In July 2018, the Office of the Comptroller of the Currency announced it would begin accepting national bank charter applications from nondepository FinTech companies - a move that offered some long-sought-after regulatory clarity for companies operating in the space.
Yet nearly two months later, on September 14, Maria Vullo, Superintendent of New York's Department of Financial Services, filed a lawsuit against the OCC claiming its FinTech charter decision is "lawless, ill-conceived, and destabilizing of financial markets" and that it "puts New York financial consumers—and often the most vulnerable ones—at great risk of exploitation by federally-chartered entities."
Jeffrey Alberts, co-leader of Pryor Cashman's FinTech and Financial Institutions Groups, spoke with the New York Law Journal about DFS' lawsuit and what it means for companies who'd hoped to avail themselves of the new charters.
"A lot of FinTech companies are frustrated about the fact that they're currently subject to regulation by dozens of different state regulators and they are excited about the possibility that with the OCC FinTech charter there would be one regulator, and they would be able to deal with just that one regulator and just that one set of regulations," Alberts said.
"Now that the DFS has sued the OCC, I think companies are reluctant to invest resources into getting that charter because they won't know what the status of this pre-emption is. In essence, until the solution is resolved, they would be subject to regulation both by the OCC and by the states, and wouldn't know who ultimately was going to win."
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