June 25, 2020
Authored by: Benjamin Saul and Samantha Goldberg-Seder
The Office of the Comptroller of the Currency’s (“OCC”) attention to modernizing regulation to better accommodate innovative products and industries is continuing full steam ahead since our recent post about a potential payments charter. In the weeks since we posted that article, Brian Brooks has become the acting Comptroller of the Currency, so it should come as no surprise that his goals are garnering some attention.
On Thursday, June 6, the OCC issued a notice of proposed rulemaking seeking public comment to update its rules for national bank and federal savings association activities and operations and an advance notice of proposed rulemaking seeking comment on rules on national banks’ and federal savings associations’ (banks) digital activities. These releases confirm that the agency is “reviewing its regulations on bank digital activities to ensure that its regulations continue to evolve with developments in the industry.”
As part of a substantial modification of the regulatory system, the OCC seeks comment on additional flexibility for banks with respect to permissible derivatives activities, tax equity finance transactions, corporate governance, anti-takeover provisions, capital stock issuances and repurchases, and participation in financial literacy programs.
In addition, the OCC seeks comment on a significant number of banking issues related to digital technology and innovation. The OCC asks whether current legal standards are sufficient flexible, whether they create undue hurdles, and whether there are other areas they should cover. Their requests for comments also touch on current questions, namely whether the pandemic has brought any concerns to light and what issues are unique to smaller institutions – which performed well with the rollout of the SBA’s Paycheck Protection Program, but may encounter hard times to come.
The OCC also asks about a broad range of emerging technologies that may prove beneficial for fintech companies. Questions focus on the following topics:
- Cryptocurrency. Specifically, what activities financial institutions and/or customers are engaged in and what barriers and obstacles exist in the banking system.
- Distributed Ledger Technology. How distributed ledgers are used or could be used.
- Artificial Intelligence/Machine Learning. How artificial intelligence and machine learning are currently used or could be used.
- Payments. What technologies and processes the OCC should be aware of and potential implications of such technologies and processes for the banking industry.
- Regtech. What new and innovative tools financial institutions use to comply with regulations and supervisory expectations.
Though significant change is likely far in the future, we enthusiastically welcome the OCC’s openness to new technologies and smarter regulations. Have any great suggestions you would like to share with the OCC? Reach out – we’re available to help you submit an official comment.