US Regulator to Shake Up Banking With Federal Charters for Payment Firms

Acting Comptroller of Currency (and former Coinbase exec) Brian Brooks is spearheading the move to let payment firms operate as banks across state lines.

AccessTimeIconSep 1, 2020 at 9:13 a.m. UTC
Updated Sep 14, 2021 at 9:50 a.m. UTC

The U.S. Office of the Comptroller of the Currency (OCC) is forging ahead with a long-in-the-works plan to offer national banking charters to payment firms that don't take deposits, but not everybody is happy.

  • According to a Tuesday report by Politico, Acting Comptroller of Currency Brian Brooks is spearheading the move that would empower payment firms to operate across state lines with a single set of consolidated rules.
  • The charter would simultaneously enable such firms to expand their financial service offerings and avoid having to apply for licencing in each state individually.
  • Brooks told Politico the OCC would be ready by Tuesday to begin processing applications for the charters, which could potentially include companies like Paypal and Coinbase.
  • Brooks is a former executive of the U.S. cryptocurrency exchange Coinbase, having served as chief legal officer from September 2018 until his departure to the OCC – a position he has held for three months.
  • “I can supervise the payments activities of JPMorgan, but I can’t supervise the payments activity of Square,” Brooks said in Politico's report, referring to Twitter founder Jack Dorsey's payments platform. “That seems really weird to me.”
  • A spokesperson from the OCC told CoinDesk all charter applications would be made public with a comment period, but said they were not yet aware of any specific applications from payment firms.
  • The role of the OCC is to regulate, supervise, and provide a charter for national banks and federal savings associations operating in the U.S.
  • Brooks said the OCC was "satisfied" it doesn't need a new regulation or statute to move ahead with its decision.
  • However, the news has sparked outrage among traditional banks, credit unions and elsewhere, per Politico's report.
  • "A few months into his service in an acting capacity, a bank regulator (and former cryptocurrency lawyer) pushes ahead with a legally dubious plan to give tech companies banking charters," tweeted Graham Steele, director of the Corporations and Society Initiative at Stanford Graduate School of Business.
  • The New York Department of Financial Services (NYDFS) has previously won the backing of a judge in blocking the OCC's plan for the "Fintech Charter" (first proposed in 2016) in the state.
  • Linda Lacewell, superintendent of the NYDFS, retweeted Steele's comment and pointed out that OCC's appeal of the ruling is still to take place.
  • U.S. states believe the OCC is stepping outside its remit in offering the new charter, according to Margaret Liu, deputy general counsel at the Conference of State Bank Supervisors.
  • Such issues haven't put off Brooks, who told Politico he saw the OCC's role more as a regulator of services than entities.


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