Financial technology, Bitcoin, and blockchain startups may soon face regulatory oversight from the Office of the Comptroller of the Currency (OCC). The organization is creating an office focused on the emerging fintech economy and implementing “responsible innovation.”
U.S. Office of the Comptroller of the Currency Creates Fintech Innovation Working Group
The mixture of finance and technology has U.S. regulators in a frenzy, with concepts like Bitcoin disintermediating the traditional system. The speed of financial technology innovation has been rapid, with regulators unable to keep the pace. Now a new OCC subsidiary will research and work with federal regulators concerning the fintech environment.
The new office will have staff in Washington, San Francisco, and New York. These areas are America’s financial and legislative focal points. Moreover, the office says it is dedicated to responsibility in this new economy and will “implement a formal framework to improve the agency’s ability” to work with the federal banking system.
“The OCC supports responsible innovation that enhances the safety and soundness of the federal banking system, treats customers fairly, and promotes financial inclusion,” said Comptroller of the Currency’s Thomas J. Curry.
“By establishing an Office of Innovation, we are ensuring that institutions with federal charters have a regulatory framework that is receptive to responsible innovation and the supervision that supports it.”
Regulators Can’t Keep up With Fintech
Potentially-affected businesses the new office will promote include most fintech companies in digital currencies and banking. According to Bloomberg, $13.8 billion was injected into fintech operations last year including mobile, blockchain, cryptocurrency, and lending applications. However regulatory policy targeting legacy financial incumbents has not reached fintech startups. This is because developers are creating these technologies so fast.
OCC’s “Office of Innovation” will have a Chief Innovation Officer working with staff from the three established cities. The office will be a “central point of contact and clearinghouse for requests and information related to innovation,” said the OCC.
Other aspects included in the office’s agenda will be outreach, conducting awareness, and promoting interagency collaboration. One vague aspect of the OCC announcement is how it plans to create charters with established fintech firms. Charters could enforce regulatory policy to companies involved in the fintech economy.
OCC’s Regulatory Fintech Initiative Will Begin Next Year
This isn’t the first time the OCC has addressed financial technology. Back in April, at the American Banker Retail Banking Conference, Thomas J. Curry called for cryptocurrency and fintech regulations. The OCC expects its office to begin operating by Q1 of 2017 and will bolster the regulatory framework. The agency also appointed Beth Knickerbocker as interim CIO.
For now, the organization said there is no determination regarding chartering of these firms. However later this year the OCC will publish a paper on the topic and hopes to get some feedback.
The OCC Office of Innovation’s creation is a reminder that regulators are ramping up efforts to get a grasp on these emerging technologies. However, many people believe regulation continues to stifle the free market and stunts innovation with ridiculous rules, fees, and licensure.
An excellent example of regulation hurting fintech businesses is New York’s BitLicense. This has caused many companies to leave the region. Of course, bureaucrats and groups like the OCC fundamentally believe they are “doing the world good” by creating these regulatory frameworks.
What do you think about the creation of the U.S. Office of Innovation? Let us know in the comments below.
Images via Shutterstock, Pixabay, and Politico.
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