The new chief operating officer at the U.S. Office of the Comptroller of the Currency (OCC) has suggested that a new 2.0 version of the special purpose national bank charter explored a few years ago be revisited. This time, instead of providing a charter for lending, the OCC could potentially offer a ‘payments charter’ that would be of interest to both traditional payment companies such as Stripe and PayPal as well as crypto companies.
The benefit of such a proposition for crypto exchanges would be to avoid the state-by-state regulation of crypto as national banks do by receiving a federal charter. The charter based on companies who would engage in lending was challenged by the New York Department of Financial Services (NYDFS
) in federal court last year, where NYDFS won and essentially nullified the Fintech charter concept entirely.
However, at the Consensus Distributed conference yesterday in his new role, Brian Brooks, who is the new Chief Operating Officer at the OCC, put forward the concept of exploring a payments charter. Brooks was previously the Chief Legal Officer of Coinbase and so is familiar with crypto and understands first-hand the difficulties of needing to go state-by-state for money transmitter licenses. Brooks commented, ‘Crypto has changed my view that technologies exist that can decentralize and reduce single points of failure.’
Can Decentralization Reduce Financial Crises?
Brooks also noted how lesson from the financial crisis relate to how ‘there are a small number of institutions in our society that are really so big and so connected with so many people’s lives that in the words of 2008, they were thought to be ‘too big to fail.’’ His response to this concept is for the industry, the idea of how decentralization provides a cure to the issue of too few companies in charge, similarly to how Big Tech is considered to have taken over the Internet. Brooks stated, ‘Decentralization is a solution to too big to fail when you distribute across a network of small actors, the network is robust even when a number of small actors go down.’
While Brooks sees crypto as a new and similar form of banking, he mentions that we still need a strong banking system, as evidenced by how COVID-19 relief from the federal government was delivered by banks. It will be interesting to see how Brooks, who formerly worked with Treasury Secretary Mnuchin in a private sector role at One West Financial, can perhaps help the U.S. Government to support crypto at a national level in the U.S.. In the past year as Facebook’s Libra was introduced, Secretary Mnuchin has been very dismissive of crypto generally and specifically around Bitcoin.
Credit: Source link