OCC Moves Ahead with Long-Planned and Much-Discussed Fintech Charter

It’s good news for fintechs in lending and payments that want a federal banking license, the Office of Comptroller of the Currency (OCC) has started accepting applications starting today. The fintech charter does not require deposit insurance from the FDIC, per a recommendation from the Treasury Department.

The Treasury Department, which today endorsed the idea of a special national bank charter in its report on Nonbank Financials, Fintech, and Innovation report, “to the extent applicants would not take deposits.” In other words, startups holding deposits are not candidates for the charter.

Today’s report read:

The OCC’s special purpose national bank charter, proposed in 2016, presents an attractive option for firms interested in the benefits of having a single primary federal regulator. This type of banking charter may provide a more efficient, and at least a more standardized, regulatory regime, than the current state-based regime in which they operate.

Comptroller of the Currency Joseph M. Otting said in a statement emailed to media:

Providing a path for fintech companies to become national banks can make the federal banking system stronger by promoting economic growth and opportunity, modernization and innovation, and competition. It also provides consumers greater choice, can promote financial inclusion, and creates a more level playing ground for financial services competition.

The application approval process is live as of today on the OCC’s website. According to a statement from the OCC, these applications are subject to a 30-day comment period, after which the OCC will make a decision within 120 days.

This charter was formed back in 2016 by the then-Comptroller Thomas Curry. Over the past few years, the initiative never came to fruition. On numerous occasions, it was stalled either due to logistical reasons and regulatory hurdles, particularly from state bodies who claimed the OCC did not have authority in such cases.

The US Treasury report, acknowledging this possible tension between state regulators and the OCC, cautioned the organization to “move forward with thoughtful consideration of applications for special purpose national bank charters.”

Bank Innovation has reached out to the OCC for comment and is awaiting a response.

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