Author - Liz Bodey

1
California Enacts “Mini-CFPB” Law, Significantly Altering Financial Services Regulation in the State
2
CSBS Rolls Out Joint Examination Initiative for Nationwide Payments Firms
3
Remittance Companies in CFPB’s Crosshairs
4
The OCC Tells Cryptocurrency Holders to Take It to the Bank: National Banks and FSAs Can Now (Definitively) Provide Custodial Services for Cryptocurrency
5
It’s BA-ACK! OCC planning a new fintech charter: “Payments Charter 1.0”
6
IOT Group to set up blockchain centre in the Australian energy sphere
7
Wall Street banks face threat from Silicon Valley: McKinsey
8
“True Lender” litigation heats up: small business sues marketplace lender and partner bank, alleging conspiracy to evade usury laws
9
Meet us at Money20/20!
10
Marketplace lender seeking fair lending guidance receives CFPB’s first no-action letter

California Enacts “Mini-CFPB” Law, Significantly Altering Financial Services Regulation in the State

By: Jeremy McLaughlin & Mehreen Ahmed

On September 25, 2020, California Governor Newsom signed AB-1864 into law, which will significantly change the landscape of consumer financial service regulation in the state. The law renames the Department of Business Oversight as the Department of Financial Protection and Innovation (“DFPI”). Along with a new name, the DFPI also gains important enforcement powers as the agency will now have the power to enforce all California laws related to “persons offering or providing consumer financial products or services in the state.” The law allows DFPI to establish a “Financial and Technology Innovation Office.” A key aim of the law is to improve the state’s consumer protection capacity by increasing the number of investigators and attorneys to oversee financial institutions.

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CSBS Rolls Out Joint Examination Initiative for Nationwide Payments Firms

By Jeremy McLaughlin and Dan S. Cohen

On September 17, the Conference of State Bank Supervisors (CSBS) announced that at least 40 states will establish a joint examination process for “nationwide payments firms” for the 2021 examination cycle. Known as “MSB Networked Supervision,” the initiative will allow 78 licensed payments companies, including some cryptocurrency exchanges, to undergo one joint examination rather than separate examinations for each state in which they are licensed. The examinations will be conducted by a group of examiners from multiple states but led by one designated state’s regulator. To be eligible, companies must be licensed in at least 40 states. This initiative follows the “One Company, One Exam Pilot” that was completed earlier this year and is part of CSBS Vision 2020, an initiative to create “a networked system of nonbank licensing and supervision.”

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Remittance Companies in CFPB’s Crosshairs

By Jeremy McLaughlin and Judie Rinearson

The Consumer Financial Protection Bureau (CFPB) recently announced settlements with two remittance transfer providers for violations of the Electronic Funds Transfer Act (EFTA) and the Remittance Rule, part of the regulation that implements the EFTA—an area in which there isn’t typically much CFPB enforcement activity.

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The OCC Tells Cryptocurrency Holders to Take It to the Bank: National Banks and FSAs Can Now (Definitively) Provide Custodial Services for Cryptocurrency

By Judith Rinearson, Jeremy McLaughlin, and Daniel Cohen

On 22 July, the Office of the Comptroller of the Currency (OCC) issued an interpretive letter confirming that national banks and federal savings associations (collectively, banks) can offer custodial services for cryptoassets because “providing cryptocurrency custody services…is a modern form of traditional bank activities related to custody services.”

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It’s BA-ACK! OCC planning a new fintech charter: “Payments Charter 1.0”

By Judie Rinearson and Mehreen Ahmed

On June 25, 2020, Acting Comptroller Brian Brooks announced in an American Bankers Association’s podcast that the Office of the Comptroller of the Currency (the “OCC”) is planning to introduce “Payments Charter 1.0”, which would effectively be a “national version of a state money transmission license.”

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IOT Group to set up blockchain centre in the Australian energy sphere

By Cameron Abbott and Sarah Goegan

Technology company IOT Group announced this week that it has signed an Australian first energy and blockchain deal. In the agreement with Hunter Energy, IOT Blockchain will build a blockchain centre at the Redbank coal-fired power station in the Hunter Valley, two hours north of Sydney.

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Wall Street banks face threat from Silicon Valley: McKinsey

By Rick Giovannelli

Last week McKinsey published its 2017 Global Banking Annual Review, which is summarized in this Business Insider article. The headline on that article is the title of this post and is both accurate and an understatement of the risks of technological and relationship disruption facing banks. This was a major topic of conversation at last week’s Money 20/20 conference, of which K&L Gates was a sponsor and which drew more than 10,000 attendees.

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“True Lender” litigation heats up: small business sues marketplace lender and partner bank, alleging conspiracy to evade usury laws

By David D. Christensen and Jennifer Janeira Nagle

Over the last several years, a number of U.S. state and federal government enforcement actions have challenged the viability of the bank partnership model that many marketplace lenders have used to fund consumer and small business loans.  Specifically, regulators have argued that, in partnerships where the non-bank entity controls much of the funding process or the bank has little-to-no risk of loss, the non-bank entity is the “true lender.”

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Meet us at Money20/20!

K&L Gates is excited to be a part of Money20/20, the largest global event focused on payments and financial services innovation! Join us from October 22nd – 24th in Las Vegas, U.S.

We have several exciting events and programs taking place during the conference.

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Marketplace lender seeking fair lending guidance receives CFPB’s first no-action letter

By David D. Christensen, Jennifer Janeira Nagle and Brandon R. Dillman

The U.S. Consumer Financial Protection Bureau (CFPB) recently issued its first no-action letter, pursuant to a policy designed to encourage innovation in the fintech marketplace by creating a testing ground for new technologies. If received, a no-action letter simply indicates that the CFPB “has no present intention to recommend initiation of an enforcement or supervisory action” against the applicant with respect to the specific product and regulatory concerns at issue.

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