October 26, 2018, Cov Financial Services

On October 25, 2018, the Conference of State Bank Supervisors (“CSBS”) filed a complaint in the United States District Court for the District of Columbia to stop the Office of the Comptroller of the Currency (“OCC”) from issuing special purpose national bank charters to fintech companies.  The lawsuit follows a similar suit against the OCC by...… Continue Reading

October 23, 2018, Cov Africa

In its final deliverable of the 2016–2018 term, the President’s Advisory Council on Doing Business in Africa (“Council”), issued a call to the U.S. Government and the American business community to make a deliberate effort towards nurturing greater U.S. commercial engagement with Africa. The final report was prepared by the private-sector members of the ...

October 19, 2018, Cov Financial Services

On October 17, 2018, Federal Reserve Board Governor Lael Brainard discussed the potential for financial innovation, and in particular, fintech products and services, to foster financial inclusion of underserved families and small businesses.  She has frequently addressed the importance of fintech, including cryptocurrencies, digital currencies and distributed ...

October 15, 2018, Cov Financial Services

On October 9, 2018, Grovetta Gardineer, the Office of the Comptroller of the Currency’s (“OCC’s”) senior deputy comptroller for compliance and community affairs, reaffirmed the OCC’s willingness to accept applications from fintech companies seeking a special purpose national bank charter and grant such applications if the application meets certain requirements. ...

October 5, 2018, Cov Financial Services

Last week, in a denial of a motion to dismiss, a Massachusetts district court ruled that virtual currencies are commodities under the Commodity Exchange Act (the “CEA”) and that therefore the CFTC has authority to prosecute fraud with respect to virtual currencies (see CFTC v. My Big Coin Pay, Inc., No. 18-10077-RWZ, 2018 WL 4621725...… Continue Reading

October 5, 2018, Law360

Randy Benjenk is quoted in Law360 regarding the uncertainty surrounding how many fintech firms will apply for special-purpose charters from the OCC. Mr. Benjenk says, “The question is whether the benefits of the charter will outweigh its burdens and the risks involved. I think you’ll see some fintechs conclude that, if they’re going to be regulated like a bank, ...

September 28, 2018

WASHINGTON—The National Law Journal has named Covington's Michael Nonaka to its inaugural list of "Cryptocurrency, Blockchain, & Fintech Trailblazers." This list profiles 50 lawyers who have "moved the needle" and are making great strides as finance and technology grow more entwined. Mr. Nonaka is co-chair of the firm’s Financial Services Group and advises ...

September 18, 2018, Cov Financial Services

Late last week, the Commodities Futures Trading Commission (CFTC) and the Monetary Authority of Singapore (MAS) announced a cooperation agreement on FinTech innovation.  The agreement is principally focused on information sharing on FinTech trends and developments and on each regulator’s FinTech sandboxes. The agreement could also, however, help FinTech ...

September 17, 2018, Cov Financial Services

On September 14, 2018, Superintendent of the New York State Department of Financial Services (“NYSDFS”) Maria T. Vullo filed a complaint in federal court against the U.S. Office of the Comptroller of the Currency (“OCC”) to block the OCC from issuing any special purpose national bank (“SPNB”) charters. The OCC announced last month, after much...… Continue Reading

September 5, 2018, Covington Alert

This client alert summarizes recent regulatory developments relating to fintech and discusses the implications of these developments.

August 16, 2018, Cov Financial Services

Arizona recently became the first state in the U.S. to create a “regulatory sandbox” program to facilitate the development of innovative financial products and services. Such products would either incorporate new or emerging technology or reimagine uses of existing technology. The program would exempt participants from certain state financial regulations, but ...

August 9, 2018, Cov Financial Services

The Bureau of Consumer Financial Protection announced earlier this week that it would join ten non-US financial regulators in an alliance, called the Global Financial Innovation Network (GFIN), to encourage the growth of fintech — and, potentially, create a “global sandbox” for financial innovation. The alliance was initially proposed, in February 2018, by the ...

August 7, 2018, Global Data Review

David Stein is quoted in Global Data Review regarding the U.S. Department of Treasury’s recommendation to introduce data protection regulations in the fintech industry. Mr. Stein suggested that such a law may have to be modeled on existing state-level legislation. He says, “There likely would be pressure to enhance existing federal data security laws that apply ...

August 2, 2018, Cov Financial Services

On July 31, 2018, the U.S. Department of the Treasury released a report identifying numerous recommendations intended to promote constructive activities by nonbank financial institutions, embrace financial technology (“fintech”), and encourage innovation. This is the fourth and final report issued by Treasury pursuant to Executive Order 13772, which established ...

August 2, 2018, Cov Financial Services

The Office of the Comptroller of the Currency (“OCC”) announced yesterday that a nondepository financial technology (“fintech”) company that engages in a core banking activity, such as paying checks or lending money, can now apply for a special purpose national bank (“SPNB”) charter. This announcement followed shortly after the release of the Treasury ...

August 1, 2018, Bloomberg Law

Michael Nonaka is quoted in Bloomberg Law on the fintech industry’s enthusiasm regarding the Treasury Department’s recommendation that Congress support the “valid when made” doctrine. Mr. Nonaka adds, “The [recommendation] shows that these issues are not going away and that the uncertainty created from a growing body of inconsistent court opinions isn't a stable ...

July 31, 2018, Law360

Michael Nonaka is quoted in Law360 regarding the Office of the Comptroller of the Currency accepting applications for special-purpose national bank charters from financial technology companies. Mr. Nonaka says it will be a while before any fintech firms operate as national banks, and they may ultimately decide the special purpose charter does not suit their ...

June 14, 2018, Cov Africa

As a startup founder, there are a number of issues vying for your attention on a daily basis, most of which are essential to the success of your business. Issues such as differentiating your product from competitors, developing stellar code, creating effective advertising, hiring the right staff and of course securing enough capital to fund...… Continue Reading

May 29, 2018, Bloomberg Law

Michael Nonaka is quoted in a Bloomberg Law article regarding guidance from the Office of the Comptroller of the Currency on small-dollar installment loans. The OCC was likely making an observation and statements of fact “rather than trying to write into the policy any discouragement of any bank-fintech partnership," says Nonaka. But the provision “does stick ...

April 25, 2018, Bloomberg Law

Michael Nonaka is quoted in a Bloomberg Law article regarding Rep. Patrick McHenry's statements at a recent conference stressing that a proposal to modify how banks comply with investment requirements in local communities must take account of new technologies such as mobile banking. According to Nonaka, the Treasury's report, which included recommendations for ...

April 12, 2018, The Recorder

The Recorder highlights the arrival of Suzanne Bell to Covington's Technology Transactions practice. Bell says she was attracted to the firm's strong regulatory practice given the increased intersection between the technology sector and government regulations. Bell adds that she is looking forward to using her experience in technology transactions to assist ...

April 3, 2018, Washington Lawyer

Michael Nonaka is quoted in a Washington Lawyer article regarding legal opportunities surrounding blockchain. While some lawyers might eventually become blockchain-specialty attorneys, blockchain is looking “more like a technology you have to know about if you’re in certain industries,” says Nonaka. For instance, highly regulated industries such as energy and ...

March 9, 2018, Cov Africa

When bitcoin entered the public’s eye for the first time in 2013, it was touted as one of the greatest inventions for the unbanked in Africa. The World Bank estimates that of the 2 billion people without access to the modern financial system, a third live in Sub-Saharan Africa. In recent months, bitcoin and cryptocurrency...… Continue Reading

March 2, 2018, Global Policy Watch

Bank-fintech partnerships are good for consumers and banks, as I recently explained in testimony to Congress during a hearing on the opportunities and challenges in the fintech marketplace. Consumers benefit because banks are able to use fintech to deliver safer, more transparent, lower cost and more convenient financial products and services to consumers over ...

January 31, 2018, Global Policy Watch

The European Commission (“EC”) has stated that the almost limitless list of potential use cases of distributed ledger technology (“DLT”) makes it both very promising and challenging, and has expressed its support for blockchain and DLT.[1]  However, many European institutions are still of the opinion that the technology is at its early stage of development,...… ...

August 3, 2017, Corporate Counsel Magazine

Michael Nonaka is quoted in a Corporate Counsel Magazine article regarding the Office of the Comptroller's argument that it cannot be sued over its plans for a special purpose national bank charter. According to Nonaka, "it's a fair assumption" the Conference of State Bank Supervisors would continue to pursue litigation against the OCC if the case is thrown out, ...

July 25, 2017, The Wall Street Journal

David Martin is quoted by The Wall Street Journal in an article regarding the SEC's warning on initial coin offerings. The SEC's report will likely "chill the waters a bit for these offerings," says Martin.

June 15, 2017, Law360

Michael Nonaka is quoted in a Law360 article examining how U.S. regulators are fostering fintech innovation. According to Nonaka, the CFTC and FINRA initiatives are important steps to get the agencies up to speed on fintech issues. “It’s certainly a step forward, it’s a step in the right direction for the regulators to be able to do new initiatives that will ...

May 31, 2017, The National Law Journal

Michael Nonaka is quoted by The National Law Journal in an article regarding the likelihood that the U.S. will introduce a regulatory sandbox for fintech companies to test new products and business models without regulatory consequences. According to Nonaka, there is "great value" in a sandbox for entrepreneurs, but "in order for a sandbox to work, you have to ...

May 24, 2017, Cov Africa

Earlier this month, more than 1,000 leaders from business, government, and civil society participated in the World Economic Forum on Africa in Durban in early May with the theme, “Achieving Inclusive Growth through Responsive and Responsible Leadership.” This note highlights several conversations relevant to the forum’s theme. The Leadership Challenge The ...

May 11, 2017, Forbes

Michael Nonaka is quoted in a Forbes article regarding the prospect of President Trump's taxing remittances for a Mexico border wall, and the possibility of an increase in the use of digital currencies as a result. In discussing banks and payment companies' experience in this field, Nonaka indicates that these institutions have taken the proposed rules in ...

May 1, 2017, BankBeat

Randy Benjenk is quoted in BankBeat regarding the Office of the Comptroller of the Currency’s decision to develop a limited purpose national banking charter for fintech. Commenting on the development of guidelines, Mr. Benjenk says, “the initiative began as a non-partisan issue, but it is turning more partisan as more details are put on the table, with different ...

January 6, 2017, Law360

Sebastian Vos is quoted in a Law360 article regarding the launch of a Global Blockchain Business Council at this year’s World Economic Forum by Covington and The Bitfury Group. “Blockchain has the potential to be the next great technological innovation, revolutionizing areas from cross-border payments, trade finance and land registries to government records,” ...

December 11, 2016, Harvard Law School Forum on Corporate Governance and Financial Regulation

December 5, 2016, Covington Alert

On December 2, 2016, Comptroller of the Currency Thomas J. Curry announced that the Office of the Comptroller of the Currency (“OCC”) would move forward with issuing special purpose national bank charters to financial technology (“fintech”) companies. The OCC released a whitepaper1 outlining its authority to issue charters to fintech companies, its approach to ...