Brian Brooks, acting head of the US Currency Monitor and former legal director of Coinbase, warned that the Consumer Financial Protection Bureau has been given the authority to issue “fintech charters.”
Earlier this week, the CFPB Consumer Law Group released a report containing 102 policy recommendations aimed at “improving and strengthening” financial rules, including a proposal for Congress to authorize the CFPB for non-federal custodian institutions – financial companies that do not accept deposits from clients … and other financial services.
Under the leadership of Brian Brooks, the OCC developed a Fintech charter for special purposes in 2020, paving the way for some cryptocurrency companies to apply for recognition as a national bank. Paxos and BitPay applied for lease approval during the new system in December.
If the CFPB’s right to hire fintech companies is expanded, it could diminish the legal clarity about which non-custodian cryptocurrency firms should apply for, and lead to overlapping mandates of the two agencies.
In a January 6 statement, the acting head of the Foreign Trade Commission rejected the CFPB’s request for the right to hire fintech companies, warning that the move would undermine legislation aimed at separating the regulatory functions of the two agencies following the 2008 financial crisis:
“In keeping with its wisdom, Congress severed the Dodd-Frank Charter, which provided and enforced oversight of consumer protection requirements, and granted FCC lease powers and special consumer protection powers to the CFPB.
Brooks argued that the current momentum “needs to be maintained” to ensure that regulatory responsibilities do not overlap, noting that “the additional protections implemented after the recent financial crisis […] shared these responsibilities, so that none of them in service the other is compromised. ”
“This momentum needs to be sustained for the CFPB to continue to enforce several financial consumer protection laws for financial institutions outlined in the Dodd-Frank Act, while avoiding creating a prudent regulatory gap that could lead to safety and health risks.”
On January 4, the OCC published a guide to inform national banks about the potential of using public blockchains and stable dollar coins for settlements, contract transactions, and acting as auditors of the blockchain network.