When Manu Smadja and his partner founded financial technology startup Mpower Financing in 2014, the online lender was only licensed to operate in Washington, D.C., New York and Massachusetts. Like many other nonbank loan originators that aspire to expand their businesses, Mpower wanted to expand but was stymied by the need to apply for licenses in each state in their expansion plan.

Mpower, which provides loans to foreign students at U.S. universities, is one of a growing number of financial technology firms that use technology to improve their financial services. Because such firms don’t qualify for national bank charters, they must get charters at the state level.

After Mpower had become licensed in 14 states by last year, it chose to partner with the $200 million Bank of Lake Mills in Wisconsin, which enabled Mpower to lend to students in all 50 states.

In an effort to tackle the multi-state licensing problem, the Office of the Comptroller of the Currency, the Treasury bureau responsible for regulating national banks, began exploring the idea of a special purpose national bank charter for fintech companies in December 2016, which would allow the OCC to license and regulate various types of fintech companies and exempt them from state licensing laws. After having extensive discussion and deliberation, the OCC is poised to announce its position on the fintech charter as soon as this month, according to Comptroller of the Currency Joseph Otting.

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