Our Comments to the OCC on Digital Currencies and Bank Innovation

The Office of the Comptroller of the Currency (“OCC”) published an advanced notice of proposed rulemaking (“ANPR”) on June 4. The ANPR invited comment on its regulations at 12 C.F.R. Part 7, Subpart E and 155, and any other banking issues related to digital technology and innovation.

A copy of the comment letter can be found here: Ketsal – OCC Comment Letter August 3 2020. 

In summary, we encourage the OCC to consider the following:

• A declaration that products and services that involve cryptocurrencies or that incorporate blockchain technology (“Blockchain-based Offerings”), beyond cryptocurrency safekeeping and custody, are within the scope of permissible activities for national banks, citing authority under 12 C.F.R. Part 7, Subpart E to “perform, provide, or deliver . . . any [otherwise authorized] activity, function, product, or service” through electronic means;

• Codification of OCC Interpretive Letter #1170 (the “Custody Letter”) in the nonexclusive, illustrative list of permissible activities in 12 C.F.R. § 7.5002(a);

• National banks are well-equipped to examine, classify and mitigate any safety and soundness risks associated with Blockchain-based Offerings;

• Stablecoins potentially offer efficiencies not available through legacy banking applications – for example, in the arena of real estate investment trusts (“REITs”);

• A national bank charter specific to payments would be a boon to marketplace payments providers, and a national bank charter specific to lending would consolidate systemic risk for lenders focused on specific business verticals; and

• COVID-19 has highlighted fractures and inefficiencies in existing customer onboarding and branch banking requirements.