Despite scepticism about easing loan regulations, the Fintech Working Group raised the question of how crypto-currencies can improve payment methods in the United States
In a hearing on Tuesday, the Congressional Fintech Working Group heard arguments about new rules that would potentially expand banking regulations to accommodate more technology companies providing financial services.
A sub-unit of the Financial Services Committee, the Fintech Working Group leads the committee’s assessments of emerging technologies. As Task Force Chair Stephen Lynch (D-MA) noted, „Banking is becoming less centralized. Consumers are faced with more choice than they have ever had.
Banking the unbanked?
Much of the tug-of-war at today’s hearing concerned whether relaxing banking rules would allow more companies, for example, to offer loans, would adequately expand financial access. Lynch, for example, said: „One of the great promises of the Fintechs was the idea that it could help us bank the unbanked. The evidence is really mixed.
In response to a line of questioning from Representative Rashida Tlaib (D-MI) about whether the Fintechs had fulfilled that promise, witness Raul Carrillo of the Demand Progress Education Fund said
„I have not seen any compelling evidence that these private financial technology companies are saving the day. In fact, I am concerned that these transactions are occurring without the proper protections.
Carrillo also warned about Big Tech entering the financial mainstream, according to similar concerns by committee chair Maxine Waters (D-CA). „We are very concerned about the recent invasion of dominant technological platforms in payments, especially with the Libra project proposed by Facebook,“ said Carrillo.
In contrast, Everett K. Sands, founder and CEO of Lendistry, was optimistic about the role of the good players. Lendistry is both a fintech and a community development financial institution (CDFI). He called on Congress to provide more „carrots“ for good players instead of „sticks“ for bad ones:
„The current rules of the SBA (Federal Agency for Small Business Development) and others have been established as a form of risk management. While we respect them, there needs to be some kind of revision so that the good guys aren’t fighting with one hand tied behind their backs“.
More optimism towards cryptomoney as a payment processor
Part of the occasion for the hearing is the proposed changes to the payments statutes of the Office of the Comptroller of the Currency, OCC, the U.S. regulator for federal banks. The office has been extremely active in extending the involvement of fintech and cryptomonies in traditional finance.
The hearing was called „Licensing of Banking: Examining the Legal Framework Governing Who Can Lend and Process Payments in the Age of Financial Technology“. Many pointed to the particular role of cryptomonies in the evolution of payments. Sands said:
„We also believe that lending and payments each require a significant adjustment in regulation, and we suggest that the OCC focus first on payments as new entrants to emerging technology such as Bitcoin Era, Blockchain and crypto currencies gain traction“.
The representative, French Hill (R-AK), was even more forthright and ended his time with the statement that „We need a payment method in cryptomonies as part of the reforms to our current payment system“.
As Brian Brooks, acting director of the OCC, noted earlier, the payments authority of the office predates its authority over banks, but the new push for a federal payments statute faces a setback.