To keep you informed of recent activities, below are several of the most significant federal events that have influenced the Consumer Financial Services industry over the past week.
Federal Activities:
On March 30, the U.S. Department of Labor’s Employee Benefits Security Administration issued a landmark proposed rule that would “democratize” access to alternative investments in 401(k) plans by clarifying how plan fiduciaries may prudently add such options and by creating process-based safe harbors for selecting designated investment alternatives. The proposal, which implements President Trump’s executive order on expanding access to alternative assets, reaffirms ERISA’s focus on procedural prudence and directs fiduciaries to make objective, analytical determinations on factors such as performance, fees, liquidity, valuation, benchmarks, and complexity, while remaining neutral as to specific asset classes. Framed as a corrective to prior guidance viewed as discouraging alternative and digital assets, the rule is intended to lower litigation risk and regulatory uncertainty for fiduciaries, thereby expanding the range of investment choices available to more than 90 million Americans saving for retirement. For more information, click here.
On March 27, the European Central Bank (ECB) published Working Paper No. 3208, which uses hand‑collected data on four major decentralized finance (DeFi) protocols to examine who actually governs “decentralized” finance and what that means for regulation. The authors find that governance token holdings are highly concentrated — with the top 100 addresses typically controlling more than 80% of supply and roughly half or more of tokens linked to the protocols themselves or to centralized and decentralized exchanges — and that this concentration is stable over time. They also show that governance is dominated by a small set of delegates wielding delegated votes, many of whom cannot be reliably identified from public blockchain data, making it difficult to link control over proposals and risk parameters to specific legal entities. The paper concludes that decentralized autonomous organizations (DAOs) often fall short of meaningful decentralization and that, given pervasive concentration and pseudonymity, commonly suggested “regulatory anchor points” such as governance token holders, developers, or exchanges may be hard to use in practice without improved traceability and clearer, possibly bespoke, legal frameworks for DeFi governance. For more information, click here.
On March 26, the U.S. House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing to assess whether federal financial regulators are keeping pace with rapid innovation in areas like digital assets and artificial intelligence (AI), with members emphasizing the need for agencies to build expertise, adopt new supervisory technologies, and provide regulatory stability while avoiding policies that chill innovation. Majority members spotlighted their efforts to reverse what they characterized as the prior administration’s “anti‑crypto” posture, including the Federal Reserve’s Novel Activities Supervision Program, and stressed the importance of clear, durable rules for stablecoins and digital asset market structure. Regulators from the Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA) testified that banks and credit unions are already using AI and related tools for fraud detection, anti-money laundering (AML)/countering the financing of terrorism (CFT), underwriting, and customer service, and described agency efforts to support responsible adoption — such as developing “right‑sized” supervisory expectations, engaging with third‑party technology providers, and publishing AI resources — while maintaining safety, soundness, and compliance with existing law. For more information, click here.
On March 26, Coinbase announced it is powering a first-of-its-kind, Fannie Mae-backed “crypto‑backed” conforming mortgage product offered by Better, allowing borrowers to pledge Bitcoin or USDC in their Coinbase accounts as collateral for a separate down‑payment loan while obtaining a standard conforming mortgage on the home. Under the structure, borrowers effectively take out two loans at closing — a traditional Fannie Mae mortgage and a crypto‑secured loan funding the cash down payment — with both sharing the same interest rate and term and being serviced as a single combined monthly payment, while the pledged crypto remains in custody in Better’s Coinbase Prime account and is returned once the loan is repaid, with mortgage terms insulated from crypto price volatility. The product is pitched as a way for digital asset holders to access homeownership without liquidating long‑term positions (and potentially triggering capital gains), and Coinbase One members approved for either a crypto‑backed or traditional Better mortgage can receive closing-cost credits equal to 1% of the mortgage amount (capped at $10,000), with USDC pledgors able to continue earning rewards on their holdings to help offset servicing costs. For more information, click here.
On March 25, the Financial Stability Oversight Council (FSOC) unanimously issued for public comment proposed interpretive guidance on designating nonbank financial companies, signaling a return to prioritizing an activities‑based approach while adding new safeguards tied to economic growth and economic security. The proposal would have FSOC focus first on risks arising from specific activities and practices across markets, resorting to firm‑specific designations only where those risks cannot be adequately addressed otherwise; require a cost‑benefit analysis that considers the likelihood of a firm’s material financial distress and permits designation only when expected benefits outweigh expected costs; and introduce a pre‑designation “off‑ramp” under which FSOC would identify remedial steps a firm or regulators could take to address identified systemic risks before a designation is finalized, thereby enhancing transparency, analytical rigor, and the link between systemic‑risk oversight and broader economic objectives. For more information, click here.
On March 25, the U.S. House Financial Services Committee held a full committee hearing titled “Tokenization and the Future of Securities: Modernizing Our Capital Markets” to examine how tokenization is being used in U.S. capital markets, whether current securities laws and regulations adequately govern these activities, and what gaps, ambiguities, or overlaps may pose risks to investors or impede innovation. Witnesses testified on the implications of tokenization for market integrity, investor protection, and capital formation, as well as on operational and legal issues arising from the use of blockchain-based records. The hearing considered two discussion drafts: the Modernizing Markets Through Tokenization Act of 2026, directing the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to conduct a joint study on whether further guidance or rulemaking is needed for tokenized securities and derivatives, and the Capital Markets Technology Modernization Act of 2026, clarifying that key market intermediaries and exchanges may use blockchain records consistent with SEC rulemaking under the Securities Exchange Act of 1934. For more information, click here.
On March 25, NCUA proposed a deregulatory rule to eliminate its prescriptive limits on third‑party servicing of indirect vehicle loans, including the current caps that restrict a credit union’s purchases from any one servicer to 50% of net worth (rising to 100% after 30 months) and the associated waiver process for both federal and federally insured state‑chartered credit unions. The Board explained that these one‑size‑fits‑all concentration limits are unnecessarily burdensome and that individual credit union boards are better positioned to set policies appropriately scaled to their size, risk profile, and use of third‑party servicers, consistent with a principles‑based supervisory approach. If finalized, the NCUA would continue to oversee such activities through the examination process rather than hard numerical caps, and the agency expects the change to reduce administrative costs and compliance complexity without having a significant economic impact on small credit unions. Comments on the proposal are due by May 26, 2026. For more information, click here.
On March 24, the U.S. Department of Housing and Urban Development’s (HUD) Office for Fair Housing and Equal Opportunity announced it has opened a Fair Housing Act investigation into the Washington State Housing Finance Commission’s Covenant Homeownership Program, a zero‑interest secondary loan program for first-time homebuyers that offers down payment and closing cost assistance — and, for low-income borrowers, potential full forgiveness after five years of ownership — based in part on whether applicants have a parent or grandparent of specified racial or ethnic backgrounds. HUD indicated it believes the program’s race-based eligibility criteria, adopted following the Commission’s 2023 “Racial Equity Strategy Plan,” may unlawfully discriminate by excluding, among others, persons of European, Japanese, Arab, or Jewish ancestry, and Secretary Scott Turner stated that under the Trump administration, HUD will not tolerate racial or ethnic preferences that deny equal protection and will enforce the Fair Housing Act to ensure equal access to housing assistance. For more information, click here.
On March 24, the Financial Stability Board (FSB) published its 2025 Annual Report, in which Chair Andrew Bailey underscored both the resilience of the global financial system in the face of recent shocks and the need for the FSB to keep adapting amid rising geopolitical fragmentation and strains on multilateralism. The report highlights 2025 workstreams on long‑standing vulnerabilities such as sovereign debt and nonbank financial intermediation (NBFI) (including new work on NBFI leverage and the creation of a Nonbank Data Task Force), as well as elevated asset valuations, crypto‑asset and stablecoin risks, and operational fragilities. It reviews implementation of the FSB’s 2023 global regulatory framework for crypto-assets and stablecoins, finalization of a common format for cross‑border operational incident reporting, continued efforts to bolster resolution readiness, and the completion of key policy initiatives under the roadmap for enhancing cross‑border payments, with a renewed focus in the next phase on diagnosing the slowdown in G20 reform implementation and driving more effective, jurisdiction‑level follow‑through. For more information, click here.
On March 24, CFTC Chairman Michael S. Selig announced the creation of an Innovation Task Force to help craft clear “rules of the road” for U.S. innovators developing novel products and technologies in derivatives markets, with a particular focus on crypto assets and blockchain, AI and autonomous systems, and prediction markets and event contracts. Working alongside the CFTC’s Innovation Advisory Committee, the Task Force will drive the Commission’s innovation agenda, develop a coherent regulatory framework for these emerging areas, and coordinate with other federal agencies, including the SEC and its Crypto Task Force, to promote responsible innovation while keeping U.S. market participants competitive. For more information, click here.
On March 24, SEC Chairman Paul S. Atkins, speaking at the Digital Asset Summit in New York, highlighted what he called a historic week for U.S. digital asset markets, emphasizing the Commission’s publication of a “token taxonomy” and updated Howey interpretation that draws clearer jurisdictional lines around when a crypto asset is a security. He explained that the new framework delineates five categories of digital assets — four of which are not securities — and outlines compliance pathways for entrepreneurs raising capital with crypto assets, with the aim of ending the “Securities and Everything Commission” era and refocusing the SEC on its statutory investor-protection mandate in securities transactions. Atkins cautioned, however, that the SEC’s interpretation is only a foundation, not a final resolution, and stressed that only Congress can fully “future‑proof” regulation through comprehensive market-structure legislation, while the SEC continues to clarify the proper bounds of its authority under existing law. For more information, click here.
On March 24, ECB Executive Board member Piero Cipollone told the European Parliament’s ECON Committee that the Eurosystem is pressing ahead with technical preparations for a potential digital euro — while stressing it will only be issued once an EU legal framework is in place — to ensure a universally accessible, pan‑euro area retail complement to cash that strengthens monetary sovereignty and reduces payment fragmentation. He highlighted four workstreams: “inclusion and accessibility by design,” including a partnership with the ONCE Foundation and features like adaptive interfaces to serve people with disabilities and low digital literacy; an innovation agenda that uses the digital euro’s common infrastructure and standards to help European payment service providers (PSPs) and fintechs scale new services (such as conditional payments, e‑receipts, and offline use cases) across borders; integration into the broader payments ecosystem via co‑badging with domestic schemes and common European standards so that the digital euro acts as public “rails” on which private solutions can run rather than as a competitor; and a phased piloting program, with PSPs to be selected in 2026 for a 12‑month pilot starting in the second half of 2027, aimed at ensuring technical readiness for a possible launch around 2029, assuming timely adoption of the digital euro regulation. For more information, click here.
On March 23, Senators Adam Schiff (D‑CA) and John Curtis (R‑UT) introduced the bipartisan Prediction Markets Are Gambling Act, which would bar any CFTC–registered entity from listing prediction contracts that resemble sports bets or casino-style games, effectively pushing such products back under state (and tribal) gambling regimes rather than federal derivatives regulation. Citing explosive growth in sports prediction markets — including hundreds of millions to billions in trading volume on events like March Madness and the Super Bowl — Schiff and Curtis argue these contracts are functionally indistinguishable from illegal sports betting in states like California and Utah, evade state and tribal consumer protections, generate no public revenue, and conflict with Congress’s original intent that the Commodity Exchange Act not permit gaming. The bill responds to what they describe as a sharp CFTC policy reversal and growing federal tolerance of these markets, and complements Schiff’s separate DEATH BETS Act targeting “death contracts” and other event contracts tied to terrorism, war, or individuals’ deaths. For more information, click here.
On March 23, the SEC and CFTC issued a joint final interpretive release clarifying how federal securities laws apply to crypto assets and certain crypto transactions, classifying crypto assets into five categories (digital commodities, digital collectibles, digital tools, stablecoins, and digital securities) and emphasizing that only “digital securities” and nonsecurity tokens offered under an investment contract are securities. The interpretation explains when a nonsecurity token becomes subject to, and can later separate from, an investment contract under Howey; concludes that specified forms of protocol mining and protocol staking in public proof‑of‑work and proof‑of‑stake networks, and related staking receipt tokens and “wrapped” tokens that are simple one‑for‑one receipts for nonsecurity assets, do not involve securities transactions; and provides that certain “airdrops” of nonsecurity tokens with no consideration from recipients likewise do not create investment contracts. The CFTC concurrently signaled it will treat qualifying nonsecurity tokens as commodities under the Commodity Exchange Act, and both agencies characterized the interpretation as a first step toward a more coherent, innovation‑supportive regulatory framework, while inviting public comment that could lead to further refinements. For more information, click here.
On March 20, Federal Trade Commission (FTC) Chairman Andrew N. Ferguson issued a memorandum directing the creation of an internal Healthcare Task Force. The directive underscores that health care remains a top enforcement and policy priority for the FTC, reflecting the administration’s focus on a “more competitive, innovative, affordable, and higher quality healthcare system.” Ferguson’s memorandum highlights the outsized role of health care in the U.S. economy, approximately 18% of GDP, and the disconnect between that level of spending and many patients’ ongoing difficulty accessing affordable care. The memo links those challenges to consolidation and other forms of allegedly anticompetitive conduct across health care markets, as well as to regulations that may weaken incentives to lower costs or improve quality. The chairman emphasizes the particular impact on vulnerable populations, including rural communities, seniors, and veterans. The memo also stresses the FTC’s “dual mandate” to police both unfair or deceptive practices and unfair methods of competition. Against that backdrop, the Healthcare Task Force is designed to break down silos within the agency and between it and other agencies, leverage the FTC’s wide-ranging health care experience, and ensure that enforcement and advocacy efforts are aligned across the agency. For more information, click here.
On March 20, the Consumer Financial Protection Bureau (CFPB) published a Paperwork Reduction Act notice seeking Office of Management and Budget reinstatement of its information collection for “Mortgage Acts and Practices — Advertising (Regulation N)” (OMB Control No. 3170-0009), which requires covered mortgage advertisers to retain certain records for 24 months to support enforcement against deceptive mortgage advertising. The notice estimates 483 private-sector respondents and 242 total annual burden hours, and invites public comment by April 20, 2026, on the necessity and practical utility of the collection, the accuracy of the burden estimates, ways to improve the quality and clarity of the information collected, and methods to reduce respondent burden, including through automation. For more information, click here.
On March 19, Senator Chris Coons (D‑DE), joined by Senator Lisa Murkowski (R‑AK), introduced S.4144, the Ending Scam Credit Repair Act (ESCRA Act), which would significantly tighten the Credit Repair Organizations Act by clarifying the definition of “credit repair organization” (narrowing the attorney exemption and ensuring entities can’t evade coverage), banning advance fees for promised credit improvement until results are documented on a consumer report at least 180 days later, and expressly prohibiting “jamming” practices involving repetitive, unsupported disputes to credit bureaus and furnishers. The bill would strengthen disclosures to consumers (including a plain-language warning that credit repair firms do nothing consumers cannot do themselves for free), require retention of and access to call recordings, mandate that consumers receive copies of all contracts and communications sent on their behalf, and make clear that organizations are covered even if they are law firms, unless a narrow bankruptcy/Consumer Credit Protection Act attorney exception applies. ESCRA would also require all credit repair organizations to hold a state license as of January 1, 2026; impose detailed identification and licensing requirements on disputes sent to furnishers; and enhance civil remedies by authorizing statutory damages of $500 per violation, in addition to existing relief. For more information, click here.
On March 19, the Federal Reserve, FDIC, and OCC jointly issued three proposed rules to “modernize” the regulatory capital framework for banking organizations of all sizes. The proposals operate on three fronts. For the largest, most internationally active banks (Category I and II), the agencies would replace overlapping regimes with a single “expanded risk‑based approach” that integrates credit, market, operational, and credit valuation adjustment (CVA) risk. For most other banks, the agencies would refine the standardized approach by recalibrating risk weights for core lending categories, e.g. residential mortgages, corporate exposures, and mortgage servicing assets, while preserving overall simplicity. Separately, the Federal Reserve would update the framework for setting the GSIB surcharge so that the additional capital required of the largest, most complex firms better reflects their systemic footprint and funding profile. The agencies aim to simplify how capital is calculated, better align requirements with underlying risk, and maintain the strength of the banking system, even as they project a modest decline in aggregate capital requirements compared to today’s levels. Comments on all three proposals are due by June 18, 2026. For more information, click here.
On March 19, the FDIC Board of Directors voted to rescind its 2009 Statement of Policy on Qualifications for Failed Bank Acquisitions and related 2010 Q&As, which had imposed additional conditions on private investors and nonbank entities seeking to acquire failed banks or assume their deposits — conditions the agency now views as an unnecessary deterrent to broader participation in resolution transactions. By eliminating these policy constraints (effective upon Federal Register publication), the FDIC aims to reduce regulatory barriers for nonbank bidders in the failed-bank process and thereby increase competitive bidding, with the goal of lowering the ultimate cost of bank failures to the Deposit Insurance Fund. For more information, click here.
On March 18, the Federal Housing Finance Agency (FHFA) announced changes to Fannie Mae and Freddie Mac homeowner insurance requirements intended to lower premiums and expand insurability, particularly for condo projects and borrowers in rural or high-cost insurance markets. The revisions allow both single-family and condominium properties financed with conforming mortgages to use less expensive actual cash value (ACV) roof coverage while retaining full replacement cost coverage for the remainder of the structure, simplify the prior “maximum per-unit deductible” standard for condos, and rescind a 2024 clarification that FHFA now views as unnecessarily complex and cost-increasing. FHFA projects that by broadening acceptable coverage types and easing certain underwriting constraints, more condo buildings will qualify for agency-backed financing and more borrowers — especially first-time and rural buyers — will see lower total monthly housing costs without, in the agency’s view, materially weakening overall loss protection. For more information, click here.
On March 17, the FTC announced it is sending more than $10.9 million in refunds to 443,048 consumers harmed by a credit repair scheme operating under names including Financial Education Services, United Wealth Education, United Credit Education Services, and Youth Financial Literacy Foundation, which allegedly lured people with poor credit into paying for sham “easy fix” services and then pushed them into a pyramid scheme to recruit others. The distributions follow 2024 settlements requiring the company and its principals to halt their deceptive practices and surrender funds for consumer redress. For more information, click here.
On March 17, the Federal Housing Finance Agency issued a final rule and technical amendment to its Private Transfer Fee Covenants (PTFC) regulation reinstating “grandfather” exceptions that were inadvertently removed in 2024, thereby clarifying that, effective nunc pro tunc to July 16, 2012, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks may continue to deal in mortgages (and related securities) on properties encumbered by private transfer fee covenants created before February 8, 2011, or created thereafter pursuant to pre‑February 8, 2011, agreements approved by a government body or entered into in settlement of litigation. The amendment, which FHFA adopted without additional notice and comment on good-cause grounds, is intended to protect stakeholders who relied on those transitional provisions and to avoid title uncertainty that could arise from their temporary omission, while preserving the 2024 rule’s separate exemption allowing the enterprises to retain certain shared equity loans with private transfer fees that predate July 1, 2023. For more information, click here.
State Activities:
On March 25, reports surfaced that New York Assembly Democrats are pushing a tiered excise tax on energy‑intensive crypto mining operations — facilities using at least 2.25 million kilowatt-hours annually, particularly proof‑of‑work miners — at rates between 2 and 5 cents per kilowatt-hour, with projected revenue of $95 million in 2027 and $380 million annually through 2030 to help fund a $2.6 billion utility‑bill rebate for residents. Supporters, led by Assemblymember Anna Kelles, argue crypto mining is a risky industry that drives up utility costs without commensurate job benefits, while industry groups and lobbyists warn the measure amounts to a de facto ban that unfairly singles out one type of high-load user, could violate the Commerce Clause, and would deter investment and jobs in upstate regions. The proposal appears only in the Assembly’s one-house budget so far; the Senate and Governor Hochul have not endorsed it, and negotiations ahead of the April 1 budget deadline will determine whether the tax advances. For more information, click here.