Legal Seminar, Denver, CO

Fintech Charter: Pre-litigation Developments

• 12 CFR 5.20(e)(1) • Any activity within the business of banking • Three core banking functions 2003 Corporate Activities Rulemaking

• “OCC will move forward with chartering fintech companies” • Cites 5.20(e)(1). December 2016—OCC Issues White Paper

• For “SPNB” Charters • Engages in one of the core banking functions • Does not take deposits within meaning of the FDIA March 2017— OCC Issues Draft Licensing Manual

2016 Receivership Rulemaking

April 2017— CSBS files suit

• For uninsured trust banks • Considering a

special purpose charter for fintech firms.

For Discussion Purposes Only

Fintech Charter: Overview of CSBS Legal Arguments

• OCC lacks statutory authority to create a fintech charter because the NBA provides the OCC with the authority to charter an entity in only two circumstances:

(1) General Chartering Authority : When the entity is organized to carry on the “business of banking”. – Carrying on the “business of banking” requires, at a minimum, engaging in receiving deposits. – IBAA v. Conover , 1985 U.S. Dist. LEXIS 22529 (M.D. Fla. Feb. 15, 1985) (2) Special Purpose Chartering Authority : When the entity is organized to carry on a special purpose expressly authorized in statute other than the business of banking. – National State Bank v. Smith , 1977 U.S. Dist. LEXIS 18184 (D.N.J. Sept. 16, 1977)

For Discussion Purposes Only