The Consumer Financial Protection Bureau (CFPB) has put forth a proposal to supervise large non-bank FinTech firms that offer services like digital wallets and payment apps.
Unveiled on November 7, the proposed rule would apply in a similar manner to how large banks and credit unions are currently overseen, focusing on larger firms that handle over five million transactions per year. This adjustment in regulation marks a considerable shift in the ways non-bank fintech firms are currently supervised.
This move by the CFPB may serve to level the playing field between traditional banking institutions and emergent FinTech contenders in the financial services sector. By subjecting the larger FinTech firms to the same rigors as their banking counterparts, a more uniform regulatory landscape may emerge.
While the advantages may seem evident, it remains to be seen how the proposed changes will be received within the FinTech sector. The implementation of these new proposed rules could bring about several effects, such as industry consolidation and revising business models that comply with the new regulatory measures.
The full details of the CFPB’s proposed rule can be found in this article by Orrick, Herrington & Sutcliffe LLP at JD Supra.
While the proposed regulations are likely to undergo a period of time for public comments before any final rules are implemented, firms should start to assess and understand the potential implications of these regulations on their business operations.