Treasury Report Recommends More Consistent Regulation to Spur Innovation

August 6, 2018

On July 31st, the Treasury Department (“Treasury”) released its fourth and final report in response to President Trump’s Executive Order 13772.

The report, entitled “A Financial System That Creates Economic Opportunities: Nonbank Financials, Fintech, and Innovation” (the “Report”), only briefly addresses distributed ledger technologies, blockchain and digital assets, but takes broad aim at perceived regulatory challenges to innovation.  The Report argues for a significant rethinking of state and federal regulation across data access, licensing, payments and many other issues.

The recommendation that initially attracted the most media attention was Treasury’s endorsement of the special purpose national bank charters (“FinTech Charters”) proposed by the Office of the Comptroller of the Currency (“OCC”).  Hours later, the OCC announced that it will accept applications for FinTech Charters from financial technology (“FinTech”) companies that offer bank products and services and meet the OCC’s chartering requirements (the “FinTech Charter Policy Statement”) and new Licensing Manual (the “Comptroller’s Manual Supplement” or the “Supplement”).  We will publish a follow-up Alert addressing the OCC’s FinTech Charter in greater detail in the coming days.

The Report, however, has a much broader focus.  While Treasury makes recommendations across the spectrum of issues relevant to FinTech innovations, such as the regulation of products, services, marketplace lending and access to and use of consumer data, the report suggests far-reaching changes to the relationships between state and federal regulators and to regulatory frameworks for banks and other enterprises.  Treasury notes that it incorporated “insights from the engagement process for the previous three reports” into this Report.  As a result, the recommendations reflect a cumulative scope principally unified by the stated intent to spur innovation.