MAG Insights

Announcements from the MAG & Featured Articles

What's Up in Washington: FTC Focus on Competition and Consumer Protection; Fintech Firms (MAG Quarterly- Volume Six, Issue Three)

By Beth Provenzano, Vice President, Public Affairs, MAG 

September 6, 2018

Allowed to Apply for Bank Charters; Concerns Over Cryptocurrency 

Competition and innovation play an important role in the future of payments.  Learn more about how policymakers are examining competition and the role they see innovation has moving forward. 

FTC Announces Hearings on Competition and Consumer Protection in the 21st Century
Beginning this fall and scheduled through early 2019, the Federal Trade Commission will hold a series of public hearings to determine if modifications to competition and consumer protection enforcement law, enforcement priorities, and policy are necessary.  The hearings will examine evolving business practices, new technologies, international developments, and broad-based changes in the economy.

The FTC also invited public comments prior to the hearings to gather broad and diverse views on topics such as antitrust and consumer protection law as well as enforcement and the intersection of privacy, big data and competition.  In addition, the FTC will solicit comments for each individual hearing and at the conclusion of the series of hearings.

The Merchant Advisory Group submitted comments, which focused on the need for competition and the role innovation plays in the payments ecosystem. 

Fintech Firms Allowed to Apply for Bank Charters
In late July, the Office of the Comptroller of the Currency announced it will accept bank-charter applications from fintech firms.  Fintech firms have been growing their businesses in payments in recent years.  Merchants have watched their activity closely, eager to see if their innovation will bring competition and transparency into payments.

Fintech firms will be subject to the same federal laws, regulations, reporting requirements, and supervision as traditional national banks under the new charter. Before the OCC decision, fintech firms were only eligible for to obtain state charters, which meant they were subject to multiple states’ regulations.  

It is too soon to know how many fintech firms will seek bank-charters or if the change in policy will encourage innovation in financial services.  MAG will monitor this development, especially as it relates to the payments ecosystem.
Concerns Over Cryptocurrency 
Congressional lawmakers, officials at the Department of Justice, and Federal Reserve Chairman Jerome Powell have recently expressed concern about the misuse of digital currencies.  The rise of cryptocurrencies has led to increased concerns over national security and money laundering.

Oversight of cryptocurrencies remains uneven across the globe, and in the United States, officials grapple with regulating exchanges.  The Commodity Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC) have limited authority over exchanges, and at a recent House Agriculture Committee hearing, Chairman Mike Conaway (R-TX) recently discussed criminal behavior as it relates to Bitcoin.

The House Financial Services Committee is also actively considering cryptocurrencies.  Rep. Ted Budd (R-NC) introduced legislation, the Financial Technology Protection Act, HR 5036, which would create a new task force chaired by the Treasury Secretary.  The task force’s purpose would be to study illicit financing with cryptocurrencies, and propose, with input from industry, new policy and law to combat it.  The committee reported HR 5036 out in a 57-0 vote.  With election season underway and a crowded legislative calendar, it is unclear whether the Senate will take up the legislation, should it pass the House.  

Lawmakers and policymakers’ interest in technology is nothing new, and more hearings, legislation, and reports about cryptocurrencies should be expected as the technology is more widely adopted by consumers.