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 June 5, the Consumer Financial Protection Bureau (CFPB) issued a formal statement on how immigration status factors into ability‑to‑repay determinations under the Truth in Lending Act (TILA) and Regulation Z. The statement emphasized how immigration status can affect that forward‑looking assessment. Regulation B already permits lenders to consider immigration status to protect their rights and remedies. The CFPB now stresses that when repayment depends on U.S.‑based employment, and the file contains information indicating that the consumer may not be lawfully present, may lack work authorization, or may otherwise be at risk of removal, a creditor may be obligated to factor that into its ability‑to‑repay analysis. At the same time, the CFPB acknowledges the wide variety of lawful immigration statuses and declines to prescribe bright‑line rules across categories. Instead, the CFPB expects creditors to make reasoned, documented judgments about when a particular status or set of facts indicates a reasonably expected change in future income. Crucially, the statement does not authorize blanket denials based on noncitizen status or Individual Taxpayer Identification Number (ITIN) use. The Equal Credit Opportunity Act and fair lending concerns still constrain how immigration‑related information may be used. Days earlier, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), jointly with the federal banking agencies and in coordination with the Internal Revenue Service (IRS), released a detailed advisory on fraud, payroll schemes, and money‑laundering risks associated with the unlawful employment of nonwork authorized persons, including specific guidance around use of ITIN and Suspicious Activity Reports (SARs). For more information, click here and here.
On June 5, the Federal Deposit Insurance Corporation (FDIC) published a notice of proposed rulemaking to amend 12 CFR Part 350 to establish Bank Secrecy Act and economic sanctions compliance standards for FDIC‑supervised permitted payment stablecoin issuers (PPSIs) under the GENIUS Act, requiring each PPSI to comply with applicable FinCEN and the Office of Foreign Assets Control rules (31 CFR Chapters X and V), including anti-money laundering (AML)/countering the funding of terrorism (CFT) programs, sanctions programs, reporting, and customer identification requirements, and creating a new Subpart C that sets out definitions, the FDIC’s supervisory and enforcement approach to PPSI AML/CFT programs, and a formal consultation framework with FinCEN before significant AML/CFT enforcement or supervisory actions. The proposal clarifies how PPSIs may share otherwise confidential supervisory information with FinCEN, preserves applicable privileges, and includes a severability clause, while the accompanying impact analysis concludes that the rule should enhance consistency and effectiveness of AML/sanctions compliance for payment stablecoins with relatively modest incremental costs because PPSIs will leverage their parent insured depository institutions’ existing compliance infrastructures. Comments on the proposal are due to the FDIC by August 4, 2026. For more information, click here.
On June 5, Bloomberg Law reported that U.S. House Ways and Means Committee discussion drafts would overhaul U.S. digital asset taxation by allowing taxpayers to defer income on newly created tokens from mining or staking until sale (with any gain or loss then treated as ordinary income) and to report aggregate annual gains and losses on widely traded digital assets instead of tracking each transaction, subject to limits for high‑volume users. The drafts would also extend wash‑sale rules to cryptocurrencies, permit dealers and professional traders to elect mark‑to‑market treatment similar to securities, and tighten rules on U.S. taxpayers who move to low‑tax jurisdictions by imposing a 10‑year lookback unless at least 10% foreign tax is paid on gains. Additional provisions would streamline charitable contributions of widely traded digital assets by eliminating appraisal requirements, and offer reduced penalties for taxpayers who voluntarily correct past crypto tax noncompliance. The package is expected to be formally introduced ahead of a committee hearing as Congress moves toward the first comprehensive tax framework for digital assets. For more information, click here.
On June 4, the FDIC filed an amicus brief in the Tenth Circuit’s en banc rehearing of National Association of Industrial Bankers v. Weiser, supporting industry plaintiffs and arguing that the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) § 525’s phrase “loans made in such State” refers to the state where the bank is located and performs key lending functions, not where the borrower resides. The filing confirms the FDIC’s historical position on the DIDMCA opt out and directly bears on the limited applicability of Colorado’s opt out and UCCC rate caps. For more information, click here.
On June 4, the U.S. Supreme Court unanimously held in Sripetch v. SEC that the U.S. Securities and Exchange Commission (SEC) does not need to prove that investors suffered pecuniary loss in order to obtain a disgorgement award in civil enforcement actions. Writing for the Court, Justice Gorsuch anchored the decision in traditional equitable principles of restitution, concluding that disgorgement focuses on the defendant’s unjust gains rather than the victim’s out-of-pocket losses. The Court resolved a split between the Second Circuit and other courts of appeals. Sripetch is a significant win for the SEC and other civil enforcement agencies that rely on gain-based remedies. By rejecting a pecuniary-loss requirement, the Court preserves the SEC’s ability to pursue disgorgement in cases where investor harm is diffuse, difficult to quantify, or not easily demonstrated in out-of-pocket terms. Defendants will not be able to defeat disgorgement simply by arguing that investors ultimately did not lose money. At the same time, the decision leaves intact core constraints on disgorgement drawn from Liu and traditional equity. The SEC still must tie the award to the defendant’s net profits causally connected to the violation, and focus on directing those gains to “wronged investors” rather than treating disgorgement as a free-standing penalty for the Treasury. The Court’s repeated emphasis on “traditional equitable principles” and on the wrongful invasion of legally protected interests gives defendants continued grounds to challenge disgorgement amounts that overshoot net profits, lack a clear causal nexus to the alleged violation, or are sought in circumstances where no investor’s legal interests were actually invaded. For more information, click here.
On June 2, the FDIC, Office of the Comptroller of the Currency (OCC), and Federal Reserve Board (FRB) jointly announced another step in their effort to eliminate “reputation risk” from the federal banking supervisory framework, an effort prompted by Executive Order 14331 (Guaranteeing Fair Banking for All Americans). The agencies updated a broad set of interagency documents to remove references to “reputation risk” and, in some cases, “reputation,” reinforcing their earlier decision to stop using reputation risk as a basis for examination findings or exerting supervisory pressure on financial institutions to avoid or exit certain banking relationships. The federal banking agencies have indicated that they will continue reviewing supervisory materials and may update additional documents as needed. The FRB still needs to finalize its own reputational risk rule, which would complete the tri‑agency transition away from reputation risk as a supervisory tool. For more information, click here.
On June 2, the U.S. Department of the Treasury’s Office of Foreign Assets Control designated Nobitex — Iran’s largest digital asset exchange — and three other Iranian exchanges (Wallex, Bitpin, and Ramzinex, along with several Nobitex executives and Khamenei-linked insiders) under E.O. 13224 and E.O. 13902 for facilitating sanctions evasion, terror finance, and other IRGC‑linked activity as part of the Trump administration’s “Economic Fury” maximum pressure campaign on Iran. Treasury described Nobitex as processing over half of all Iranian digital asset inflows in 2025, enabling Islamic Revolutionary Guard Corps (IRGC)‑affiliated ransomware operations, helping the Central Bank of Iran access hundreds of millions of dollars in stablecoins to prop up the rial, and moving regime wealth abroad — including during recent U.S. combat operations and internet blackouts — while the other exchanges similarly handled significant IRGC‑linked flows. As a result of the designations, all property and interests in property of the listed persons in the U.S. or in the possession or control of U.S. persons are blocked, and U.S. persons are generally prohibited from dealing with them. Non‑U.S. persons face secondary sanctions risk for certain dealings, and Treasury highlighted available guidance, enforcement consequences (including strict‑liability civil penalties), whistleblower incentives, and the U.S. Department of State’s reward of up to $15 million for information that disrupts the IRGC’s financial mechanisms. For more information, click here.
On June 1, the FDIC Office of Inspector General (OIG) issued its Failed Bank Review of Metropolitan Capital Bank & Trust of Chicago, Illinois, describing how the Illinois Department of Financial and Professional Regulation closed the bank on January 30, 2026, and appointed the FDIC as receiver after persistent asset quality problems eroded its capital, leading to an estimated $19.6 million loss (8% of total assets) to the Deposit Insurance Fund. The report explains that, because the loss was under $50 million, the Federal Deposit Insurance Act required the OIG to assess the grounds for receivership and evaluate whether “unusual circumstances” justified a more in‑depth review, considering factors such as the size of the loss relative to assets, the adequacy of FDIC supervision, indications of fraud, and other contributing conditions. The OIG concluded that no such unusual circumstances were present and therefore an in‑depth review of the loss was not warranted. For more information, click here.
On May 29, the Commodity Futures Trading Commission (CFTC) took a set of actions that together open a path for digital asset perpetual contracts to trade on registered U.S. platforms by classifying them as futures, rather than swaps, for the first time. The Commission approved the first such product, issued a policy statement on how it will review future perpetual contracts, and its staff issued separate guidance addressing foreign-listed perpetuals and customer margin and 24/7 trading. Perpetual contracts, often called perpetual futures, are futures-style instruments without a fixed expiration date, and they have until now traded almost entirely on offshore crypto trading platforms. Alongside the order, the Commission issued a policy statement on the listing of perpetual contracts addressing asset classes not covered by the Order. Because such products may vary significantly depending on the assets they reference, the Commission took the view that the voluntary, case-by-case review process under Regulation 40.3 is the appropriate route for listing perpetual contracts on asset classes not covered by the Kalshi order, rather than through self-certification. The Commission notes this guidance is a first step and that it may later address perpetuals more comprehensively through further guidance or rulemaking. It encouraged market participants to engage with staff and submit such products for review, and the policy statement will be published in the Federal Register. For more information, click here.
On May 29, the U.S. Department of Housing and Urban Development (HUD), through the Federal Housing Administration (FHA), issued a request for information seeking public comment on FHA’s Minimum Property Requirements (MPRs) for single-family mortgage insurance programs, aiming to modernize and streamline these standards to better balance borrower and Mutual Mortgage Insurance Fund (MMIF) protections with the costs and burdens of repairs and inspections, particularly in light of perceptions that FHA-related repair and reinspection rates exceed those of the government-sponsored enterprises. HUD invites feedback by June 29, 2026, on topics including the comparative advantages and disadvantages of MPRs, whether current requirements adequately protect borrowers and the MMIF, which specific MPRs may no longer be necessary, opportunities for greater post-closing repair flexibility, ways to improve clarity and consistency for mortgagees and appraisers, whether the FHA appraiser’s scope of work aligns with modern practice, and broader suggestions for modernizing FHA’s approach to collateral risk management. For more information, click here.
On May 29, the SEC published an order granting Paxos Securities Settlement Company, LLC (PSSC) a temporary 18‑month registration as a clearing agency under § 17A of the Exchange Act, allowing it to operate as a central securities depository and securities settlement system using its Paxos Settlement Service and distributed-ledger-based “Paxos Ledger,” while exempting it during this period from the organizational and capacity determinations in §§ 17A(b)(3)(A) and (F). The SEC recounted PSSC’s 2025–2026 application history, noted supportive and critical comment letters, and emphasized that PSSC will provide bilateral delivery-versus-payment settlement for pre‑approved counterparty pairs, with margin requirements and optional netting, but will not act as a central counterparty or extend credit. The order conditions temporary registration on PSSC completing a “Ramp‑Up” period — at least 10 months before operations begin and then at least 12 months with no more than 10 participants and no enhanced multilateral netting — during which PSSC must finalize key relationships (such as Depository Trust Company participation and settling bank arrangements), systems, and policies, amend its CA‑1 as needed, and submit any rule changes through the § 19(b)/Rule 19b‑4 process, while remaining subject to SEC supervision, examinations, and ongoing Exchange Act obligations. For more information, click here.
State Activities:
On June 5, the California Department of Financial Protection and Innovation published a second modification to its proposed Digital Financial Assets Law regulations, responding to the Office of Administrative Law’s disapproval of the rulemaking. The changes clarify the license application (Form MU1), executive-officer and control-person reporting, and surety bond requirements, and add an Initial Statement of Reasons Addendum to the rulemaking file. Comments are due June 22, 2026. For more information, click here.
On June 4, Bloomberg Law reported that Illinois lawmakers quietly approved a first-in-the-nation Digital Asset Privilege Tax — a 0.2% levy on the value of digital asset trades conducted in the state, expected to raise about $60 million as part of omnibus tax bill SB 3019 — but cryptocurrency trade groups are urging Governor J.B. Pritzker to remove the provision before he signs the state’s $55.9 billion fiscal 2027 budget, warning in a joint letter that the tax is “substantively unsound, procedurally deficient, and economically destructive” and will drive digital asset businesses out of Illinois. Industry representatives and tax practitioners say they were “completely blindsided” by the measure, which was added at the last minute with no public hearing, and note that while certain exchanges already comply with other transactional taxes, this novel financial transactions tax raises significant policy and compliance concerns. For more information, click here.
On June 3, Colorado Governor Jared Polis vetoed Senate Bill 26-134, “Payment Card Networks’ Fees,” which would have barred payment card networks from charging interchange fees on the tax portion of transactions (with an intended exemption for issuers under $60 billion in assets) and required large retailers to use any resulting savings for consumer price reductions or employee compensation, explaining that despite his support for helping restaurants and small businesses and reducing unnecessary fees, the bill posed significant legal and operational risks with limited financial upside. Citing Illinois’s stalled Interchange Fee Prohibition Act (IFPA), recent OCC and National Credit Union Administration preemption actions, and a federal court injunction against Illinois’s interchange-fee limits, Polis warned that Colorado’s measure was likely to face similar preemption challenges and might never take effect. Even if it did, he questioned its feasibility in a national payments system, raising concerns about potential double-swipe requirements, costly system changes for small businesses, and negative impacts on rewards programs, tourism, and credit availability. He also noted that community banks and credit unions reported they would not be effectively exempt in practice and criticized a Senate amendment directing how large retailers must deploy savings as an inappropriate and unenforceable intrusion into private business decisions, concluding that more targeted, implementable relief — such as tax measures enacted in House Bill 26-1223 — offers better support for small businesses than SB 26-134, which he therefore disapproved and vetoed. For more information, click here.
On June 3, Governor Jared Polis signed HB 26-1196, which requires Colorado landlords to include in every rental application a notice explaining what information they will obtain for tenant screening, a general description of the factors they will consider (such as credit history, rental history, income, and any criminal background check), and whether they use a third‑party screening service and its name. The law clarifies that landlords are not obligated to adopt or disclose rigid disqualifying criteria for applicants. In eviction cases, it also requires landlords to follow court rules on protecting personal identifying information and to redact sensitive data — such as Social Security numbers, dates of birth, driver’s license or state ID numbers, and financial or payment card numbers — from supporting documents that might become publicly accessible, while still allowing those identifiers to be provided confidentially to the court when necessary. The law is effective as of July 1, 2027. For more information, click here.
On June 2, the Conference of State Bank Supervisors (CSBS) submitted a comment letter to the U.S. Department of the Treasury on its proposed principles for determining whether a state-level regulatory regime for payment stablecoin issuers is “substantially similar” to the federal framework under the GENIUS Act, emphasizing Congress’s clear intent to preserve cooperative federalism and the dual banking system. CSBS underscores that U.S. dollar stablecoin markets have been developed and supervised primarily by state regulators, who have the deepest direct experience overseeing stablecoin issuers, and that Congress accordingly embedded many state-developed approaches into the GENIUS Act and preserved a robust state regulatory pathway. The letter stresses that the Act creates a federal floor while allowing states to tailor rules to local needs and innovation, and that Treasury’s principles should respect the statute’s use of “similarity” rather than stricter concepts like “uniformity” or “consistency,” thereby leaving room for legitimate differences between state and federal implementation while still meeting the Act’s standards. For more information, click here.
On June 2, the New York State Department of Financial Services (DFS) announced that it signed a memorandum of understanding (MOU) with the European Banking Authority (EBA) to enable the exchange of supervisory and confidential information on stablecoin activities, strengthening cross-border oversight, identifying market trends and risks, and promoting the integrity of the stablecoin market. Acting Superintendent Kaitlin Asrow and EBA Chair François‑Louis Michaud emphasized that robust international cooperation is essential for effective digital asset regulation, and DFS noted that the MOU applies only to supervised entities’ stablecoin-related activities and builds on its existing stablecoin supervisory framework, which has governed New York‑approved issuers since 2018 through reserve, redeemability, transparency, and no‑rehypothecation requirements. For more information, click here.
On June 1, Chief Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois issued an updated opinion in Illinois Bankers Association v. Raoul, holding that, in light of the OCC’s April 2026 revisions to 12 C.F.R. § 7.4002, the Illinois IFPA’s Interchange Fee Limitation is preempted as applied to national banks, out-of-state banks covered by Riegle-Neal, federal savings associations, and payment card networks, and permanently enjoining Illinois from enforcing that provision against those entities while leaving in place her earlier conclusion that the statute is not preempted as to certain other institutions (such as Illinois-chartered credit unions). The court rejected the OCC’s argument that its “Interim Final Order” mooted the case or stripped jurisdiction, treated that order as nonbinding and of limited persuasive value, but gave effect to the OCC’s Interim Final Rule expanding national banks’ authority to obtain interchange fees indirectly through third parties, finding that the IFPA would now significantly interfere with the exercise of that federally conferred power. The decision also reaffirms that the IFPA’s separate Data Usage Limitation remains preempted or invalid as to national banks, most out-of-state banks, federal savings associations, federal credit unions, and payment card networks and processors when acting to facilitate those entities’ powers, and it notes ongoing legislative efforts to delay the IFPA’s effective date and parallel state and federal developments on interchange-fee regulation. For more information, click here.
On May 20, Vermont Governor Phil Scott signed Act No. 106 (H.385), a comprehensive statute creating new “coerced debt” protections and financial exploitation safeguards. The act defines coerced debt arising from domestic abuse, human trafficking, or abuse of vulnerable adults, sets out a debtor-friendly process for submitting a “statement of coerced debt” with supporting documentation, requires creditors to halt collections, investigate, and, if the debt is substantiated as coerced, cease enforcement and request removal of related negative credit information, and grants courts authority to vacate judgments and shift recovery to the perpetrator while preserving common-law remedies and confidentiality of victim information. The act also amends Vermont’s consumer reporting procedures to require reinvestigation and deletion of coerced debts, clarifies law-enforcement complaint handling for identity theft, and adds a new banking subchapter allowing banks and credit unions, in defined circumstances, to delay or refuse customer-directed transactions they reasonably suspect involve financial exploitation, with limited liability protection and authority to notify certain third parties. It further mandates data collection and reporting on suspicious transaction holds and coerced debt utilization, with the financial exploitation provisions effective immediately and the coerced debt creditor- and consumer-reporting provisions effective July 1, 2028, and applying to both future and existing coerced debts. For more information, click here.
On May 19, South Carolina Governor Henry McMaster signed Act 208 (S.163), adding Chapter 47 to Title 34 to bar state and local governing authorities from accepting or requiring payment in, or participating in tests of, central bank digital currency, while expressly allowing individuals and businesses to use digital assets for lawful transactions and to hold them in self-hosted or hardware wallets without disparate tax treatment beyond what would apply if U.S. legal tender were used. The act protects digital asset mining operations in industrial zones from zoning or noise restrictions that do not generally apply to other industrial businesses, requires such mining businesses not to place additional stress on the electrical grid and to furnish power purchase agreements to the Public Service Commission on request, and exempts participants in digital asset mining, node operation, blockchain software development, and crypto-to-crypto exchanges from money-transmitter licensing solely on that basis. It further provides that businesses offering “digital asset mining as a service” or “staking as a service” are not, by that fact alone, offering a security under state law, while preserving the attorney general’s authority to bring fraud actions against persons who falsely claim to provide those services. For more information, click here.