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At the hearing on Tuesday, the US Fintech Task Force listened to debates about new rules that may expand bank supervision to accommodate more technology companies that provide financial services.
The US Financial Technology Task Force is a sub-department of the Financial Services Commission responsible for the commission’s review of emerging technologies. As the chair of the working group Stephen Lynch (D-MA) pointed out: “The banking industry is becoming more and more decentralized. Consumers face more choices than ever before.”
No bank account in the bank?
At the hearing, the two sides discussed repeatedly about relaxing the banking regulations to appropriately expand financial channels, such as allowing loans to more companies. Lynch pointed out: “One of the big prospects of fintech is that it can help us provide funds to people who don’t have a bank account. The evidence is mixed.”
In response to a query from the representative of Rashida Tlaib (D-MI) about whether fintech companies are realizing this prospect, Raúl Carrillo of the Need for Progress Education Fund said:
“I don’t see any conclusive evidence that these private fintech companies are saving the situation. In fact, I am worried that these transactions will be conducted without proper protection.”
Carrillo also warned large technology companies not to enter the financial industry, which is consistent with the concerns of Committee Chairman Maxine Waters (D-CA). Carrillo said: “We are particularly concerned about the recent entry of major technology platforms into the payment field, the most notable of which is the proposed Facebook Libra project.”
In contrast, Lendistry’s founder and CEO, Everett K. Sands, is optimistic about high-quality performers. Lendistry is both a financial technology company and a community development financial institution (CDFI). He called on Congress to give more benefits to high-quality performers, while giving inferior performers “sticks”:
“The current regulations of the SBA (Small Business Administration) and other agencies have been regarded as a form of risk management. While we respect them, we need to conduct some kind of review so that high-quality performers will not be restrained.”
More optimistic about cryptocurrency as a payment method
Part of the hearing was a proposal to amend the payment charter of the Office of the Comptroller of Currency (OCC), the U.S. Federal Banking Regulatory Agency. The Office of the Comptroller of the Currency has been very active in expanding the participation of fintech and cryptocurrencies in traditional finance.
This hearing was called “Licensing to Banks: Reviewing the legal framework for who can lend and process payments in the era of financial technology.” Many people pointed out the special role of cryptocurrency in payment development. Sands said:
“We also believe that both lending and payment require major regulatory adjustments. We recommend that OCC focus on payment first, because new technologies such as Bitcoin, blockchain and cryptocurrency are becoming more and more popular among entrants.”
The representative of French Hill (R-AK) was even more direct, ending his speech with the statement “We need a cryptocurrency payment channel as part of our current payment system reform.”
As the head of OCC agency Brian Brooks previously pointed out, the authority of the OCC in payments is earlier than its authority in the banks, but the promotion of the federal payment regulations is facing resistance.