January 2017
A Potentially Promising Approach to Regulation of FinTech or Should the U.S. Adopt a Regulatory Sandbox?

The Office of the Comptroller of the Currency (“OCC”) recently published a proposal to bring emerging financial technology (“FinTech”) companies within the scope of the agency’s jurisdiction. The proposal is useful as part of a greater discussion of how to properly regulate FinTech companies in a way that will protect the public without stifling innovation.

The OCC proposal appears to echo the sentiments of some lawmakers that FinTech should be regulated like banks. Critics of this approach believe the OCC’s proposal to register FinTech companies as special purpose national banks will more than likely prove unduly burdensome for the majority of early stage FinTech companies. Others believe such an approach may prove a useful option for well-established FinTech companies that can afford the costs associated with the application process and on-going compliance with applicable rules and regulations. As Congress considers how to regulate FinTech, lawmakers should consider the free market approaches being employed in other jurisdictions that are actively supporting the development of FinTech, including Singapore and the United Kingdom.

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To learn more about our Financial Technology (FinTech) and Regulation practice, click here.