Bank regulators in seven US states have agreed to standardise parts of the licensing process for money service businesses (MSBs) in a bid to make it easier for fintech startups to operate across the country.
Currently, firms offering services such as money transfers and cryptocurrency trading have to apply individually to operate in each of the 50 US states.
Under the new compact, if one of Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington reviews key elements of licensing - IT, cybersecurity, business plan, background check and Bank Secrecy Act compliance - the other six will accept the findings.
Other states are expected to join the agreement, as part of an effort by local regulators to streamline and integrate the system of licensing and supervision for fintechs. A Fintech Industry Advisory panel has also been set up, while a new tech platform for licensing and supervision of non-banks is in the works.
John Ryan, CEO, Conference of State Bank Supervisors (CSBS), says: "This MSB licensing agreement will minimize the burden of regulatory licensing, use state resources more efficiently, and allow for broad participation by other states across the country."
The changes are in part related to a turf war between the state regulators and the Office of the Comptroller of the Currency (OCC), which wants to start granting fintech charters to make it easier for startups to operate across state lines.
The CSBS has brought a complaint in the US district court of Columbia which alleges that the OCC is over-reaching its authority in granting charter status to non-banks.