US blockchain companies advance licensing options across states

Rage Review : After the U.S. Office of the Comptroller of the Currency (OCC) released a report on Internet innovation in March, blockchain companies and advocacy groups hope that the report will inform regulators' decisions on future dynamics in the field. The current regulatory system does not provide sufficient national licensing options for national or global companies, and this gap limits the development of companies in the United States. In many cases, companies tend to develop in these countries with more efficient licensing systems. The OCC should work more closely with industry startups.

Translation: Nicole

Following the release of a March report on internet innovation by the U.S. Office of the Comptroller of the Currency (OCC), six blockchain companies and advocacy groups have publicly stated their desire to inform and influence regulators on future developments in the space.

While it is known that the OCC's actions are aimed at better understanding the industry, most respondents through the forum urged regulators to create a national licensing system that would ease restrictions on startups entering the industry. Industry representatives argued that what is needed is a way to bypass the licensing process of each state, which currently discourages domestic innovation.

Such comments have been made in a variety of forms by industry players, including bitcoin exchange Coinbase, bitcoin payments app Circle, industry advocacy group Coin Center and distributed ledger startup Ripple, which have publicly commented.

Ryan Zagone

Ryan Zagone, head of regulatory relations at Ripple, wrote:

“Our current regulatory system does not provide adequate national licensing options for national or global businesses, and this gap restricts business growth in the United States. In many cases, businesses prefer to expand to these countries with more efficient licensing systems.”

Coin Center CEO Jerry Brito and bitcoin startup Circle CCO John Beccia added to the sentiment with speeches of their own, in which they advocated for the OCC to create a new “alliance option” for national money transmission regimes.

John Beccia

Beccia wrote:

“We believe that the new license at the consortium level will drive the race for innovation among regulators.”

Respondents suggested that the OCC establish a special task force or innovation office aimed at operating more directly in the fintech sector so it could better understand the nuances of specific technologies and business models used by startups.

Respondents also spoke directly to the nuances of blockchain technology and the regulatory regime, which is difficult for the industry to navigate using the current regulatory regime that applies to more traditional payment systems.

The negative impact is as Perianne Boring, President of the Chamber of Digital Commerce, strongly reflected:

“Digital currency and digital asset companies engaging in money services business (MSB) cannot engage in banking without proper initial due diligence on the actual business model.”

International influence

Industry restrictions are becoming more common, and many representatives encouraged the OCC to look at countries such as the United Kingdom, Singapore and Australia because these jurisdictions are more suitable for the development of innovative startups.

For example, Brito said the OCC should emulate the measures of the UK Financial Conduct Authority, which he believes has created a more inclusive atmosphere that has a positive impact on the domestic Internet finance ecosystem.

Jerry Brito

Brito wrote:

“Innovators who ignore state rules, or who attempt to misrepresent an activity that is not a money transfer, or who seek to be excused rather than authorized, will face profound criminal penalties.”

Brito’s statement attempted to enumerate the benefits of new financial technologies, arguing that they should be more clearly understood in the wake of the recent theft of funds from decentralized payment network SWIFT.

Beccia, whose company recently secured an e-money license in the U.K., responded to the speech in a filing praising the U.K.’s approach and hoping the OCC will follow suit.

Beccia wrote:

“In addition to encouraging innovation, UK regulators are also focusing on international coordination to further foster innovation and help UK internet finance companies.”

Beccia went on to position further action from the OCC’s perspective as a way to restore U.S. competitiveness in the fintech sector and “change the dynamic.”

Direct contact

Bank blockchain consortium R3CEV appears like an outsider in these submissions, as R3 is more directly focused on the relationship between the current financial industry, the OCC and its clients.

However, R3 managing director Charlie Cooper argued that the OCC should work more closely with industry, including startups.

Charlie Cooper

He said:

“The OCC should consider ways to actively engage with the private sector — financial services firms and technology companies — to better understand and support the entry of new technologies into the market.”

Cooper even said the OCC should alleviate concerns about new technological innovation by taking steps to understand blockchain technology internally, working directly with industry startups, and emphasizing the importance of collaboration among all market participants.

The comments of each interviewee can be viewed here.