Rep. Maxine Waters (D-California), who is chairwoman of the House Financial Services Committee, raised concerns over banking charters for fintech and crypto companies at a subcommittee hearing on the topic this week.

Why should we care?
Under the Trump administration, the Office of the Comptroller of the Currency developed a new banking charter that allows fintech companies to offer lending and payment products without taking deposits or securing FDIC insurance. Given his background as former legal officer of Coinbase and his ties to the industry, Brian Brooks, former acting comptroller of the currency energetically supported this move. “Innovative technology emerged allowing fintech companies to provide consumers with better alternatives to traditional banks,” he told the committee. Waters, however, wasn’t buying it, suggesting the charters would allow fintechs to avoid regulatory oversight. “The [Office of the Comptroller of the Currency] has overstepped its authority, pretending that laws signed by Abraham Lincoln were intended to create charters for fintech or cryptocurrency,” Waters said. Other Democrats used the opportunity to express concerns about cryptocurrencies. Rep. Brad Sherman, (D-California) suggested that bitcoin was providing opportunities for nefarious actors – including terrorists and criminals – to operate outside the purview of laws and regulations. Republicans, including Rep. Patrick McHenry (R-North Carolina) expressed more openness to the concept of fintech charters, saying consumer and business preferences are evolving, and that the private sector should step in to meet their needs. “We should be encouraging our regulators to seek regulatory requirements that fit these advancements, not hinder them,” he said.