FDIC Unveils Rule Forcing Banks To Keep Fintech Customer Data in Aftermath of Synapse Debacle (cnbc.com) 5
The Federal Deposit Insurance Corp. on Tuesday proposed a new rule forcing banks to keep detailed records for customers of fintech apps after the failure of tech firm Synapse resulted in thousands of Americans being locked out of their accounts. From a report: The rule, aimed at accounts opened by fintech firms that partner with banks, would make the institution maintain records of who owns it and the daily balances attributed to the owner, according to an FDIC memo. Fintech apps often lean on a practice where many customers' funds are pooled into a single large account at a bank, which relies on either the fintech or a third party to maintain ledgers of transactions and ownership.
That situation exposed customers to the risk that the nonbanks involved would keep shoddy or incomplete records, making it hard to determine who to pay out in the event of a failure. That's what happened in the Synapse collapse, which impacted more than 100,000 users of fintech apps including Yotta and Juno. Customers with funds in these "for benefit of" accounts have been unable to access their money since May.
That situation exposed customers to the risk that the nonbanks involved would keep shoddy or incomplete records, making it hard to determine who to pay out in the event of a failure. That's what happened in the Synapse collapse, which impacted more than 100,000 users of fintech apps including Yotta and Juno. Customers with funds in these "for benefit of" accounts have been unable to access their money since May.
Remember people (Score:5, Insightful)
Whenever you hear "fintech", it really means "unregulated bank".
Rewriting for clarity (Score:1)
> Federal Deposit Insurance Corp. on Tuesday proposed a new rule forcing banks to keep detailed records for customers of fintech apps after the failure of ...
Could be rewritten as "the federal government proposed a new rule to force banks to track customers even more and make that data more easily available to the federal government"
Speculation: Each new form of payment, new bank account type, etc. is a whole new planet for the government to write laws and regulations for. Most of which will be used to
Re: (Score:3)
That is what the Supreme Court said when they neutered agency abilities to do their job. Now Congress has to get involved in every little thing by passing laws.
Re: (Score:3)
Well fine. In that case, when your NotAScam unregulated bank goes belly up you lose your money.
protections for consumers (Score:2)
Letting legislators write all new laws and bureaucrats write all new regulations has a high risk of shifting even more power to the central federal government resulting in less privacy, less freedom and less opportunities for average citizens.
Refer: Digital Central Bank Currency - risks - https://en.wikipedia.org/wiki/... [wikipedia.org]