How an Updated Payments Charter Could Aid Digital Assets
New acting comptroller of the Office of the Comptroller of the Currency (OCC) Brian Brooks announced that this coming fall season, banks can expect to see what the OCC is calling the new Payments Charter 1.0, which could potentially provide service in the interest of both fintech and cryptocurrencies.
A Payments Charter Is What’s Needed to Help Banks and Crypto Alike
As it stands, the way the U.S. government works is that banks are required to earn money-transmitting certificates dependent on their own states’ rules. Thus, California will have different rules from Arizona, while that state’s banks will be different from New York, and that’s state’s rules will be the opposite of Montana’s. The process can get very lengthy and complicated, and the OCC wants to make things considerably simpler in the coming months.
That’s where the new Payments Charter 1.0 comes in. This would be a charter introduced at the federal level and would enforce the same rules for all banks regardless of what state they were situated in. They follow the federal regulations set forth in the charter, and thus, they are permitted to serve as money-transfer businesses, which means that it is within their rights to provide cryptocurrencies to customers and offer crypto-related services.
Brooks says that this will largely work for customers who are seeking ways to have their portfolios and assets bundled up into unique packages. He explains:
It’s not clear that customers always want their financial services in bundled form. One of the reasons for a rise in fintech is an unbundling that is happening.
He has also stated that the Fed has expressed concern over potential risks involved with the new charter, and that it’s going to sit back and watch for a while. Brooks is taking it upon himself to convince the Fed that this is the right thing to do, and that things depend on how “persuasive” he can be.
Others Pushing for Change
He’s not the only one pushing the introduction of the new charter. Amy Luo – senior counsel of global business development and stable coins at Coinbase, one of the leading cryptocurrency exchanges in the United States – expressed her comments regarding the new payment charter, saying that it can “democratize” the financial system as we know it. She explained:
A federal payments charter has the potential to democratize the playing field, promote innovation, and make financial services accessible to those that need them most in a way that still ensures there is strict regulatory oversight and protection for consumers… Anyone that has had to deal with state-by-state money transmitter licensing will know how difficult it is to navigate the patchwork of requirements, especially with regards to new technologies such as virtual currencies. Often, only the largest players have access to the resources required to undergo this intensive analytical exercise, and even then, there is no certainty that they have gotten it right.