Douglas Landy, Partner at White & Case — On Banking Charters, Crypto, and CBDCs

Published in

Wharton FinTech

4 min readJan 3, 2022

In this episode, I’m joined by Douglas Landy, Partner at White & Case, a leading law firm serving companies, governments, and financial institutions worldwide.

Doug and I cover a range of topics, including:

Neobanks and Banking Charters:
Doug highlights that, since the U.S. is a highly regulated and controlled regulatory environment, fintech firms frequently rely on banking partnerships as the fastest way to initially go to market. As the firms mature and look for increased control over client relationships, many apply for limited or full banking charters. More recently, banks have developed a white-glove service for fintech firms that have limited charters. This partnership allows fintech firms to offer products with the speed and efficiency that consumers demand, without being a fully chartered bank. Doug goes on to detail a regulatory debate going on in Washington — should fintech firms be regulated like banks. We end the discussion by comparing the U.S. regulatory environment for fintech firms with the landscape in the UK and the EU.

Bank Engagement with Cryptocurrencies:
The engagement of banks with cryptocurrencies is still in its infancy. As one regulator told Doug:

“Crypto is the only asset that might be on a bank’s balance sheet that could go to 0 tomorrow, and they have to be treated like that.”

While this statement may not be exactly true, it underscores the risk-averse approach many regulators have on the topic. So far, banks are holding crypto assets in custody and lending against them, but not actually taking a position in cryptocurrencies themselves. Prior to cryptocurrencies becoming a standard part of a bank’s activities, banks and regulators need to decide if crypto assets should be classified as a security or a commodity. Doug has written extensively on this topic, including here and here.

The Future of Central Bank Digital Currencies:
Doug discusses the future of Central Bank Digital Currencies (CBDCs) in the United States, and details how the distribution model (central bank issuing direct to consumer vs. central bank issuing through banks to consumers) is an important focus point. He argues that issuing CBDCs direct to consumers has the potential to destabilize the banking system by pulling deposits out of it. Overall, Doug does believe the U.S. will eventually move in the direction of CBDCs, particularly because the technology has the ability to reduce overall transaction costs and include more people in the financial system.

The Future of Fintech:
Doug and I end the conversation by discussing a few areas in fintech he is excited to see play out in the near future, including:

Continued reduction in settlement times and transaction costs
Streamlined KYC/AML processes that lead to a wave of financial inclusion
Development of Defi in the Payment, Clearing, and Settlement space

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Douglas Landy:

Douglas Landy serves as co-head of White & Case’s Financial Institutions Industry Group and head of the US Financial Services Regulatory practice. He is also a member of the Firm’s Fintech practice.

Doug is one of the most preeminent US lawyers advising financial institutions on blockchain and crypto matters. He represents global banks on the creation blockchain and crypto trading platforms, custody, payment systems, stablecoins and related financial products. Doug has also been advising non-bank Fintech companies on potential bank charters, including the OCC’s Payment Charter, and similar charters and licenses.

Clients benefit from his deep understanding of banking and securities laws, along with his thorough and practical legal analysis. He has represented banks in some of the largest M&A transactions in banking history, and in some of the most significant regulatory and Fintech events of the last two decades. Doug was a key advisor to many leading banks and financial institutions, industry advocacy groups during the last financial crisis and the subsequent regulatory reform period. He began his career at the Federal Reserve Bank of New York. His regulatory practice focuses on matters involving almost every significant regulatory issue, including bank charters and licenses, the Volcker Rule, capital requirements, bank insolvency issues, and US laws and regulations applicable to non-US banks. Doug is credited for coining the acronym “TOTUS” for the important Volcker Rule exclusion for trading outside of the United States.

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About the Author:

Anirudh Singh is a second-year MBA Candidate at The Wharton School, where he is part of the Wharton FinTech Podcast team. He has a passion for economic development, venture capital, financial services, and all things FinTech. Don’t hesitate to reach out with questions, comments, feedback, and opportunities at singhan@wharton.upenn.edu.

Douglas Landy, Partner at White & Case — On Banking Charters, Crypto, and CBDCs

Written by Anirudh Singh