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The fintech industry may be facing a new level of regulatory uncertainty after a federal court upheld a lawsuit by New York regulators who sued to block the Office of the Comptroller of the Currency from granting special purpose bank charters to growing companies in the space.
The New York State Department of Financial Regulators, regulates approximately 230 state and international banks and regulates another 600 non-bank financial services companies, supervising a total of about $7 trillion assets, according to court filings by the department.
The OCC, which has been mulling a national regulatory effort since 2016, announced last summer that it would consider special purpose charters for fintechs, sparking an immediate backlash from New York and other state regulators who not only saw a threat to their own regulatory authority, but also perceived potential risks to consumers and traditional banks in their states.
DFS Secretary Linda Lacewell last week called the ruling a "resounding victory" for consumers and the regulated banking industry in New York and across the country.
"The court has recognized the expertise of DFS and other state banking regulators and the significant role we play in generating nonbank financial services, promoting innovative fintech products, helping to achieve a level playing field for regulated banking institutions, and most importantly, protecting consumers," she said in a statement issued after the ruling. "DFS, which was created in response to the financial crisis, will continue to lead and fill any and all voids that misguided federal policy decisions create."
"State financial regulators are pleased by the decision today made by U.S. District Court for the Southern District of New York ruling that the New York Department of Financial Services case against the OCC is ripe for consideration and should proceed, rejecting the OCC's claims to the contrary," John Ryan, president and CEO of the Conference of Bank State Supervisors said in a statement released after the ruling was announced last week.
Regarding similar litigation involving the Conference of Bank State Supervisors and the OCC, Ryan said in the statement, "[W]e continue to believe that the OCC has acted outside its congressional mandate in seeking to grant national bank charters to non bank entities."
He cited a statement by the court that "receiving deposits is an indispensable part of the business of banking."
Federal regulators had been working on a plan to offer special purpose charters that would allow fintechs to operate in a more uniform regulatory environment, rather than having to navigate through a patchwork of state regulations.
In some states, for example, usury laws ban not only high interest payday lenders, but also fintechs that provide loan advances against a weekly paycheck or, in other cases, peer-to-peer lending.
DFS officials saw the effort to create special charters as an attack on state regulatory authority that would put consumers at risk of operating in a quasi-regulated banking environment. This would weaken the level of protection and recourse against some of the past practices used to collect outstanding balances or charge hidden fees, DFS determined.
The OCC is now considering legal options, spokesman Bryan Hubbard told Mobile Payments Today via email. "We are reviewing the decision to determine next steps and continue to litigate the matter in a related case," he said.
The case is Maria T. Vullo vs. Office of Comptroller of the Currency and Joseph M. Otting, United States District Court Southern District of New York, Civil Action No. 18-cv-8377
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May 7, 2019
JCB International Co. and Viva Wallet announced a joint licensing agreement that allows JCB payment cards to be used at the POS and online at 108,000 merchants in 12 European countries, beginning with Belgium, Cyprus, France, Greece, Romania and the U.K., according to a press release.
Germany, Italy, the Netherlands, Poland, Portugal and Spain will be added soon to the list of accepting nations, the release said. The agreement covers JCB contactless and 3D Secure transactions in all countries.
The agreement will give JCB cardholders — including about 1 million Russian tourists — the ability to access thousands of merchants in the 12 accepting countries.
"Greece received 30 million visitors in 2017, making it one of the most visited countries in the world, so its imperative for JCB to have a presence here as we extend our wider reach into Europe to ensure our cardmembers enjoy a seamless payments journey when visiting European countries," Tsuyoshi Notani, managing director, JCB International Europe Ltd., said in the announcement.
Topics: Card Brands, In-App Payments, Mobile Apps, Mobile Payments, POS, Region: EMEA, Retail
Companies: JCB International Co. Ltd.
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May 7, 2019
Currency.com has announced the public launch of what it calls the world's first tokenized securities exchange, following a beta test in which more than 150,000 people traded tokenized securities with cryptocurrency.
According to a press release, the public launch makes 1,000 tokenized securities available to both private and institutional investors around the world. The exchange works by tracking the underlying price of equities, commodities and indices. For example, users could buy a token that tracks with the performance of Apple on the Nasdaq, reflecting the same economic costs and benefits of a share of the company, according to a release from Currency.com.
Currency.com has expanded trading for tokenized securities listed on the Hong Kong Stock Exchange — for example Tencent, China Mobile and HSBC.
The launch includes a new mobile app, which gives crypto traders a series of tools that the company says have been available previously only to traditional investors, including 50% margin closeouts and selling at a loss.
"The arrival of tokenized securities will completely change how investors can use their cryptocurrencies," Currency.com CEO Ian Gowansaid in the release. "Linking crypto to the price of stocks and shares provides a tangible way for holders of bitcoin and Ethereum to access traditional financial markets."
He said the company's beta launch proved that there is an appetite for this kind of exchange and that the full launch marks a "significant shift" in the direction of crypto as its becomes more regulated.
More than $26 million a month has been traded on the platform, the company said. Currency.com said it leverages the technology of Capital.com, its sister platform, which is regulated by the FCA and CySec.
The company is backed by VP Capital and Lamabel Ventures. CEO Gowan spent 15 years leading technology at IG, a trading platform that grew from $250 million to $3 billion.
Topics: Bitcoin, Mobile Payments, Online Purchasing, Region: EMEA, Regulatory Issues
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May 6, 2019
Brazilian financial giant Banco Bradesco S.A. has agreed to buy BAC Florida Bank from Managua, Nicaragua-based Grupo Pellas for $500 million.
According to a press release, Coral Gables-based BAC Florida provides private banking, wealth management and real estate financing to clients in 49 U.S. states through its digital banking arm.
The acquisition of BAC will enable Bradesco to expand its offering to high net worth individuals and expand its checking, credit card and real estate financing services. The bank said that it will also expand its corporate and institutional business through the acquisition.
"Expanding our product and service offerings through BAC Florida is the way of being the preferred wealth management bank for our clients, who have increasingly demanded more diversification and greater access to global solutions," Bradesco CEO Octavio de Lazari said in the release.
BAC Florida announced in April that it had joined Capital & Credit Risk Manager, a global fintech platform to enable trade finance and institutional banking for the buying and selling of trade assets.
Topics: Mobile Banking, Region: Americas
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May 6, 2019
Thunes, a Singapore-based cross-border payments firm for emerging markets, has raised $10 million in Series A funding led by GGV Capital, according to a press release.
The funding will be used to accelerate the company's business across Africa, Asia and Latin America.The firm rebranded in February from its formal name TransferTo Mobile Financial Services Ltd. to the trading name of Thunes.
The company, which currently has offices in London, Dubai and Miami, said it plans to open offices in San Francisco and Paris to enable closer access to customers and partners.
"We pride ourselves on the long-term success of the companies we invest in and we were attracted by Thunes because we are aligned with their mission and see a lot of growth potential with the business," GGV Capital Managing Partner Jenny Lee said in the release. "This is a great business with a fantastic growth record, and we look forward to their next chapter."
Thune completes more than 300,000 transactions per day and processes more than $3 billion in volume per annum, the release said. In March, the company announced a deal with Western Union to allow payouts to be sent directly to mobile wallets.
Topics: Mobile Apps, Mobile Payments, Money Transfer / P2P, Region: APAC
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