In twin proposals, OCC looks to update rules, seek comments on digital activities

Updates on rules for bank activities and operations – including addressing permissible derivatives activities for national banks – and a comment request on banks’ digital activities were issued Thursday by the banks’ federal regulator.

In a release, the Office of the Comptroller of the Currency (OCC) said it issued a notice of proposed rulemaking (NPR) on its own rules to “update or eliminate outdated regulatory requirements that no longer reflect the modern financial system and clarify and codify recent OCC interpretations.”

In addition to permissible derivatives, among the changes the OCC said were significant in the proposal are:

  • codifying OCC interpretations to permit national banks and federal savings associations to engage in certain tax equity finance transactions;
  • codifying OCC interpretations regarding national bank membership in payment systems and clarifying that federal savings associations are subject to the same requirements as national banks;
  • expanding the ability of national banks to choose corporate governance provisions under state law;
  • clarifying the extent to which a national bank may adopt anti-takeover provisions permissible under state corporate governance law;
  • codifying OCC interpretations of the National Bank Act relating to capital stock issuances and repurchases.

Regarding digital activities, the agency issued an advance notice of proposed rulemaking (ANPR) which it said was aimed at supporting “the evolution of the federal banking system and its ability” to meet needs of customers and communities.

The agency said it is looking for comments on such topics as:

  • whether the legal standards in its current rules are sufficiently flexible and clear in light of the technological advances that have transformed the financial industry over the past two decades;
  • whether those legal standards create unnecessary hurdles or burdens to innovation by banks;
  • whether there are digital banking activities or issues that are not covered by these rules that the OCC should address (e.g., digital finders’ activities, certain software, and correspondent services);
  • what activities related to cryptocurrencies or cryptoassets are financial services companies or bank customers engaged in and what are the barriers or obstacles to further adoption of crypto-related activities in the banking industry;
  • how distributed ledger technology is used or potentially used in activities related to banking;
  • how artificial intelligence and machine learning techniques are used or potentially used in activities related to banking;
  • what new payments technologies and processes the OCC should be aware of and what are the potential implications of these technologies and processes for the banking industry;
  • new issues that have arisen as a result of changes in the banking system that have occurred in response to the COVID-19 pandemic.

Comments on both the NPR and the ANPR are due Aug. 3.

OCC Requests Comment on Proposal to Update Activities and Operations Rules and its Rules on Digital Activities