12 June 2020

The U.S. Office of the Comptroller of the Currency Seeks Comment on Digital Innovation by Banks

The U.S. Office of the Comptroller of the Currency (OCC) has issued an Advance Notice of Proposed Rulemaking (ANPR)1 seeking input on how best to accommodate new technology and innovation in the business of banking, in connection with the OCC’s “comprehensive review” of its regulations at 12 C.F.R. part 7, subpart E (national banks), and part 155 (federal savings associations) (collectively, Rules). The ANPR offers industry participants an opportunity to shape future guidance and remove regulatory burdens to offering innovative new products, partnering with technology companies and enhancing operations through deployment of new technologies. The ANPR follows on the heels of regulators’ other efforts to address technological developments,2 with the caveat that the OCC is not seeking comment on authority to issue special purpose national bank charters.

After recounting some of the ways in which past guidance has addressed innovation (e.g., electronic payments, check capture and online banking), the OCC lists some of the new technologies, the implementation of which may be hindered by ambiguous, burdensome or inflexible rules, such as blockchain, artificial intelligence, biometrics, cloud computing and big data/analytics. The OCC also notes that national banks and federal savings associations (collectively, Banks) must compete with technology companies, while acknowledging the growing importance of mutually beneficial relationships between Banks and technology companies.

Generally, the OCC is requesting public input on the issue of whether the Rules “effectively take into account the ongoing evolution of the financial services industry, promote economic growth and opportunity and ensure that banks operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations.” In particular, the ANPR seeks comment on 10 groups of specific questions, including these:

i. Are the legal standards under the Rules inflexible or burdensome?

ii. Are there activities or services not currently addressed by the Rules but should be?

iii. In what activities would the commenter like to engage using technologies such as crypto/blockchain, artificial intelligence, new payments technologies or regtech?

The ANPR also focuses on critical new technologies such as distributed ledgers and artificial intelligence, asking, for example: “What types of activities related to cryptocurrencies or cryptoassets are financial services companies or bank customers engaged? To what extent does customer engagement in crypto-related activities impact banks and the banking industry? What are the barriers or obstacles, if any, to further adoption of crypto-related activities in the banking industry? Are there specific activities that should be addressed in regulatory guidance, including regulations?” The ANPR thus offers a unique opportunity for the industry to offer conceptual frameworks that will facilitate the adoption of these technologies across the banking industry without the need for time-consuming individualized applications or interpretive requests.

Any comments responding to the ANPR should bear in mind the three principles the OCC will follow when issuing new regulations: any new regulation should (1) be technology-neutral, (2) protect consumers and privacy, including by ensuring transparency and informed consent and (3) be principle-based. Comments also should address safety and soundness concerns associated with adoption of any new technologies.

Comments are due by August 3, 2020.


1 OCC, National Bank and Federal Savings Association Digital Activitieshttps://www.occ.gov/news-issuances/news-releases/2020/nr-occ-2020-76a.pdf. Comments are due by August 3, 2020.

2  See, for example, the Federal Deposit Insurance Corporation’s (FDIC) recent approvals of deposit insurance for Square and Nelnet, as discussed in another Sidley Update, FDIC Proposes Consolidated Supervision for Industrial Banks and Industrial Loan Companies, https://www.sidley.com/en/insights/newsupdates/2020/03/fdic-proposes-consolidated-supervision-for-industrial-banks-and-industrial-loan-companies (Mar. 31, 2020). See also Nikhilesh De, A key bank regulator in the U.S. may be open to allowing crypto companies to be licensed as financial institutions on a national, rather than state-by-state, levelhttps://www.coindesk.com/us-banking-regulator-suggests-federal-licensing-framework-for-crypto-firms (May 11, 2020) (describing statements made at CoinDesk’s Consensus: Distributed conference by Brian Brooks, then the Chief Operating Officer and now the acting Comptroller of the Currency, regarding the possibility of a bank charter for payments firms).

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