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Entry of the 800lb gorilla: the US is waking up to fintech

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By Johannes Eulen

While Bermudians were distracted by Cup Match, the US’s Office of the Comptroller of the Currency (OCC)- which regulates so-called “national banks” through Federal charters- published guidance on how it would now accept applications from fintech companies seeking to conduct banking business across the US, other than the taking of deposits.

Bermuda’s government may have thought that it got there first with its own recently passed fintech banking legislation: and it did. However, it was always unlikely that the world’s largest economy, with its well-developed start-up culture and infrastructure, would allow others to control the direction of development of fintech banking services and regulation.

In addition, the US Treasury has also now endorsed the concept of “regulatory sandboxes”, as already promulgated by the BMA; so the question now arises as to how Bermuda will be able to maintain an “edge” in both areas.

Somewhat ironically, help may come from regulators at the state level in the US, jealous of their perquisites as the current primary source of regulation for non-depositary financial services companies: an OCC fintech bank charter would relieve its holder from the complexities of state-based licensing. And, of course, one can rely upon New York’s Department of Financial Services to ensure that its views are made known: “Toddlers play in sandboxes. Adults play by the rules”. So, prepare for the customary turf war between the states and the federal bureaucracy.

Fortunately, in the BMA, Bermuda has a capable and well-respected regulator, which is long accustomed to dancing with and around the larger and more self-important primates.

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