The big news this week is another Bitcoin record, but those were not the only news in the world of finance and technology this week, so here is once more the FinTechnologist Weekly, a look at the past week in FinTech:
Crypto Tales, FinTech Charters and More Trouble in China
Another Week Another All-Time High
Well, we already gave it away, but this week marked another highlight in the success story of Bitcoin with another all-time high when it breached the $60k mark per BTC. $60,000!!! Just think about it! And as always, when Bitcoin reaches new heights, we salute Laszlo Hanyecz who apparently traded 10,000 BTC for two pizzas back in 2010. If only he’d been happy with just one of the two and held on to the other half, he’d own $50 million in Bitcoin today. The latest bull run has not been limited to the most valuable amongst cryptocurrencies with Ethereum and others seeing similar or even bigger increases, so the question is naturally, how long can this last or is it only the beginning of something even bigger in terms of investment gains. We shall see, I suppose, but my prudent verdict is that we haven’t reached the top yet, which, of course, should not be considered investment advice at all!
The Future of FinTech Charters
The Office of the Comptroller of the Currency (OCC) in December 2016 published its ideas about special purpose national bank charters to fintech companies. Those FinTech charters were to serve several purposes: to create a bank regulatory framework to fintech companies that would help ensure that these companies operate in a safe and sound manner so that they can effectively serve the needs of customers – just as banks do that operate under full-service charters; to promote consistency in the application of law and regulation to all financial institutions across the country and ensure that consumers are treated fairly; and to make the federal banking system stronger by offering a path for fintech companies to become national banks.
As such, FinTech firms would have been allowed under the charters to offer lending or payment products without insurance from the FDIC and have federal oversight instead of complying with state banking regulations. While the Trump presidency supported the plans, in 2019 a federal judge stopped the whole process by questioning the OCC’s authority.
An interesting conversation on Wharton Business Daily this week discusses now the future of FinTech charters under the Biden administration.
Interestingly and in my opinion correctly, David Zaring, Wharton professor of legal studies and business ethics, points out that it is not so much a question of federal vs state authority or Fintech startups taking the fast lane without sufficient oversight – the question that is really interesting what it means for Big Tech and other large corporations if they were allowed to set up banks in this way and how it would fundamentally alter the banking landscape in the U.S.The OCC’s proposal targeted the promotion of innovation by newcomers but not necessarily gave sufficient thought to the role of Apple, Google and others of their kind.
However, regardless of whether we are talking about the regular kind of FinTechs or BigTech firms, Zaring said he expects the Biden administration to favor higher levels of regulation for FinTechs, which does not sound good for the future of FinTech charters.
More Clouds over China?
Last week we talked about an interesting WEF white paper on the future for FinTech in China, which didn’t reveal all that much you couldn’t have figured out. There’s something cooking though and has been for a while, but now it has palpable financial effects with the shares in the Internet giant Tencent loosing $62 billion in value in only two days. Analysts speculate that like Jack Ma’s Ant Group, Tencent could be forced to establish a financial holding company to include its banking, insurance and payments services. Sounds like more clouds over China, but I’m sure we‘ll find out soon. Stay tuned.
That’s all for this week but ff you have an interesting story or would join me on the podcast, connect on Twitter.In any case, make sure you sign up to the newsletter to stay in the loop if you don’t mind. Thanks!
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