Bryan Cave is uniquely well-positioned to serve fintech companies. In addition to many other clients, we are honored to serve as counsel to Financial Solutions Lab companies (the $30 million, five-year initiative managed by the Center for Financial Services Innovation and supported by JPMorgan Chase). Click here for a great overview of CFSI.
We serve on several fintech industry trade groups and write and speak extensively on topics affecting fintech. Our lawyers regularly partner with clients in developing new financial products and services and one has been named as a co-inventor with a client. And, we do our best to make introductions and connect clients to a variety of resources.
The fintech industry is usually thought of as companies that are providing a financial service without a depository charter. That is, these companies are not banks, credit unions or thrifts. Unlike the banking industry which has seen only 2 new banks in the last 8 years, fintech is a white-hot sector with scores of new entrants each year and significant investment from venture capital and private equity ($9.89 billion in the U.S. in just 2014, per Accenture).
Below is a quick illustration of a few of the types of companies in fintech. Each of these companies has two things in common: (1) they operate in an environment heavily regulated by multiple state and Federal authorities and (2) they are innovating.
Prepaid and Emerging Payments
Many fintech companies are in the payments, stored value and virtual currency space. In a myriad of ways, these companies are seeking to innovate in prepaid cards, payroll cards, universal gift cards, general purpose reloadable cards and “closed loop” merchant-issued gift cards. They are building new products in the areas of mobile payments, e-wallets and virtual currencies. Sometimes they build on existing payment infrastructures – including credit, debit, prepaid and merchant acquiring programs. Some are card-based and others use contactless radio frequency technology, text messaging. Still others offer virtual payment products useable only on the Internet or through mobile devices.
Some well-established examples are such as PayPal / Venmo, Gyft, Blackhawk Networks, and Square. Others are more recent startups, such as Stripe, Square, Coinbase, Support Pay, Dwolla and many others.
Bryan Cave has deep experience in advising payments and stored value card companies with respect to the laws of all 50 states and Federal law.
Bryan Cave’s Prepaid and Emerging Payment Team has been the foundation of our involvement in the fintech industry. For more information on our extensive services in this area, please click here.
Many fintech companies have a credit-related (lending) service, such as Lending Club, Prosper, OnDeck, BorrowersFirst, LendUp, Better Finance, Kabbage, Puddle, Funding Circle, Mission Asset Fund and Lenny Loans, among many others.
Bryan Cave advises companies in the fintech lending sector on complying with Federal law and the laws of all 50 states in marketing, underwriting, originating, servicing and collecting consumer and business credit products. This includes advice on which states require licensing and which exempt the company’s activities as well as assistance in obtaining the necessary licenses. Sometimes a company’s activities are similar to those of an escrow agent or money transmitter, so we often assist with those analyses as well. Clients value our ability to understand their business and provide precisely tailored solutions in light of their unique business model and goals as well as these sometimes overlapping regulatory regimes.
Marc Andreessen of Andreessen Horowitz has invested nearly $50 million in Bitcoin related startups and believes the digital currency will help establish trust between otherwise unrelated parties over the Internet. Andreessen has noted that the use of Bitcoin, for the first time, allows internet users to transfer unique digital property in a way in which the legitimacy of the transfer cannot be challenged.
Bryan Cave focuses on the regulatory aspects of virtual currency in light of existing regulations that have been applied to digital currency businesses in the past, including FBI criminal prosecutions against leading digital currency platforms, FinCEN regulatory actions against money services businesses and money transmitters in the digital currency space, SEC enforcement actions against collective investment vehicles that focus on digital currencies, and congressional focus on emerging digital currency businesses. We also counsel clients on the potential regulations that will be applied to digital currencies by the CFTC, FinCEN, the SEC and state regulators.
For more information on our Digital Currency practice, please click here.
Our lawyers have deep experience with the regulations (and the regulators!) and how to guide innovation in a heavily regulated environment. Our regulatory advice covers many areas, including:
Most fintech companies have significant equity and capital needs and a rapidly-expanding workforce. They are often attractive M&A candidates. The fintech lenders typically have large, ongoing need for credit facilities and structured finance to provide the funding they need to make loans. Bryan Cave’s corporate team is accustomed to working with regulated companies and partner closely with the regulatory lawyers in serving this industry.
These companies frequently need litigation assistance in defending against regulatory enforcement actions, plaintiffs’ lawsuits and IP infringement disputes. These are usually high stakes, “bet-the-company” matters. Victory depends on a deep understanding of the regulatory context in which these disputes arise.
Our Fintech Intellectual Property team routinely advises clients how to protect their new technology in the financial services industry. Some areas of our experience include:
Data Privacy and Security.
Bryan Cave’s data privacy and security attorneys help banks’ clients utilize customer data to increase opportunities and enhance user experience, all while decreasing corporate risks.
The issues that we routinely address for our clients include: