OCC Approves Fintech Company’s National Banking Charter Applications | Ballard Spahr LLP

The OCC announced this week that it has conditionally approved applications from Social Finance Inc. (SoFi) to establish SoFi Bank, National Association (SoFi Bank, NA), as a full-service national bank headquartered at in Cottonwood Heights, Utah.

The OCC press release says that as part of the transaction, SoFi Bank, NA is acquiring Golden Pacific Bank, National Association, a nationally insured bank, and will continue to offer a range of purpose-built lending and deposit products. local business previously offered by Golden Pacific. The bank will also provide a national fully digital and mobile lending platform to consumers across the country. Among other conditions imposed by the OCC as part of the approval is that the resulting bank will not engage in any crypto-asset business or service. Separately, SoFi Bank NA’s parent company, SoFi Technologies, has petitioned the Federal Reserve to become a bank holding company and therefore subject to consolidated oversight.

In his press release, the OCC said its approval “brings SoFi, a major fintech, into the federal banking regulatory perimeter, where it will be subject to full oversight and the full panoply of banking regulations, including the Reinvestment Act. This levels the playing field and will ensure that SoFi’s deposit and lending activities are conducted in a safe and sound manner, including limiting the bank’s ability to engage in crypto-asset activities. The press release also quoted Acting Comptroller Hsu’s statement that “This action is consistent with the comprehensive legal and policy review of pending licensing decisions that I initiated last May, and our work with d other federal and state regulators to develop a coordinated approach to federal regulatory modernization. perimeter.”

References to a “level playing field” and “modernizing the federal regulatory perimeter” are similar to those included in Acting Comptroller Hsu’s statement regarding the withdrawal of the complaint filed by the Conference of State Banking Supervisors (CSBS) seeking to prevent the OCC from granting a national bank charter to Figure Technologies Inc. The lawsuit, like previous CSBS lawsuits, challenged the authority of the OCC to issue national bank charters for use (SPNB) to non-custodial fintech companies or uninsured companies. depository fintechs. In its press release announcing the withdrawal, the OCC said Figure Technologies had amended its charter application for Figure Bank, National Association, to offer FDIC-insured deposit accounts.

These developments suggest that, at least for now, seeking a full-service national bank charter (either through acquisition of an existing financial institution or de novo charter) is the most practical route. available to fintech companies who wish to obtain a charter from the OCC and that seeking an SPNB charter that would allow a fintech company not to take deposits or to take deposits without being FDIC insured is a strewn path of uncertainties. However, we note that seeking a charter will pose its own challenges (including a thorough review of the proposed business plan) and may not be a viable option for many fintechs if they engage in commercial activities at the beyond those permitted for bank holding companies.

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