The Office of the Comptroller of the Currency (OCC) has announced that it will be setting up an Office of Financial Technology to keep up with the changing pace of finance.
According to the official announcement by the OCC, the new office will begin operations in early 2023 and will work in synergy with the agency’s Office of Innovation. The OCC’s planned move is targeted at virtual currencies, and the proliferation of stablecoins has made it imperative for the body to create a new arm.
“Financial technology is changing rapidly, and bank-fintech partnerships are likely to continue growing in number and complexity,” said Michael J. Hsu, Acting Comptroller of the Currency. “To ensure that the federal banking system is safe, sound, and fair today and well into the future, we need to have a deep understanding of financial technology and the financial technology landscape.”
The OCC says the new department will be headed by a chief financial technology officer from the agency’s ranks. The role is a deputy comptroller and will report directly to the senior deputy comptroller for Bank Supervision Policy.
“The establishment of this office will enable us to be more agile and to promote responsible innovation, consistent with our mission,” added Hsu. The OCC also noted that the incoming Office of Financial Technology would “provide strategic leadership” and offer an in-depth perspective for the regulation of digital assets in banking.
The decision to create the new arm comes on the heels of the agency increasing the level of scrutiny for bank-fintech partnerships as it looks to improve the risk profile for financial institutions in the country.
The OCC’s tango with virtual currencies
In 2020, the OCC penned a letter to an undisclosed bank offering ideas on how banking institutions can offer “cryptocurrency custody services” for its clients in what was seen as a bold move.
“This letter also reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law,” read the letter.
In January 2021, the OCC approved using stablecoins for settlements of financial transactions by banks, which several industry players described as a huge win. Since the historic declaration, the OCC appears to have adopted a cautious stance towards digital assets, but it could all change with the launch of the new arm.
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