The OCC has just taken another step toward a national fintech charter

March 16, 2017 - Fintech
The OCC has just taken another step toward a national fintech charter


Today it released a draft of the licensing manual supplement that will be used by fintech companies digital currency and blockchain companies among them to understand and engage in the process of becoming a chartered special purpose national bank (often called a Fintech Charter).

The draft manual echos and clarifies previous statements from the OCC specifying that they have legal authority to charter a company that merely provides access to a payment system (even if it doesn’t take deposits or make loans). The draft manual reads:

a special purpose national bank that conducts activities other than fiduciary activities must conduct at least one of the following three core banking activities: taking deposits, paying checks, or lending money.

And then, as we’ve asked for in previous letters, it goes on to elaborate on what paying checks means in the modern world:

issuing debit cards or engaging in other means of facilitating payments electronically may be considered the modern equivalent of paying checks.

The draft manual also delves into a topic we focused on in our most recent comment letter: under existing interpretation and law is there a broad category of bank-permissible activities which could be used to describe the range of activities in which digital currency companies engage? The OCC helpfully points a perspective applicant in the right direction through a succession of footnote references to past interpretations (the same past laws and interpretations we described in our most recent comment). These include:

buying and selling exchange, coin, and bullion [12 USC 24]

which is one possible route for appraising the purchase or sale of digital currency to customers as a bank-permissible activity. The manual also describes:

establishing and operating a messenger service (12 CFR 7.1012), acting as a finder (12 CFR 7.1002)

which is a pretty good description of running a full node or a lightning node. It also cites:

acting as a finder (12 CFR 7.1002),

which is what a digital currency exchange is doing when it connects buyers and sellers on their platform. It also cites:

producing and selling software that performs a service the bank could perform directly (12 CFR 7.5006).

which is a great match for hosted wallet design and services, e.g. a high tech version of safekeeping activities banks have provided for centuries in the form of safe deposit boxes and other custodial services.

We’re thrilled that the OCC is making this process as transparent as possible, and even doing a bit of hand-holding to help innovators (who are better versed in bits than bonds) understand and navigate the chartering process.

If you’d like to read more about how a charter may be relevant to digital currency companies take a look at our most recent letter to the OCC. And look out for our next comment! Even though licensing manuals are not usually subject to a public comment process, the OCC has asked for continued feedback from the community.