Modernization Of Fintech Regulation: Analyzing State Regulatory Solutions For Banks And Nonbanks

State-chartered banks and non-banks alike face a challenging 50-state regulatory regime when offering interstate internet banking and financial services, which puts them at a competitive disadvantage when compared to national banks offering those same services under greater protection of federal preemption.

The Office of the Comptroller of the Currency has proposed an initiative to allow certain types of non-bank entities, such as loan companies and money transmitters, to become national banks and gain the benefit of federal preemption to address this 50-state regulatory burden. That OCC plan is under attack in court. The states themselves have been among the most significant critics of the OCC's fintech initiative.