For the primary time in a dozen years, the Workplace of the Comptroller of the Foreign money (OCC) is looking for to replace its laws on digital actions to think about banks’ use of blockchain and distributed ledger know-how (DLT), as half of a bigger effort relating to banks’ use of know-how. On June 4, 2020, the OCC launched an Advance Discover of Proposed Rulemaking (ANPR) looking for public touch upon the digital actions of banks, together with with respect to DLT. The ANPR states that “[the OCC] is interested in making sure it is aware of and understands the evolution of financial services, so it ensures the federal banking system continues to serve consumers, businesses, and communities effectively[, and] is reviewing its regulations on bank digital activities to ensure that its regulations continue to evolve with developments in the industry. [The ANPR] solicits public input as part of this review.” Public feedback on are due by August 3, 2020.
Underneath the present regulatory framework, OCC laws particularly addressing nationwide banks’ digital actions are usually set forth in 12 C.F.R. half 7, subpart E, which was initially promulgated in 2002 and up to date in 2008. Since then, the OCC has usually responded on a case-by-case foundation to trade requests for approval to interact in “innovative, technology-driven banking activities.” Now, the OCC is endeavor a complete evaluation of 12 CFR half 7, subpart E (in addition to associated half 155), and the ANPR was issued in reference to such evaluation.
The ANPR lists and solicits public remark for 11 particular technology-related questions. Of these 11, the query associated to DLT states:
“5. How is distributed ledger technology used, or potentially used, in banking activities (e.g., identity verification, credit underwriting or monitoring, payments processing, trade finance, and records management)? Are there specific matters on this topic that should be clarified in regulatory guidance, including regulations?”
Different questions concern synthetic intelligence, “regtech,” and comparable matters that may doubtlessly overlap with DLT. Lately, the OCC has established sure innovation-friendly applications, together with a devoted Workplace of Innovation, and the ANPR appears to suit that sample. As monetary establishments more and more implement DLT-based techniques and merchandise, OCC regulation may deal with that space and change into a essential side of its improvement.
In response to the ANPR, monetary establishments and different events may want to think about submitting feedback. Regulation works greatest when it’s knowledgeable by trade practices, and within the time since OCC final up to date its framework, blockchain know-how has change into an necessary a part of the monetary trade. Revised laws will assist present certainty to monetary establishments that use or are contemplating utilizing such know-how.