State banking regulators are nervous with the prospect of a federal fintech charter.
The federal approach that we've argued for would offer another path to regulatory clarity over the state-by-state licensing patchwork that exists today, which in turn would keep the United States competitive in FinTech. According to American Banker, some state bank supervisors do not agree.
That’s what American Banker is reporting a great piece quoting several state commissioners.
Bank supervisors in several states, which already oversee many examples of tech firms that provide financial services, say a federal charter could provide regulatory favor to still-unproven firms. They also worry that a national charter could weaken states’ own established authority to enforce consumer protection and licensing laws for tech companies in the financial sphere.
“We believe a federal one-size-fits-all framework for fintech is neither possible nor appropriate,” said Maria Vullo, New York State’s superintendent of financial services. […]
[S]tate regulators say a federal charter could be seen as validating business models on a national basis before they have proven they can withstand a crisis. They also raise concerns reminiscent of the federal preemption battles before the 2008 financial crisis, saying that a federal fintech charter could undermine state authority.
Coin Center asked the OCC for a lightweight, limited-purpose federal charter that would give digital currency firms an alternative to the state-by-state patchwork of overlapping and incongruous regulation. Notice I said alternative, because state licensing regimes would remain untouched and would always be an option for firms who chose that route.
A federal alternative is necessary because we no longer live in a world where firms offer services within just one or a handful of states. Internet-native fintech firms are by definition national–or even global–companies from the day they launch. If the authority and influence of states regulators is weakened under such an approach, it would only be because a 50-sizes-fits-all model is outmoded and unworkable in today’s enviroment. And if the U.S. doesn’t recognize that in its national policy, then it will lose to other countries that will.