In a hearing
on Tuesday, the Congressional Fintech Task Force heard arguments on new
rules that would potentially expand banking regulations to accommodate
more technology firms providing financial services.

A subunit of
the Financial Services Committee, the Fintech Task Force leads the
committee’s examinations of emerging technologies. As Task Force Chair
Stephen Lynch (D-MA) noted, “Banking is becoming less centralized.
Consumers are facing more choices than they ever have.”

Banking the unbanked?

Much
of the back-and-forth in today’s hearing was as to whether or not
loosening the rules of banking — which would allow more firms to, for
example, offer loans — would properly extend financial access. Lynch,
for one, noted that “One of the great promises of fintech was the idea
that it might help us to bank the unbanked. The evidence is really
mixed.”

In response to a line of questioning from Representative
Rashida Tlaib (D-MI) about whether fintechs had lived up to this
promise, witness Raúl Carrillo of the Demand Progress Education Fund
said:

“I have not seen any hard evidence that these
private fintech companies are quote unquote saving the day. In fact, I
am worried about these transactions happening without proper
protections.”

Carrillo also warned against Big Tech entering into finance, in keeping with similar concerns from Maxine Waters
(D-CA), Chairwoman of the full committee. “We are especially concerned
by dominant tech platforms’ recent encroachment into payments, most
notably the proposed Facebook Libra project,” said Carrillo.

Conversely,
Everett K. Sands, founder and CEO of Lendistry, was optimistic about
the role of good actors. Lendistry is both a fintech and a Community
Development Financial Institution (CDFI). He called on Congress to
provide more “carrots” for good actors as opposed to “sticks” for bad
actors:

“The current rules under SBA [Small Business
Administration] and others have been made to be a form of risk
management. While we respect them, there needs to be some type of review
so that the good guys aren’t fighting their fight with one hand tied
behind their backs.”

More optimism for crypto as a payment operator

Part
of the occasion for the hearing is proposed changes to payments
charters from the Office of the Comptroller of the Currency, the U.S.’s
regulator for federal banks. The office has been extremely active in extending fintech and crypto engagement in traditional finance.

The
hearing was called “License to Bank: Examining the Legal Framework
Governing Who Can Lend and Process Payments in the Fintech Age.” Many
noted the particular role of crypto in the evolution of payments. Sands
said:

“We also believe lending and payments each require
a significant adjustment in regulation, and we would suggest the OCC
focus on payments first as new technology entrants like Bitcoin,
blockchain and cryptocurrency gain traction.”

Representative
French Hill (R-AK) was even more direct, ending his time with the
declaration that “We need a cryptocurrency payment rail as part of our
current payment system reforms.”

As Brian Brooks, Acting Head of the OCC, has previously noted,
the office’s authority in payments predates its authority in banks, but
the new push for a federal payments charter is facing pushback. 

source link : https://cointelegraph.com/news/congress-weighs-crypto-payments-and-fintech-lending-in-hearing-today