To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

• On June 2, President Biden announced his intent to extend the tenures of two Republicans serving on the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission: Mark Toshiro Uyeda and Summer Mersinger, respectively. For more information, click here.
• On June 2, Chairman of the House Financial Services Committee Patrick McHenry and Chairman of the House Committee on Agriculture Glenn Thompson released a discussion draft of legislation intended to provide a comprehensive regulatory framework for the digital asset market. Notably, the bill excludes from the Securities Act of 1933’s disclosure requirement blockchain protocols that certify to the SEC that they become “decentralized networks.” The bill defines a “decentralized network,” in relevant part, as a protocol that “no person, acting on the person’s own, had the unilateral authority, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, to control or materially alter the functionality or operation of the blockchain network… .” Section 204 of the bill carves out a process by which the SEC may rebut a protocol’s assertion that it is sufficiently decentralized and not subject to the act’s reporting requirements. For more information, click here.
• On June 2, digital asset trade associations Blockchain Association and DeFi Education Fund filed a joint amicus brief in support of Coin Center’s lawsuit regarding the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanction of open-source software Tornado Cash. In the brief, the trade associations argued that OFAC’s sanction of Tornado Cash “reflects a basic misunderstanding” and “[l]ike any tool — indeed, like the internet itself — software like Tornado Cash can be misused for illicit purposes.” For more information, click here.
• On June 1, the Federal Reserve (Fed) and the California Department of Financial Protection and Innovation (DFPI) entered against Silvergate Bank (Silvergate) a consent order requiring, among other things, Silvergate to seek the Fed’s and DFPI’s approval before “engag[in] in any expansionary activities, new lines of business, or establish[ing], any new branches or other offices… .” For more information, click here.
• On June 1, six federal regulatory agencies, including the Consumer Financial Protection Bureau (CFPB), requested public comment on a proposed rule designed to ensure the credibility and integrity of models used in real estate valuations. In particular, the proposed rule would implement quality control standards for automated valuation models (AVMs) used by mortgage originators and secondary market issuers in valuing real estate collateral securing mortgage loans. For more information, click here.
• On June 1, the CFPB published an issue spotlight on digital payment apps heavily used by consumers and businesses. The analysis finds that funds stored on these apps may not be safe in the event of financial distress, since the funds may not be held in accounts with federal deposit insurance coverage. The CFPB also issued a consumer advisory for customers holding funds in these apps and how they can make sure their funds remain safe. For more information, click here.
• On May 31, the Department of Housing and Urban Development (HUD) published FHA INFO 23-44, which announced the posting of the Draft Mortgagee Letter (draft ML), Payment Supplement Partial Claim. Through the proposed policy provided in this draft ML, the Federal Housing Administration (FHA) proposes to create a new loss mitigation option to assist struggling borrowers that are delinquent on their mortgage payments. This option is targeted to assist borrowers in default, who are unable to obtain a significant payment reduction through other loss mitigation options. For more information, click here.
• On May 31, the European Banking Authority (EBA) launched a public consultation on amendments to its guidelines on money laundering and terrorist financing (ML/TF) risk factors. The proposed changes extend the scope of these guidelines to crypto-asset service providers (CASPs). The consultation runs until August 31. For more information, click here.
• On May 31, the Justice Department announced that ESSA Bank & Trust has agreed to pay more than $3 million to resolve allegations that it engaged in a pattern or practice of lending discrimination by redlining majority-Black and Hispanic neighborhoods in and around Philadelphia. For more information, click here.
• On May 30, the Commodity Futures Trading Commission Division of Clearing and Risk (DCR) issued a staff advisory on the risks associated with the expansion of Derivatives Clearing Organization (DCO) clearing of digital assets. In the past several years, DCR has observed an increased interest by DCOs and DCO applicants in expanding the types of products cleared, as well as business lines, clearing models, and services DCOs offer, including those related to digital assets. For more information, click here.
• On May 25, U.S. Representative Alex X. Mooney (R-WV) introduced H.R. 3712 titled the Digital Dollar Pilot Prevention Act to prohibit the Fed from establishing, approving, or otherwise carrying out any proof-of-concept programs intended to test the practicability of issuing a central bank digital currency (CBDC). For more information, click here.
• On May 25, the World Economic Forum released a white paper titled, “Pathways to Crypto-Asset Regulation: A Global Approach,” which examines the needs for a global approach to regulate digital assets, and analyzes the challenges of a global approach. For more information, click here.
• On May 25, the Office of the Comptroller of the Currency (OCC) announced revisions to its policies and procedures manual on bank enforcement actions to reflect its consideration of actions against banks that exhibit or fail to correct persistent weaknesses. For more information, click here.
• On May 24, the CFPB issued a blog post discussing mortgage rates paid by consumers varying across lenders. For more information, click here.
• On May 23, the Acting Comptroller of the Currency Michael J. Hsu discussed the OCC’s commitment to a fair and inclusive financial system in remarks at the Bank On National Conference. For more information, click here.
• On May 23, Prometheum Ember Capital LLC announced it has received a first-of-its-kind approval from the Financial Industry Regulatory Authority (FINRA) to operate as a special purpose broker-dealer (SPBD) for digital asset securities. This approval permits Prometheum Capital to custody digital asset securities on behalf of retail and institutional clients. For more information, click here.
• On May 22, HUD released Mortgage Letter (ML) 2023-11 to update previously issued guidance on loss mitigation options for non-borrowers, who acquire a title through an exempted transfer. For more information, click here.
• On May 20, the Federal Trade Commission filed an amicus brief in a case on appeal before the U.S. Court of Appeals for the Ninth Circuit, arguing that the Children’s Online Privacy Protection Act does not preempt state laws that are consistent with the federal statute’s treatment of regulated activities. For more information, click here.

State Activities:

• On May 27, Texas Governor Greg Abbott signed SB 768, amending the state’s data breach notification statutes. Under the amended law, a security breach must be disclosed to the attorney general “as soon as practicable and not later than the 30th day after the date on which the person determines that the breach occurred.” This amendment reduces the amount of time for disclosure down from 60 days. The act also requires that the notice be submitted via an electronic form. For more information, click here.
• On May 25, while delivering testimony before the New York State Assembly, Superintendent of the New York State Department of Financial Services (NYDFS) Adrienne Harris asserted that the NYDFS’ BitLicense regime has “cement[ed] the [NYDFS] as the leading global prudential regulator for virtual currency business activity.” For more information, click here.
• On May 25, New York Attorney General Letitia James recovered $300,000 from an online sporting goods retailer following the company’s failure to adequately safeguard consumers’ personal data. The company’s inadequate security measures left it vulnerable to a cybersecurity attack in 2021 that affected consumers private information, including credit card information and email addresses. The company agreed to pay $300,000 in penalties and further agreed to strengthen its cybersecurity policy to better protect consumers’ private information. For more information, click here.
• On May 24, Minnesota Governor Tim Walz signed AF 2744, a bill that amends several of the state’s statutes concerning financial institutions. Among other things, the bill revises the definition of “annual percentage rate” as it pertains to small consumer loans to “include[] all interest, finance charges, and fees,” and requires that the annual percentage rate “be determined in accordance with either the actuarial method or United States Rule method.” With respect to a consumer short-term loan, the bill provides that a short-term loan lender may charge an annual percentage rate of up to 50% but prohibits any other charges or payments in connection with a consumer short-term loan. Loans that exceed 36% annual percentage rate must also comply with certain other provisions. For more information, click here.
• On May 24, Florida Governor Ron DeSantis signed HB 1185, which, among other things, permits mortgage loan originators to work from remote locations if certain conditions are met. Some of the conditions set forth in the act are: (a) the licensee has written policies and procedures for the supervision of loan originators working from remote locations; (b) access to company platforms and customer information complies with the licensee’s comprehensive written information security plan; (c) an in-person interaction with a customer does not occur at the originator’s residence unless such residence is a licensed location; (d) physical records are not kept at a remote location; (e) customer interactions and conversations about consumers comply with applicable state and federal information security requirements; (f) the originator must use a virtual private network or system that ensures secure connectivity when access the company’s secure systems or documents from a remote location; (g) the licensee ensures all appropriate security updates are installed and maintained; (h) the licensee is able to remotely lock/erase company-related contents of any device; and (i) the registry’s record designates the originator’s principal place of business as the originator’s registered location. For more information, click here.
• On May 23, New York Attorney General Letitia James recovered $550,000 from a medical management company for failing to properly shield New Yorkers’ personal information, including health records. The company’s networks were left susceptible to a cyberattack when the company failed to timely update its software, affecting more than 1.2 million individuals across the nation. The security failures violated state law and the federal Health Insurance Portability and Accountability Act (HIPAA). The company has agreed to pay $550,000 in penalties, strengthen its security measures with regard to safeguarding data, and offer consumers free credit monitoring services. For more information, click here.
• Recently, the New York branch of the U.S. Central Bank published the Phase II report of Project Cedar, an ongoing pilot with the goal of improving cross-border payments using distributed ledger technology. According to a press release, among other things, the report discusses findings related to interlinking simulated central bank currency ledgers; “atomic settlement” where “transactions were only settled if all legs in the cross-currency payment chains were executed successfully”; and “near real-time settlement” where a “simulated payment scenario achieved end-to-end settlement in under 30 seconds on average. For more information, click here.

To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

• On May 19, the Federal Reserve Bank of New York’s New York Innovation Center (NYIC) and the Monetary Authority of Singapore (MAS) published a joint research report of Phase II of Project Cedar and the MAS’ Ubin+ Project, both of which seek to uncover whether central bank digital currencies (CBDCs) and distributed ledger technology (DLT) can be leveraged to improve the efficiency of cross-border payments and lessen the need of foreign exchange conversions for settlement. For more information, click here.
• On May 18, the House Financial Services Committee Subcommittee on Digital Assets, Financial Technology, and Inclusion hosted a hearing, titled “‘Stable’ in ‘Stablecoins’: How Legislation Will Help Stablecoins Achieve Their Promise.” During the hearing, Congress discussed two stablecoin regulatory proposals: (1) a framework proposed by Chairman Patrick McHenry and (2) a framework proposed by Ranking Member Maxine Waters. Notably, Chairman McHenry’s proposal would preserve the current dual banking system model and delegate “supervisory, examination, and enforcement authority” of “state qualified stablecoin payment issuers” to “state payment stablecoin regulators.” Under McHenry’s proposal, a state payment stablecoin regulator is afforded the option to enter a memorandum of understanding with the Federal Reserve (Fed) under which the Fed would carry out the supervision, examination, and enforcement duties of state-qualified stablecoin payment issuers of a particular state. Without a memorandum of understanding in place, McHenry’s proposal limits the Fed’s enforcement authority of state-qualified payment stablecoin issuers to exigent circumstances. Conversely, Ranking Member Waters’ proposal specifically requires state-qualified payment stablecoin issuers to register with the Fed within 180 days after being approved to issue stablecoins by a state payment stablecoin regulator.For more information about the hearing, click here. For more information about, Chairman McHenry’s proposal, click here. For more information about Ranking Member Waters’ proposal, click here.
• On May 18, U.S. House Majority Whip Tom Emmer (R-MN) and U.S. House Representative Darren Soto (D-FL) published a bill called the “Securities Clarity Act,” which seeks to amend the term “security” within Section 2(a) of the Securities Act of 1933 to include the term “investment contract asset.” The bill defines “investment contract asset” as “an asset, whether tangible or intangible, including assets in digital form (A) sold or otherwise transferred, or intended to be sold or otherwise transferred, pursuant to an investment contract; and (B) that is not otherwise a security pursuant to the first sentence of paragraph (1) [of Section 2(a)].” The bill is premised on the notion that an “investment contract” as defined by the U.S. Supreme Court’s Howey test is a security, but the assets sold pursuant to the investment contract themselves are not. According to a press release about the bill, “Without this distinction between the asset and the securities contract, token projects that must raise capital to fund development in the early stages will not be able to move out of the securities framework once the project is decentralized … .” For more information about the Securities Clarity Act, click here. For more information about the proposed bill, click here.

• On May 18, Financial Action Task Force (FATF) President T. Raja Kumar issued a letter to the Group of Seven (G7) leaders, titled “An end to the lawless crypto space.” The letter implores the G7 to adopt the FATF updated digital asset recommendations, which the FATF hopes will become the global standards on combatting money laundering, terrorism financing, and proliferation financing. For more information, click here.

• On May 18, the Consumer Financial Protection Bureau (CFPB) published “Consumer experiences with overdraft programs” — a report that synthesizes interviews and focus groups with low- and moderate-income consumers during summer 2022 to better understand their experiences with overdraft programs. Topics raised in the report included the following:

• Confusion among consumers about overdraft;
• Concerns about fees, payment timing, and notifications;
• Experiences with financial hardships and fee waivers;
• Experiences with account closures;
• Approaches to avoid overdraft fees; and
• Limited awareness of account options without overdraft fees.

For more information, click here.

• On May 17, House Representative French Hill (R-AR), who also serves as the chairman of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, and House Representative Jake Auchincloss (D-MA) introduced the Power of the Mint Act bill. If enacted, the bill would prohibit the Fed and the secretary of the treasury from issuing a central bank digital currency. For more information, click here.

• On May 15, during an interview with Financial Times, U.S. Department of Justice (DOJ) Crypto Enforcement Director Eun Young Choi noted that the DOJ intends to focus on digital asset companies that are obviating anti-money laundering and know-your-customer rules, as well as “chain bridge” exploits that have become prevalent in decentralized finance. For more information, click here.

• On May 11, the Bank of International Settlements (BIS) Innovation Hub published a guidance handbook for central banks considering implementing offline CBDC payments. The handbook defines an offline payment as “a transfer of value (CBDC) between devices that takes place without requiring connection to any ledger system.” For more information, click here.

• On May 11, the Internal Revenue Service Criminal Investigation (IRS-CI) announced that it is delivering blockchain analysis tools and cyber training to Ukranian law enforcement agencies in April and May. To date, the IRS-CI has donated 15 Chainalysis Reactor licenses, which grants access to blockchain forensics software, to Ukranian authorities for training. For more information, click here.

• On May 11, the Securities and Exchange Commission announced that it filed an enforcement action against GA Investors for allegedly conducting fraudulent offerings of securities, including crypto-asset mining pools. For more information, click here.

• Earlier this month, the Federal Trade Commission (FTC) modified its Telemarketing Sales Rule (TSR) guidance webpage to clarify the requirements for obtaining consent to deliver calls with prerecorded messages and the elements of assisting and facilitating liability. For more information, click here.

State Activities:

• On May 19, the Massachusetts Division of Banks and Educational Computer Systems, Inc. (ECSI) entered a consent order that required ECSI to pay a $500,000.00 administrative penalty for operating as an unlicensed student loan servicer. For more information, click here.

• On May 19, California Attorney General Rob Bonta issued a statement on a decision by the U.S. District Court for the District of Massachusetts, blocking two major airline companies from continuing and further implementing what had become known as the Northeast Alliance — an anticompetitive joint venture that enabled the two airlines to operate as a single carrier on certain routes to and from New York and Boston. The AG, along with the DOJ, filed a lawsuit against the airlines in 2021, alleging violations of the federal Sherman Act. As AG Bonta explained, “Whether you call it a merger, a takeover, or an alliance, we’re not going to stand by when companies take action to consolidate their market share and disrupt competition in the process.” For more information, click here.
• On May 19, Governor Greg Gianforte signed the Montana Consumer Data Privacy Act into law, making Montana the ninth state to enact a comprehensive consumer data privacy law. The law will take effect October 1, 2024. For more information, click here.

• On May 16, Maryland Governor Wes Moore signed SB106 into law, exempting up to $500 in a deposit account or other accounts of a judgment debtor held in certain financial institutions from execution on the judgment without an election by the debtor to exempt the money. The bill also establishes the procedures a depository institution must follow upon receipt of a writ of garnishment or other levy or attachment under certain circumstances. The law will take effect October 1. For more information, click here.

• On May 16, Maryland Governor Wes Moore signed HB384 into law, which prohibits an institution of higher learning from refusing to provide a current or former student with a transcript or taking other punitive measures regarding a student’s transcript request because the student owes a debt to the institution of higher education. The law will take effect on July 1. For more information, click here.

• On May 15, the Texas Senate voted in favor of Texas House Bill 1666 — dubbed the “Proof of Reserve” bill. If enacted, the bill would require digital asset exchanges to create plans to enable its customers to view a quarterly accounting of their liabilities and their customers’ digital assets held in custody by the exchange. Further, the bill would require digital asset exchanges to file with the Texas Department of Banking annual attestations of the exchanges’ outstanding liabilities to their customers. For more information, click here.

• On May 11, the Texas House of Representatives passed HJR 146, seeking to amend the Texas Constitution to formally guarantee that citizens of Texas have the right to “own, hold, and use … digital currency … when trading and contracting for goods and services … .” For more information, click here.

• Earlier this month, Indiana Governor Eric Holcomb signed SB452, a bill that provides that a collection agency may engage in taking assignments of subordinate lien mortgage transactions and undertake the direct collection of payments from or the enforcement rights against debtors arising from subordinate lien mortgage transactions, without obtaining a mortgage license issued by the department. The law will take effect July 1. For more information, click here.