Fintech Firms Get Chance to Grow Up

Fintech Firms Get Chance to Grow Up
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Over the past decade, there’s been an explosion of Silicon Valley start-ups and technology companies that act like banks. Now, a key U.S. regulator is inviting them to be regulated more like traditional lenders, according to Bloomberg. The Office of the Comptroller of the Currency said it plans to start accepting applications from fintech companies for a special charter that would formally subject them to federal banking rules.

Companies that become chartered will get the benefits of being an established company in the eyes of the government. But they will also face anti-money laundering controls and consumer protections that apply to other lenders, the OCC said. “Preferences and needs of consumers, communities, and business are changing," Comptroller of the Currency Thomas Curry said in prepared remarks at Georgetown University Law Center. “Providing a national charter to those responsible innovators who seek one and meet our high standards can help promote economic growth across the country and recognizes that technology-based products and services are the future of banking and the economy.

A special charter marks one of the most significant steps by U.S. banking regulators to try to bring technology firms more under the government’s watch. With the development of systems such as blockchain, mobile payments systems and the new approaches to lending taken by companies including LendingClub and On Deck Capital regulators have scrambled to keep pace. Many of the innovations have popped up without the government restrictions that established financial firms are subjected to. While the charter won’t be required for firms to keep lending, the government is trying to provide a framework that will entice companies to sign up.