Second Circuit Dismisses DFS Challenge to OCC Fintech Charter Authority

On June 3, 2021, the U.S. Court of Appeals for the Second Circuit dismissed a lawsuit brought by the New York Department of Financial Services challenging the OCC's authority to issue special purpose national bank charters to non-depository fintech companies. The court ruled that DFS lacked standing because the OCC had not received or approved any SPNB charter applications from fintechs under DFS jurisdiction, meaning no actual or imminent injury existed.

This reversed a district court decision that had set aside the OCC's 2018 SPNB regulation, which was designed to allow fintechs engaged in lending or payments to obtain national bank charters without taking deposits. Despite the legal victory, the OCC had not issued any fintech SPNB charters due to the prolonged litigation. The ruling preserved a key pathway for fintechs seeking federal bank charters and removed a significant legal obstacle to the OCC's fintech charter framework.

The decision was widely analyzed as a meaningful win for the OCC's authority over fintech regulation, though regulatory uncertainty and political dynamics continued to influence whether fintechs would actually pursue or receive such charters.