The grandly named Office of the Comptroller of the Currency is one of the oldest agencies in Washington, set up during the Civil War to help build a national banking system and strengthen the dollar. Predating even the Federal Reserve by 50 years, it has long served an important if relatively obscure role overseeing American finance.

But in 2016, this venerable agency has suddenly become the center of the first big battle between traditional banks and a new industry that even its most visionary founders would have had trouble imagining. The so-called “fintech” industry—a tech-driven explosion of startups offering bits of the services that banks traditionally provide—is at odds with established banks over a bureaucratic duty the agency has performed since 1863: issuing charters.

Charters are powerful documents that allow banks to offer loans and take deposits in multiple states without having to comply with a patchwork of state regulations. And the new tech upstarts are eyeing these old documents with some jealousy. Fintech firms use mobile phones, websites and other technology to deliver consumers banking services like loans or money transfers—without performing all the other duties of banks. And as fintech firms like PayPal, Lending Club and SoFi have expanded across the country, they find themselves handicapped by America’s complicated web of state regulations. Right now, to operate nationally they need to undertake the long, expensive quest to get permission from each state they want to operate in—or piggyback on a mainstream bank in order to use its charter.

This past spring, the comptroller of the currency, Tom Curry, announced that the regulator would consider something new: a charter just for fintech startups. It’s not yet clear what he has in mind, but he has suggested that some kind of guidance is expected this fall, possibly as soon as October.

The prospect has launched a decidedly old-school fight around a new-wave business, and brought a parade of lobbyists and lawyers trooping into the OCC offices. A charter, in giving a bank permission to operate, also helps set the bar for regulations that it has to meet. Banks, which generally feel overregulated anyway, don’t want fintech firms to be granted a looser set of rules that free them to pick off lucrative corners of the business. Fintech firms, for their part, feel that a full slate of banking regulations is unnecessary—and worry it would strangle their industry in the crib. “I could see it being so cumbersome that it might stifle innovation, which I think would be a real shame and a missed opportunity,” says Sam Hodges, co-founder of Funding Circle, a small business lender that has helped create a new association here in D.C. to represent online lenders.

The American Bankers Association, the banking industry’s largest advocacy organization in D.C., has argued that any charter geared toward fintech needs to bring the new players firmly under federal oversight. Banks are going to “try and make the regulations for the new charter look as much like theirs as possible,” said one lobbyist tracking the OCC’s effort, who has represented both banks and fintech firms in the past. “Misery loves company.”

Like many regulators in a changing industry, the 150-year-old office finds itself in the middle of a tug of war between two kinds of business that see those risks in very different ways. Open the door too wide to fintechs, and the government could end up putting excessive competitive pressure on traditional banks, not to mention the possibility that a new tech upstart could present new risks to the financial world. But if the charter is written too narrowly, the OCC could stifle new companies that make borrowing or sending money cheaper and easier for everyone. At the center of a classic lobbying fight are millions of Americans who use the services, and a philosophical question that fintechs have forced Washington to confront: What exactly is a bank?

FOR GENERATIONS, THE question was easy to answer: a bank takes deposits, makes loans against those deposits and collects interest payments—with a side helping of other services such as wiring funds and cashing checks. Charters set the terms that help keep banks stable and money safe: Banks have to carry federal deposit insurance, submit to regular examinations from “safety and soundness” inspectors and comply with government rules about holding enough capital.

But the new breed of fintech lenders looks more like the lucrative parts of a bank sliced off from the boring, cumbersome parts. A fintech lender doesn’t take deposits. Instead, it lends money against its own assets (a model called “balance sheet lending”), or it acts as a marketplace, using software to match borrowers with investors, a transaction that looks just like a normal loan but behind the scenes is more like crowdfunding debt.

The two largest U.S. fintech lenders, Lending Club and Prosper, basically use the peer-to-peer model, while SoFi, another large personal lender, offers a mix of balance sheet and marketplace loans. All have made billions of dollars in personal loans of varying types since they started. However, in order to operate nationally, they either have to partner with a chartered bank, which technically originates the loans, or register for a lending license in each state.

Because they’re Internet-based, fintechs are almost by definition national companies—anyone with a network connection is a potential customer. The idea of a “fintech charter,” exciting as it is to the new industry, terrifies banks—especially small ones, which would suddenly be facing a new kind of competitor that doesn’t have to do the hard work of raising deposits or meeting expensive capital and asset requirements.

In the past year a new crop of fintech trade associations have sprung with remarkable speed: the Marketplace Lending Association and the Innovative Lending Platform Alliance were both launched by smaller players, and tech giants Amazon, Apple, Intuit, PayPal and Google formed Financial Innovation Now. They join groups such as the Electronic Transactions Association and the Small Business Finance Association, which also represent the interests of some online firms; individual companies have also hired their own lobbying shops on their own.

The emerging conflict between banks and fintechs bubbled into the open at an industry event last January. During a meeting of the Exchequer Club, a sort of social society for financial types at Washington’s historic Mayflower Hotel, a few blocks from the White House, American Bankers Association CEO Rob Nichols—the top lobbyist for an industry already under fire from Bernie Sanders on the campaign trail and financial reformers in Congress—made it clear that banks would not take competition from these new upstarts lying down.

“My concern over the next several years is that we don’t add yet another unlevel playing field for our nation’s banks, especially our community banks,” Nichols said. “So I think we need to spend a lot of time thinking about the future regulatory structure there. I think that’s a huge issue.”

It was a clear signal from Nichols that he’ll fight to make sure that fintech firms don’t win any kind of regulatory advantage over banks.

And it then led to a peculiar exchange with an outsider in the room: Richard Neiman, a former New York bank regulator and current head of government affairs for Lending Club, the first of the new wave of consumer lenders to go public. Neiman raised his hand to ask what fintech firms, like the one he represents, could do to improve relations with banks.

“One thing I think that’s important is your emerging industry’s use of rhetoric,” Nichols responded.

He was alluding to the sales pitches that fintech startups have been making to consumers, which have amounted to some pretty direct challenges to banks. One ad campaign from the online lender SoFi heralded the “beginning of a bankless world”; at subway stops, on Twitter, and even during a Super Bowl ad spot, it tells consumers: “Don’t Bank. SoFi.”

SoFi’s founder and CEO Mike Cagney—a former Wells Fargo trader—has gone even further in needling banks in public, saying his company wants “to change a fundamentally broken system” while making his brick-and-mortar competitors “dinosaurs.”

Clearly there’s little love lost between the banks and the startups. Much like Uber and the taxi companies, the fintech firms are trying to disrupt a well-entrenched system. In the months since Curry first announced his plans to write a new kind of charter, lobbying records show all the major financial trade associations have made the trek to the OCC, and industry lobbyists say fintech has been on the agenda for every one of the meetings.

Small banks have emerged as the point of the spear, given that they consider themselves to be the most vulnerable to fintech advances. Their influential trade group, the Independent Community Bankers Association, has lobbied Curry and his top policy staff to require any fintech firms to obey all of the same regulations, such as capital requirements, that banks must comply with under an OCC charter.

“The last thing we want to see,” said Chris Cole, executive vice president and senior regulatory counsel for the ICBA, “is a charter that has all the privileges of a commercial bank charter without the supervision and regulation that comes with a community bank.”

Community bankers say they’re already being squeezed by the Dodd-Frank financial reform law for the mistakes big banks made before the 2008 financial crisis. Now some community bankers say a new fintech charter will further legitimize their online competitors—and just make the tech upstarts more attractive acquisition targets for the big banks, which have been siphoning away community banking customers for years. “These fintech companies, if they’re the least bit successful, they’re going to end up in the big bank,” concluded Rusty Cloutier, a former chair of the ICBA and current president and CEO of MidSouth Bank in Lafayette, Louisiana.

The newcomers aren’t just waiting to see what the OCC decides. They’ve begun forming their own trade associations and meeting with the regulators. Filings show the agency has been recently lobbied by Amazon, which has begun to explore lending; PayPal, which has a program tailored for smaller companies that could benefit under a new charter; and small business lending “unicorn” Kabbage, along with trade groups like the Electronic Transactions Association (which represents a broad coalition of both banks and nonbanks) and Financial Innovation Now. Individual companies have also been in to meet with staff at the regulator.

The two sides are sparring over a host of issues, from the technicalities of capital ratios to whether, and how, an online lender would comply with the Community Reinvestment Act, a 1977 law that requires banks to lend in low- and moderate-income neighborhoods. Because the CRA predates the internet, it’s not clear how its focus on deposits and lending within a specific geographic area could apply to an online lender.

Some fintech firms say they’d likely get good ratings under the law, because they can serve consumers who don’t have access to banks; in 2015, Lending Club made a deal to extend up to $150 million in low-interest credit to low- and medium-income borrowers in a deal with Citi, in an effort to earn some goodwill with skeptical regulators—and perhaps wary bankers as well. But John Taylor, president and CEO of the National Community Reinvestment Coalition, worries that voluntary efforts won’t do nearly enough to ensure that poorer Americans have access to loans. The argument fintech startups make about serving poorer customers is “kind of ludicrous,” Taylor said, because many tech startups are pursuing higher-income, lower-risk borrowers.

Without deposits, online lenders argue that they shouldn’t have to tie up money in capital reserves, because they’re not going to have to pay back depositors if they go out of business. Community banks, of course, balk at facing a competitor that doesn’t have the same costly capital requirements that they do.

AS PRESSURE FROM all sides grows on the banking regulator, it has kept its intentions close to the vest. Though the agency has been almost universally praised for attempting to update its charters for a rapidly transforming industry, several lobbyists closely following the effort said they’d never had a harder time predicting what a regulator would do.

The agency recently took a step that may indicate how it would handle a key issue raised by an eventual fintech charter. In mid-September, the OCC issued a proposed rule for how a noninsured bank that has a charter should be wound down after it failed, and Curry said the same process would be used on fintechs—if they end up getting a charter.

In a brief interview after a recent online lending conference, Curry suggested the OCC might focus on policing fintechs after they’ve gotten charters, rather than frontloading requirements in the document itself.

“I think you’d have to assess whether there’s a need for a consumer protection or access to credit-type provision or condition baked into that process,” he said, “whether in the charter itself or a focus on supervision after the fact.” He added that the agency has to carefully examine exactly what it can do under the National Bank Act, the central law to chartering and the U.S. banking system.

However Curry’s team answers those questions, they’ll be bringing a 150-year-old national banking system, and its regulator, into the modern era. What that means for traditional banks and their customers is hard to predict.

“This is a brave new world,” said a lobbyist. “They’re chartering new territory.”

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