Brian Brooks, the acting head of the US office of the currency auditor and former chief legal officer of Coinbase, has warned that the Consumer Financial Protection Bureau will be granted the right to grant fintech charters.
Earlier this week, the CFPB Financial Law Task Force released a report containing 102 policy recommendations to “improve and strengthen” financial regulations, including a proposal that Congress authorize the CFPB to charter federal non-repository institutions – financial firms that do not Accept customer deposits and collect fees for other financial services.
Under the leadership of Brian Brooks, the OCC 2020 created the Charter for Special Payments for FinTech, which paved the way for certain crypto companies to apply for recognition as national banks. Paxos and BitPay applied for approval to charter under the new regime in December.
Should the CFPB expand the right to charter fintechs, this could reduce regulatory clarity about which agencies non-custodian crypto firms should apply to and create overlaps between the two agencies’ mandates.
In a January 6 statement, the incumbent OCC chief urged CFPB’s call for the right to charter fintechs, warning that this move would undermine legislation separating the two agencies’ regulatory responsibilities following the 2008 financial crisis should:
“In his wisdom, Congress separated charter and oversight from consumer protection enforcement in the Dodd-Frank Act by assigning the OCC the charter authority and the CFPB a specific authority to enforce consumer protection.”
Brooks argued that the existing momentum “should be maintained” to ensure that regulators’ responsibilities do not overlap, noting that “additional safeguards were put in place after the last financial crisis […] separated these responsibilities so that neither would be compromised in the service of the other. “
“This dynamic should be maintained so that the CFPB continues to enforce compliance with the enumerated laws for the protection of financial consumers for the financial companies designated by the Dodd-Frank Act, while avoiding the creation of a regulatory oversight loophole that can lead to serious security and safety problems Solidity Risks. “
On January 4, the OCC published guidelines informing national banks that they could use public blockchains and dollar stablecoins for settlement, run nodes and act as validators for blockchain networks.