June 24, 2020

With Innovation as a Top Priority for Acting Comptroller, OCC Issues ANPR on Digital Banking

3 min

Acting Comptroller Brian Brooks took the reins of the Office of the Comptroller of the Currency (OCC) on May 29, 2020, and he quickly moved to put his stamp on the agency. His Statement on Becoming Acting Comptroller identifies four priorities, which include building on the OCC's foundation of innovation to help the banking system keep up with changes in the way consumers and businesses manage their finances. Less than a week later, on June 3, 2020, the OCC issued an Advance Notice of Proposed Rulemaking (ANPR) inviting public comments on digital banking activities. Comments to the ANPR are due on August 3, 2020.

The OCC wants banks to have a regulatory and supervisory framework that enables them to evolve with technology trends and developments while operating in a safe and sound manner and protecting customers. The ANPR is part of the OCC's review of its regulations for digital banking activities (Digital Banking Regulations) found in 12 CFR Part 7, Subpart E (national banks) and Part 155 (federal savings associations).

The OCC has three goals for the regulations that result from its review:

  1. Technology-neutral regulations that allow products and services to evolve regardless of the changes in the underlying technology;
  2. Regulations that facilitate consumer protection and privacy; and
  3. Principles-based regulations that enable effective management of evolving risks and reduce the potential for regulations to become quickly outdated.

Specifically, the OCC is seeking responses to 11 questions, several of which relate to the current digital banking framework. These include whether the Digital Banking Regulations should better reflect developments in the broader financial services industry and whether there are digital banking activities the regulations do not address that should be addressed. The ANPR also asks a series of questions seeking to better understand the scope of the digital banking market. These include questions related to cryptocurrency or cryptoasset activities, current and potential uses of distributed ledger technology, AI techniques (including machine learning), new payments technologies and processes, and the potential implications of these activities and technologies for the banking industry. The questions also cover regtech, innovation challenges unique to small banks, and issues that may have come to light as a result of the COVID-19 pandemic.

The ANPR is just one part of the OCC's continuing effort to modernize its regulatory framework to reflect the continually evolving delivery of financial products and services through technology and innovation. On June 2, 2020, the OCC issued a final rule codifying the "valid when made" doctrine and announced a forthcoming rulemaking on valid bank-fintech partnerships to address the "true lender" doctrine. While the ANPR specifically states that it does not seek comment on the OCC's authority to issue special purpose national bank charters, Acting Comptroller Brooks expects to defend the "authority to issue bank charters that support companies' ability to engage in the business of banking on a national scale."

We continue to monitor developments in this area. Anyone with questions or who would like to submit comments on the ANPR should contact the authors.