On October 21, 2019, Judge Victor Marrero of the U.S. District Court of the Southern District of New York issued a final decision and order in New York State’s challenge to the OCC’s statutory authority to grant special purpose national bank charters to Fintechs (the “Fintech Charter”). Previously, in a May 2, 2019 ruling on the OCC’s Motion to Dismiss, Judge Marrero found that the New York State Department of Financial Services’ (“NYDFS”) challenge was ripe and he also found that the NYDFS’ arguments that the OCC exceeded its authority under the National Bank Act had merit. Judge Marrero’s ruling is significant in that it bars the OCC from accepting all Fintech Charter applications nationwide and rejected the OCC’s request to limit the order to applications from New York. The nationwide ruling effectively nullifies the outcome of a federal court decision in D.C. last month that agreed with the OCC that the issues here are not yet ripe to be entertained by the courts. The OCC is expected to appeal Judge Marrero’s ruling.

This ruling adds additional delay and uncertainty over the future of the Fintech Charter, which will not be resolved until appeals to the U.S. Court of Appeals for the Second Circuit, and possibly the U.S. Supreme Court, are resolved. Until then, a Fintech’s options for a federal charter are limited to seeking a full-service national bank charter or a FDIC-insured Utah industrial loan company charter. Another option is to remain state regulated on a state-by-state basis under multiple types of financial services licenses and statutory regimes.