The U.S. Office of the Comptroller of the Currency (OCC) which oversees banking activity in the U.S. published a paper in March of this year providing their perspective on the state of innovation of financial services industry, with the intent to outline its approach to developing future framework in financial innovation (fintech).
The paper proposed an approach on how banking institutions should use new technology, for example the blockchain, which in the paper they refer to as a distributed ledger technology.
The OCC said that distributed ledger technology “has the potential to transform how transactions are processed and settled”. The OCC requested feedback on the development of this new framework to support responsible innovation in the federal banking system.
Coinbase responds to the OCC
Establish policies that encourage partnerships among banks and fintech firms, including partnerships that may result in fintech firms offering separate products to shared customers with the bank.
Delineate circumstances in which adoption of fintech would be viewed as irresponsible, and articulate the perceived risks associated with particular technologies.
To the greatest extent possible, identify categories of fintech products or fintech / bank integrations which, on the whole, may be eligible for more rapid development.
Facilitate continued interaction among the OCC, banks, and fintech firms and facilitate frank and candid discussion around obstacles to adoption of fintech.
Consider whether and under what circumstances fintech firms could gain more direct access to the U.S. payments systems.
Consider whether to encourage the more systematic opening of bank APIs.
Circle responds to the OCC
Bitcoin startup Circle also responded to the OCC, saying they fully support the OCC’s efforts to develop a framework that addresses innovation. Circle also said that the OCC should consider the UK model for encouraging innovation in the U.S. Circle wrote,
The OCC could learn and benefit from the framework created by The Financial Conduct Authority’s (“FCA”) Innovation Hub which is part of Project Innovate in the United Kingdom. The Innovation Hub allows for a dedicated contact for institutions to guide them through the licensing process and beyond. It also studies gaps and the need for potential future regulation for fintech companies. Similar innovation groups have been launched in Singapore and Australia . In addition to encouraging innovation within its borders, the UK regulators have focused on international coordination efforts to further foster innovation and assist UK fintech companies.
Among other suggestions Circle said that the OCC should create a national charter for fintech companies. Since regulation happens on the state level, it becomes an onerous and expensive process state-to-state.
Overall the comments to the OCC were positive. Another bitcoin company to comment was Jerry Brito from Coin Center.