps trading … Continue Reading

Federal Reserve Board Releases Research Paper on Digital Ledger Technology

The Federal Reserve Board released a staff research paper on Monday, December 5, 2016, addressing the potential use of distributed ledger technology (DLT) in payments, clearing, and settlement (PCS) processes.  A distributed ledger is a type of database in which identical copies of information are distributed and maintained among multiple parties or multiple nodes in … Continue Reading

OCC to Issue Special Purpose National Bank Charters to Fintech Companies

On December 2, 2016, Comptroller of the Currency Thomas J. Curry announced that the Office of the Comptroller of the Currency (“OCC”) would move forward with issuing special purpose national bank charters to financial technology (“fintech”) companies. The OCC released a whitepaper outlining its authority to issue charters to fintech companies, its approach to supervising … Continue Reading

Open APIs: CFPB Comments and Legal Issues to Consider

Another major bank recently announced the launch of an open application programming interface (or “API”) platform  through which it will grant third-party software developers access to its APIs for a number of use cases, including peer-to-peer payments, reward redemptions and account summary access.  The announcement comes on the heels of prepared remarks by Consumer Financial … Continue Reading

SEC Leaders Discuss Fintech Regulation

At the inaugural Financial Technology Forum hosted by the Securities and Exchange Commission (the “SEC”) November 14, 2016, SEC Chairwoman Mary Jo White and Commissioner Michael Piwowar gave remarks addressing the future of fintech regulation and the role of the SEC in such regulation. Both Chairwoman White and Commissioner Piwowar emphasized the potential benefits and … Continue Reading

Smart Contracts: Opportunities and Legal Risks

Financial services companies, software developers and governments alike are exploring opportunities to automate a wide range of legacy processes using smart contracts and blockchain technology. What are smart contracts? Smart contracts are “computable” legal contracts that execute automatically (without verification by a third party) when a set of pre-programmed conditions are satisfied.  Unlike traditional legal … Continue Reading

Comptroller Curry Emphasizes That Fintech Charter Will Not Involve Regulatory Relief, Rejects “Sandbox” Approach to Financial Innovation

In a speech delivered yesterday to an industry conference in London, Comptroller of the Currency Thomas Curry did not reject the idea of a special charter for fintech firms – but did reject the idea that such a charter would come with lessened regulatory burdens as compared to a traditional bank charter. In particular, Comptroller … Continue Reading
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