FinTech Law TL;DR (May 21)
OCC pauses CRA + EU to ban big $ trxns + crypto grab bag
Hey all 👋
I’ll be in the Boulder / Denver area the first two weeks of June. If any of y’all want to grab coffee, give a holler.
OCC to Reconsider CRA Regs
The OCC announced it is reconsidering several Community Reinvestment Act rules issued in 2020.
Background:
The CRA says banks must provide credit access to their communities, including low- and middle-income (LMI) folks.
Banks get “CRA credits” based on how well they meet LMI credit needs.
Regulators look at those credits when deciding whether to approve branch expansions, mergers, and other bank initiatives.
The current CRA rules have long been criticized because (1) CRA standards are opaque and qualitative, (2) CRA credits almost never practically matter and (3) the CRA was written when banks had those anachronisms called “branches,” so it doesn’t address digital banking well.
The rules affected by this week’s announcements started trying to sort out those above problems; e.g., one of the rules set more quantitative CRA measurements.
This move to pause and reconsider Trump-era OCC rules makes sense; the Biden-era OCC wants a re-do with more consumer-focused rules.
I’m particularly interested to see how aggressive the OCC gets about applying the CRA to digital-first not-banks.
EU to Ban Large Cash Transactions
I usually focus on the US, but this caught my eye. The EU plans to ban cash payments above €10K as a way to combat money laundering.
Apparently, EU citizens don’t want to go totally cashless, but you have to imagine the move towards low-touch transactions during COVID enabled this AML move.
See also, Sweden going 100% cashless by 2023.
Crypto Grab Bag
Lots of movement in crypto this week…
Biden’s new tax plan would require any transfers of at least $10K of crypto to be reported to the IRS. Because, y’know, tax evasion. For AML/CFT purposes, businesses already have to report cash transactions of >$10K.
The FDIC requested info on how FDIC-insured banks are thinking about crypto and what they’d like to do with it. It seems the FDIC is mainly in info-gathering mode.
Michael Hsu (the acting head of the OCC) said the OCC is reviewing all crypto guidance it put out under Brian Brooks. Brooks issued a lot of crypto-friendly rules. This review will include the OCC’s rule from last January that opened the door for crypto custodians to get OCC trust charters.
Hsu also said the OCC, FDIC, and Fed have discussed an interagency “sprint team” focused on crypto. See also, a pending bill to get the SEC and CFTC to work together on crypto.
CA’s financial regulator recently said Bitcoin ATMs don’t trigger CA’s money transmitter laws.
Chinese regulators re-iterated and expanded their previous bans, and pledged to crack down on crypto.
Elsewhere…
Whoops...BlockFi accidentally sent 700 Bitcoins (~$25M USD at the time of writing) as a customer promo instead of stablecoins. Finder’s keepers?
CA’s financial regulator hired Christina Tetreault to lead the state’s Office of Financial Technology and Innovation, which will host office hours and seek input from FinTech operators.
The NY Fed released a study on banking specialization, showing banks tend to lend with industry specializations. The study shows that loans within a bank’s specialization tend to offer borrower’s better terms and perform better. Good evidence for FinTechs like Daylight, Cheese, and Purple that are focusing on a niche.
NY enacted a law protecting COVID stimulus payments from debt collection.
Privacy.com rebranded its card-issuing platform as Lithic and raised a Series B led by Bessemer (they get a special shoutout for all my questions @regulatorynerd puts up with).
Rohit Mittal released a great framework for building a credit startup.
The OCC published its semi-annual risk report. Two highlights: there’s credit risk as govt stimulus programs run out, and risk from banks seeking new, riskier yields as a result of low interest rates.
Sui Generis
QAnon’s lawyer had some nice things to say about the Jan. 6 capitol rioters. Nice enough to probably get him kicked off the case?
Not related to law or FinTech, but something I care a lot about:
The National Park Service recently released new guidance for park managers to help them confront climate change in U.S. National Parks.
Rangers are shifting from a mindset of “preserve the beauty” to “try resisting the change for a while, accept it, then save what you can.”
Go donate to the National Park Service (you get a tax write off!)
About
Hi. I’m Reggie. I’m a lawyer at BlueVine. Come say hi.
Any views expressed are my own (well, sort of? I mean, they’re based on laws and regulations, so they’re not really “mine”?). Nothing here is legal or financial advice.
Here are the foundational FinTech laws and regs if you want a closer look at anything.