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‘Two cops on the beat’: Regulator desires sole authority to constitution fintech companies

01/07/2021

The OCC’s appearing head is pushing in opposition to the Client Monetary Safety Bureau’s intention to constitution non-depository fintech companies.

Brian Brooks, the appearing head of the U.S. Workplace of the Comptroller of the Foreign money and former chief authorized officer to Coinbase, has warned in opposition to the Client Monetary Safety Bureau receiving the best to grant “Fintech Charters.”

Earlier this week, the CFPB’s Taskforce on Client Monetary Regulation printed a report that includes 102 coverage suggestions supposed to “enhance and strengthen” monetary rules, together with proposing that Congress empower the CFPB to federally constitution nondepository establishments — monetary companies that don’t take buyer deposits and accumulate charges for different monetary companies.

Below Brian Brooks’ management, the OCC created the Particular Function Funds Constitution for FinTech in 2020, paving the way in which for sure crypto companies to use for recognition as a nationwide financial institution. Paxos and BitPay sought approval for chartering below the brand new regime in December.

Ought to the CFPB be prolonged the best to constitution fintechs, it may scale back regulatory readability as to which companies non-depository crypto companies ought to apply to, and create overlaps between the mandates of the 2 companies.

In a Jan. 6 assertion, the appearing OCC head pushed again in opposition to the CFPB’s request for the best to constitution fintechs, warning the transfer would undermine laws supposed to separate the regulatory tasks of the 2 companies after the 2008 monetary disaster:

“In its knowledge, Congress within the Dodd-Frank Act separated chartering and prudential supervision from client safety enforcement, assigning chartering authority to the OCC and particular client safety enforcement authority to the CFPB.”

Brooks argued the prevailing dynamic “needs to be preserved” to make sure that neither regulators tasks overlap, noting “the extra protections applied following the final monetary disaster […] separated these tasks so neither can be compromised in service to the opposite.”

“That dynamic needs to be preserved in order that the CFPB continues to implement compliance with enumerated monetary client safety legal guidelines for the monetary firms designated by the Dodd-Frank Act, whereas on the identical time avoiding the creation of a prudential supervision hole that would result in critical security and soundness dangers.”

On Jan 4, the OCC printed steerage informing nationwide banks they’ll use public blockchains and greenback stablecoins for settlement, run nodes and act as validators for blockchain networks.