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Fintech Bank Charter Blocked; Blockchain Advances in Trade Settlement

A New York District Court in October ruled that  the Office of the Comptroller of the Currency lacked the appropriate authority to grant special purpose bank charters to fintech startups that are engaged in the business of banking but do not take deposits -- a major victory for state regulators who sued to block the charters. The OCC had begun accepting applications for national bank charters from non-depository fintech companies, and the ruling from the New York District Court  deals a serious setback to these firms. According to the Wall Street Journal, the OCC plans to appeal the ruling.  Meanwhile, the SEC granted a no-action request to a blockchain start-up for an experimental project aimed at settling stock trades on the day the trade is agreed on instead of the typical two days, as reported in the Wall Street Journal. The startup, Paxos, would compete with established clearing and settlement firm DTCC, and firms such as Societe Generale and Credit Suisse have agreed to use Paxos’s program. The SEC’s no-action relief includes limits on the types of stocks and number of trades that Paxos can settle during the project’s pilot phase.

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