Special Purpose Charters

Today, the OCC released an interpretive letter concluding that national banks and federal savings associations (together, “banks”) may permissibly provide cryptocurrency custody services for customers.  The letter, written by Chief Counsel Jonathan Gould, describes custody of cryptocurrency as a modern form of the traditional banking activity of providing safekeeping and custody services, which the agency has previously permitted banks to conduct through electronic means.  The letter also “reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”

Continue Reading OCC Interpretation Paves Way for Banks to Custody Cryptocurrency

On October 25, 2018, the Conference of State Bank Supervisors (“CSBS”) filed a complaint in the United States District Court for the District of Columbia to stop the Office of the Comptroller of the Currency (“OCC”) from issuing special purpose national bank charters to fintech companies.  The lawsuit follows a similar suit against the OCC by the New York State Department of Financial Services (“DFS”) in the United States District Court for the Southern District of New York, which we discussed in September.

Continue Reading State Regulators Renew OCC Suit Over Fintech Charter

On September 14, 2018, Superintendent of the New York State Department of Financial Services (“NYSDFS”) Maria T. Vullo filed a complaint in federal court against the U.S. Office of the Comptroller of the Currency (“OCC”) to block the OCC from issuing any special purpose national bank (“SPNB”) charters. The OCC announced last month, after much

The Office of the Comptroller of the Currency (“OCC”) announced yesterday that a nondepository financial technology (“fintech”) company that engages in a core banking activity, such as paying checks or lending money, can now apply for a special purpose national bank (“SPNB”) charter. This announcement followed shortly after the release of the Treasury Department’s report on nonbank financials, fintech, and innovation, which recommended that the OCC move forward with the charter.

Comptroller of the Currency Joseph M. Otting stated that allowing fintech companies to apply for special purpose national bank charters “helps provide more choices to consumers and businesses, and creates greater opportunity for companies that want to provide banking services in America.”  Comptroller Otting concluded that “companies that provide banking services in innovative ways deserve the opportunity to pursue that business on a national scale as a federally chartered, regulated bank.”

The OCC stated that its decision is consistent with broader government efforts to promote economic opportunity and supports innovation in financial services.  The OCC has made clear that fintech companies with SPNB charters will not be authorized to accept FDIC-insured deposits.  The OCC emphasized that every application by a fintech company for a SPNB charter will be evaluated on the basis of its facts and circumstances and that fintech companies that become special purpose national banks initially will be subject to heightened supervision initially, similar to any de novo bank.

A SPNB charter would be useful in providing a more uniform regulatory framework instead of the current patchwork of state licensing and rate cap regulation that applies to many fintech companies.  The charter also may enable a fintech company to gain direct access to the payment system, subject to the Federal Reserve’s willingness to grant such access.  A company that obtains a SPNB charter also may have less of a need to enter into a partnership with a bank depending on its business model.

Continue Reading The OCC Will Move Forward to Accept Applications for Special Purpose National Bank Charters for Fintech Companies