State banking regulators from Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington have seen fit to work together in an effort to enable interstate commerce by simplifying the process by which FinTech companies apply for licenses.
The states have agreed to pool resources when evaluating whether to award business licenses to companies that seek to offer money services. This will go a long way toward assuaging the calls for standardized action by regulators across the board. Under the current disparate conditions, many FinTech startups have found it cost-inhibitive to meet various individual state requirements for licensing. With license in hand, a business can engage in a wide range of financial services, including operating as a cryptocurrency exchange.
John Ryan, president and CEO of the Conference of State Bank Supervisors went over some of the merits that such an agreement can deliver.
"This MSB [money service businesses] 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."
Similar efforts were made by the Office of the Comptroller of the Currency in 2016, when the federal bank regulator called for a charter that would allow online lenders to operate nation-wide. Opposing state regulators maintained that such a measure would weaken consumer protections.
Regulators have a fine line to walk between enabling a burgeoning class of businesses to provide services amid a growing demand for liquidity and protecting the interests of the consumers who seek to participate in that marketplace; the efforts of these seven state regulators may help strike that balance.