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 March 16, the Consumer Financial Protection Bureau (CFPB) released a bulletin, warning servicers of their obligation to halt unlawful conduct involving private student loans discharged by bankruptcy courts. The bulletin details recent findings by CFPB examiners that certain loan servicers illegally returned loans to collections after bankruptcy courts discharged the loans. For more information, click here.

• On March 16, the Blockchain Association submitted Freedom of Information Act requests to the Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System (Federal Reserve), and the Office of Comptroller of Currency, seeking documents and communications on the “de-banking” of crypto firms given the recent closures of crypto-friendly banks Silvergate Bank and Signature Bank. For more information, click here.

• On March 15, the Federal Reserve announced that the FedNow Service will start operating in July. The first week of April, the Federal Reserve will begin the formal certification of participants to launch the service. Early adopters will complete a customer testing and certification program, informed by feedback from the FedNow Pilot Program, in preparing to send live transactions through the system. For more information, click here.

• On March 15, the Federal Housing Finance Agency (FHFA) announced that it took a number of steps since January 2022 to update Fannie Mae and Freddie Mac’s single-family guarantee fee pricing framework, specifically focusing on upfront fees. In January 2023, FHFA announced redesigned and recalibrated grids for upfront fees in addition to a new upfront fee for certain borrowers with a debt-to-income ratio above 40%. These updated pricing grids include the upfront fee eliminations announced in October 2022 to increase pricing support for purchase borrowers limited by income or by wealth. For more information, click here.

• On March 15, the CFPB announced that it launched an inquiry into companies that track and collect information on people’s personal lives. In issuing this new request for information, the CFPB wants to understand the full scope and breadth of data brokers and their business practices, their impact on the daily lives of consumers, and whether they all play by the same rules. This request offers the public a chance to share feedback about companies that play a significant role in people’s lives and in the economy. For more information, click here.

• On March 15, the CFPB released the 2023 Home Mortgage Disclosure Act institutional and transactional coverage charts. For more information, click here.

• On March 15, while addressing reporters after a commission vote, Securities and Exchange Commission Chairman Gary Gensler reiterated his prior stance that proof-of-stake tokens like Ethereum may constitute securities under the Howey Test. For more information, click here.

• On March 14, while delivering remarks at the Independent Community Bankers of America ICBA Live 2023 Conference, Federal Reserve Governor Michelle Bowman discussed the increase in consumer demand for crypto-assets and related services, and reiterated the Federal Reserve’s recent guidance on integrating crypto-assets into the banking sector: State member banks should notify their lead supervisory point of contact prior to engaging in crypto-asset-related activities. For more information, click here.

• On March 14, Federal Reserve Governor Michelle W. Bowman discussed innovation trends within the U.S. financial system during a conference held by the Independent Community Bankers of America. For more information, click here.

• On March 13, the Federal Reserve Board issued FAQs on its Bank Term Funding Program, established “to make available additional funding to eligible depository institutions in order to help assure banks have the ability to meet the needs of all their depositors.” For more information, click here.

• On March 13, the Justice Department and the CFPB announced that they filed a statement of interest in Connolly, et al. v. Lanham, et al. to explain the application of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) to lenders relying on discriminatory home appraisals. Currently pending in the U.S. District Court for the District of Maryland, Connolly alleges that an appraiser and a lender violated the FHA and ECOA by lowering the valuation of a home because the owners were Black and by denying a mortgage refinancing application based on that appraisal. For more information, click here.

• On March 13, while speaking at a banking roundtable in Sydney, Australia, Assistant Secretary for Terrorist Financing and Financial Crimes Elizabeth Rosenberg discussed the growth of the “virtual asset space.” While she noted the legitimate use cases of decentralized finance (DeFi), she also shared her team’s “active” work on an illicit finance risk assessment of DeFi since some use the technology to hide criminal activity and launder money. For more information, click here.

• On March 9, the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy held a hearing to discuss proposals that would alter the CFPB’s structure and authority. For more information, click here.

• On March 9, the Financial Crimes Enforcement Network informed U.S. financial institutions that the Financial Action Task Force (FATF) — an intergovernmental body that establishes international standards for anti-money laundering, countering the financing of terrorism, and countering the financing of proliferation of weapons of mass destruction (AML/CFT/CPF) — issued a public statement on February 24, announcing its suspension of the Russian Federation’s membership from FATF. The statement noted that “the Russian Federation’s actions unacceptably run counter to the FATF core principles aiming to promote security, safety, and the integrity of the global financial system.” The FATF further urged “all jurisdictions to remain vigilant of threats to the integrity, safety and security of the international financial system arising from the Russian Federation’s war against Ukraine.” The FATF also reiterated “… that all jurisdictions should be alert to possible emerging risks from the circumvention of measures taken in order to protect the international financial system and take the necessary measures to mitigate these risks.” For more information, click here.

• On March 8, the Federal Trade Commission issued a bulletin, addressing the connections between cryptocurrency scams and community groups, and how consumers may identify such scams. For more information, click here.

• On March 3, the CFPB received a rulemaking petition from the National Consumer Law Center (NCLC) in response to forthcoming FCRA rulemaking announced in its fall 2022 regulatory agenda. NCLC presented three issues for consideration as part of the FCRA rulemaking process: (1) “establish strict requirements to regulate the furnishing of information regarding a debt in collections by third-party debt collectors and debt buyers”; (2) “require translation of consumer reports by the [CRAs] into the eight languages most frequently used by limited English proficient consumers”; and (3) “establish an Office of Ombudsperson to assist consumers who have been unable to fix errors in their consumer reports from the nationwide CRAs and other CRAs within the CFPB’s supervisory authority.” For more information, click here.

State Activities:

• On March 16, a coalition of 14 attorneys general (AGs) wrote a letter condemning the world’s four largest credit card companies for their decision to pause the adoption of the International Organization for Standardization’s new merchant category code for gun and ammunition sales. In September 2022, the AGs sent the credit card companies a letter, praising their decision to enact the new category codes as a means of thwarting widespread gun violence across the nation. The March 16 letter, however, reminded the companies that they can, by implementing the codes, disrupt gun violence and urged the companies to “stick to [their] original promise.” For more information, click here. The move made by these credit card companies was viewed as a direct result of a September 2022 letter from 24 Republican AGs, detailed here, urging the companies to halt the use of this new merchant category.

• On March 15, Colorado AG Phil Weiser filed the finalized Colorado Privacy Act (CPA) rules after completing a review that confirmed the rules are legal and constitutional. Among other things, the CPA allows Colorado consumers to access the data that businesses, nonprofits, and other entities collect about them and empowers consumers to require them to delete or correct the data. The CPA also gives Colorado consumers additional control over how their personal data is used, granting them the right to opt out of the sale of their personal data and use of personal data for targeted advertising and profiling. Under the CPA, companies must disclose how they use Colorado consumers’ personal data and implement protection measures to guard against harm to consumers. The CPA also grants the AG authority to hold companies accountable for their CPA violations, draft rules to clarify CPA provisions, and provide guidance to companies for compliance. The rules are set to take effect July 1. Colorado is now the third state to enact general state privacy laws and the second to draft rules implementing such laws. For more information, click here.

• On March 15, the New York State Department of Financial Services (DFS) missed the deadline to publish its proposed amendments to its debt collection rule. While the latest version of the proposed amendments expired, the DFS will likely release an updated version in the coming months. For more information, click here.

• On March 14, the New York Department of Financial Services (NYDFS) responded to criticism from Barney Frank, co-author of the Dodd-Frank Act and prior board member of Signature Bank, that the NYDFS’ decision to take over Signature Bank sent a message that “crypto is toxic.” An unidentified NYDFS spokesperson informed The Block that Frank’s remarks were untrue, and Signature Bank closed because the bank did not provide “reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership.” For more information, click here.

• On March 9, the New York AG Letitia James filed a civil enforcement action against Seychelles-based digital asset exchange KuCoin for allegedly violating state securities laws by “purchas[ing] and offer[ing] to purchase cryptocurrencies that are commodities and securities without being registered … as a commodity broker-dealer or a securities broker or dealer … .” Notably, KuCoin sold Ethereum (ETH) on its platform, and the NY AG alleged that ETH constitutes a security under both New York’s Waldstein Test and the U.S. Supreme Court’s Howey Test. This is the first time a regulator expressly described ETH as a security, and the NY AG’s perspective conflicts with Commodity Futures Trading Commission Chairman Rostin Benham’s March 8 testimony before the Senate Agriculture Committee that ETH was a commodity. For more information, click here.

• On March 9, the Utah Legislature passed the Decentralized Autonomous Organization Act (DAO Act), which deems a DAO, among other things, a legal entity separate and distinct from its members with the capacity to sue and to be sued. As we previously discussed here, a DAO generally consists of a group of individuals organized around a mission that the group intends to effectuate through the use of smart contracts. For more information about the DAO Act, click here.

• On March 6, eight AGs won judgments, totaling nearly $245 million in the U.S. District Court for Southern Texas against the two owners of a robocall operation comprised of three companies. The judgments represent the culmination of AG-initiated litigation that addressed allegations that the owners and their companies directed billions of illegal robocalls to people across the country. The AGs first filed the lawsuit in June 2020, alleging violations of the Telephone Consumer Protection Act, the federal Telemarketing Sales Rule, and several other state consumer protection laws due to the companies’ alleged use of deceptive robocalls about extended car warranties and health care services. The companies also allegedly spoofed caller ID numbers to deceive consumers and contacted consumers on the Do Not Call Registry. The judgments banned the owners from initiating or facilitating robocalls, working with any companies that make robocalls, or engaging in any telemarketing. The near $245 million combined judgment however is largely suspended in favor of permanent bans on the companies’ operations and because of the owners’ inability to pay. 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 February 10, while delivering remarks on CNBC‘s Squawk Box and discussing the Securities and Exchange Commission’s (SEC) recent $30 million-dollar settlement with cryptocurrency exchange Kraken for its offering of a crypto staking program, SEC Chair Gary Gensler suggested that crypto-related firms currently offering either lending or staking services need to assess the SEC’s action against Kraken and “come into compliance as “whether you call it lend, whether you call it earn, [or] whether you call it yield, the offering likely constitutes the sale of an investment contract in the form of a security subject to federal securities law. For more information, click here.
• On February 10, the Federal Trade Commission (FTC) announced it will send more than $115 million in refunds to consumers nationwide as a result of a 2018 action the FTC and the U.S. Department of Justice (DOJ) brought against MoneyGram for failing to crack down on scammers using their payment system. The 2018 action charged that MoneyGram violated an FTC settlement from 2009, along with a 2012 DOJ agreement in which the company agreed to take proactive steps to reduce scammers’ ability to use their payment system to receive money from consumers. For more information, click here.
• On February 9, the FTC’s Consumer Sentinel Network shared data, revealing the top lies used by romance scammers. Topping the list were scammers, telling consumers that they needed money because a friend or relative was sick, hurt, or in jail — a lie consumers reported hearing in nearly a quarter of the reports. The next most commonly reported lie said that the scammer had great investment advice to share with their newfound romantic interest, followed closely by the lie that the scammer served in the military, or they needed help making some sort of important delivery. For more information, click here.
• On February 9, the SEC filed a civil enforcement action against Payward Ventures, Inc. and Payward Trading Ltd. (collectively “Kraken) for its offering of a “staking-as-a-service program, which the SEC alleged was “an investment contract and therefore a security whose offers and sales were subject to the registration requirements of the federal securities laws. According to the SEC, Kraken’s failure to register “means that investors have lacked material information about the Kraken Staking Program, including but not limited to “the business and financial condition of [Kraken] and “how [Kraken] determine to stake investor tokens or purportedly hold them in reserve and the extent of these purported liquidity reserves[.] Mechanistically, Kraken’s crypto staking program involved a three-step process: (1) retail investors would transfer crypto eligible for Kraken’s staking program to Kraken’s platform; (2) Kraken would then retain control of the transferred crypto and aggregate such crypto in a pooled omnibus account; and (3) Kraken would “stake crypto contained in the pooled omnibus account on various proof-of-stake (POS) blockchains, supposedly in exchange for protocol awards associated with transaction validations. On POS blockchains, the block transactions are verified by nodes that have delegated to the blockchain the minimum amount of crypto necessary for the node to be selected as a validator. Here, the SEC alleged that Kraken’s pooling of tokens from retail investors enabled it to increase “the probability that the blockchain protocol [would] select [Kraken] to validate transactions and earn rewards … . Kraken agreed to immediately cease offering its staking-as-a-service program and to pay the SEC $30 million in disgorgement, prejudgment interest, and civil penalties. For more information, click here.
• On February 9, the FTC announced that it provided the Consumer Financial Protection Bureau (CFPB) with an annual summary of its activities, enforcing the Equal Credit Opportunity Act. The summary also outlines the FTC’s business and consumer education efforts on fair lending issues. For more information, click here.
• On February 7, the CFPB issued an advisory opinion to protect Americans from double dealing on digital mortgage comparison-shopping platforms. Companies operating these digital platforms appear to shoppers as if they provide objective lender comparisons, but may illegally refer people to only those lenders paying referral fees. When shoppers use a lender that is not the best option for their needs, they may end up with a lower quality lender or paying thousands more in closing costs or interest. The advisory opinion outlines how companies violate the Real Estate Settlement Procedures Act when they steer shoppers to lenders by using pay-to-play tactics rather than providing shoppers with comprehensive and objective information. For more information, click here.
• On February 7, CFPB Director Rohit Chopra issued a statement on mortgage comparison shopping during a time of higher interest rates. The statement warned consumers about comparison shopping platforms that may lead to higher interest rates. For more information, click here.
• On February 7, the Federal Reserve (Fed) issued a final rule, interpreting Section 9(13) of the Federal Reserve Act as providing the Fed with discretion to rebuttably presume that a state member bank cannot engage in any impermissible activity for a national bank, unless permissible via federal statute or applicable regulations promulgated by the Federal Deposit Insurance Corporation (FDIC). The statement discussed the permissibility of certain crypto-asset-related activities for state member banks and how the Fed would apply the rebuttable presumption to those activities. For more information, click here.
• On February 7, the SEC’s Office of Investor Education and Advocacy issued an investor alert to warn investors of the potential risks associated with self-directed IRAs and crypto-assets, which “may be securities may be securities that are offered without SEC registration or a valid exemption from registration, and may not be accompanied by complete or accurate information to aid investors in making informed decisions. For more information, click here.

State Activities:

• On February 13, Paxos Trust Company (Paxos), announced the termination of its relationship with Binance, the largest cryptocurrency exchange by volume. Paxos was the issuer of Binance’s stablecoin, BUSD. Paxos’ announcement seems to be precipitated by the New York Department of Financial Services’ (NYDFS) recent order that required Paxos to cease minting BUSD “as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance in regard to Paxos-issued BUSD. For more information relating to Paxos’ announcement, click here.
• On February 10, the California Privacy Protection Agency (CPPA) Board issued an invitation for preliminary comments from the public regarding cybersecurity audits, risk assessments, and automated decision-making. California voters approved Proposition 24, the California Privacy Rights Act (CPRA), in November 2020, which created the CPPA to implement and enforce the law. The CPRA amendments to the CPPA direct the agency to issue regulations, requiring certain businesses to perform cybersecurity audits annually and submit a risk assessment to the CPPA regularly regarding its processing of personal information. The CPRA amendments also require the CPPA to issue regulations governing access and opt-out rights with respect to certain businesses’ use of automated decision-making technology. The preliminary rulemaking comment period will end on March 27. For more information, click here.
• On February 10, a New York state court judge rejected an attempt by iFinex and related companies, which include cryptocurrency exchange Bitfinex and USDT stablecoin issuer Tether, to block Coindesk’s Freedom of Information Law (FOIL) request for documents concerning asset reserve composition details related to Tether’s USDT stablecoin. From its inception until late February 2019, Tether publicly affirmed that all USDT stablecoins in existence were 100% backed by U.S. dollars. However, an investigation by the New York attorney general’s office uncovered that Tether’s USDT stablecoin was not sufficiently backed by reserves from at least mid-2019 to early 2021. For more information, click here.
• On February 8, New York Department of Financial Services (DFS) Superintendent Adrienne A. Harris announced the adoption of the updated Community Reinvestment Act (CRA) regulation. The regulation makes changes to the state’s Banking Law Section 28-b, which was enacted in 2019 and allows DFS to aggregate data to evaluate how well the state’s regulated banking institutions are serving minority- and women-owned businesses. The findings will then be integrated into those institutions’ CRA ratings. Among other things, the final regulation details how institutions must collect and submit the required data, while still complying with fair lending laws. The regulation requires the subject banks to report details of the applications it receives, such as (1) whether the applicant is a minority-owned business, a women-owned business, or both; (2) the application date; (3) type and amount of credit sought; (4) whether the application was approved or denied; and (5) the size and location of the business. For more information, click here.
• On February 3, the CPPA Board voted unanimously to adopt and approve the CPPA’s rulemaking package to further implement the California Consumer Privacy Act (CCPA). However, the proposed regulations will not take effect until first approved by the Office of Administrative Law, which has 30 business days from the date of submission to review the proposed regulations. On July 8, 2022, the CPPA began the formal rulemaking process to adopt proposed regulations to further implement CPPA pursuant to the CPRA. The proposed regulations (1) update existing CCPA regulations to sync them with amendments to the CCPA; (2) provide clarity and specificity with respect to new rights and concepts introduced by the CPRA; and (3) reorganize and consolidate requirements set forth by law to make the regulations easier to understand and follow. For more information, click here.
• On February 1, New York Governor Kathy Hochul announced the fiscal year 2024 executive budget, which reflects Hochul’s agenda to make the state more affordable, more livable, and safer by investing in mental health care, public safety, housing, education, climate initiatives, and more. The budget includes measures targeted at ending certain practices related to the imposition of bank overdraft and insufficient funds fees. One specific measure amends Section 9-y of the state’s banking law to grant the DFS superintendent the power to issue regulation to address (1) the manner in which banking organizations process debit and credit transactions for consumer accounts maintained at such organization; (2) charges that may be imposed in connection with transactions involving insufficient funds or uncollected balances in a consumer account; (3) charges that may be imposed in connection with a returned check; (4) the disclosures that must be provided to consumers regarding the processing of transactions in a consumer account and the associated fees; and (5) the alerts, notices, and other disclosures relating to the imposition or possible imposition of overdraft or insufficient funds fees. 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 February 3, while delivering remarks at the American Bar Association Business Law Section Derivatives and Futures Law Committee Winter Meeting, Commodities Futures and Trading Commission (CFTC) Chairman Rostin Benham noted that “there remains a gap in crypto cash market regulation for non-security tokens, and [he] believes the CFTC is well positioned to fill this specific gap if Congress so chooses.” For more information, click here.

• On February 3, the U.S. District Court for the Northern District of Illinois dismissed with prejudice claims that Townstone Financial, Inc. and its owner violated Equal Credit Reporting Act by engaging in discriminatory marketing and applicant outreach practices. For more information, click here.

• On February 1, a U.S. District Court for the Southern District of New York federal judge granted Coinbase, Inc.’s (Coinbase) motion to dismiss a putative class-action lawsuit that alleged Coinbase and its founder enabled Coinbase users to buy and sell 79 different unregistered securities in the form of digital assets (tokens) in violation of federal securities laws due to Coinbase’s purported failure to register with the Securities and Exchange Commission as a securities exchange. The class consisted of “all persons or entities that transacted in the Tokens” on Coinbase’s exchange platform between October 8, 2019 through March 11, 2022 — the class-action lawsuit filing date. Specifically, the class argued that Coinbase was a “statutory seller” of unregistered securities under Section 12(a)(1) of the Securities Act. Under the U.S. Supreme Court decision Pinter v. Dahl, a defendant constitutes a “statutory seller” if the defendant (1) passed title, or other interest in the security, to the buyer for value; and (2) solicited the purchase of a security motivated in part by the defendant’s own financial interests. The court granted Coinbase’s motion to dismiss for two reasons: (1) Coinbase could not obtain title of the tokens under the terms of use agreement it entered with its customers, which stated: “Title to Digital Currency shall at all times remain with you and shall not transfer to Coinbase,” and (2) although the class alleged that Coinbase promoted the sale of the tokens by participating in “airdrops” of the tokens and providing news updates on the price movements of the tokens, the class failed to allege that its selling and purchasing of the tokens resulted from Coinbase’s “direct solicitation.” For more information, click here.

• On February 1, the Office of the Comptroller of the Currency (OCC) issued a bulletin to inform banks and OCC examining personnel that the loan origination threshold for reporting Home Mortgage Disclosure Act data on closed-end mortgage loans has changed. Due to a recent court decision, the threshold for reporting is now 25 closed-end mortgage loans originated in each of the two preceding calendar years. For more information, click here.

• On February 1, the Department of Justice filed a complaint on behalf of the Federal Trade Commission (FTC) against GoodRX for allegedly violating the FTC Act and the Health Breach Notification Rule by failing to notify consumers that it was disclosing their personal health information to third parties for advertising purposes. For more information, click here.

• On January 30, digital news provider Axios reported that crypto-lending firm Gemini Trust Company LLC (Gemini) led its customers to believe that the Federal Deposit Insurance Corporation (FDIC) fully insured its stablecoin, GUSD, and its interest-bearing cryptocurrency deposit product, Gemini Earn. The terms of use agreement Gemini entered with its customers contains an FDIC insurance section that expressly asserts that digital assets held on its platform are not FDIC-insured: “Digital Assets held in your Digital Asset account, including your Gemini Dollars [GUSD], are not subject to deposit insurance protection, including but not limited to, FDIC insurance or Securities Investor Protection Corporation protections.” However, according to the Axios report, Gemini seemingly reassured its customers that their GUSD and Gemini Earn deposits were safe and secure. Genesis Global Capital LLC (Genesis), the entity responsible for providing interest payments to Gemini Earn accountholders, filed for bankruptcy on January 20 after announcing its decision to pause withdrawals of Gemini Earn deposits. At the time of its bankruptcy filing, Genesis possessed approximately $900 million worth of Gemini Earn deposits. For more information about the Axios report, click here.

• On January 30, Senators Elizabeth Warren (D-MA), John Kennedy (R-LA), and Roger Marshall (R-KS) issued a letter to Silvergate Bank concerning Silvergate’s role in transferring FTX customer funds to FTX’s partner firm and cryptocurrency hedge fund Alameda Research. The 2023 letter constitutes a follow-up response to the senators’ December 5, 2022 letter sent to Silvergate. Notably, the 2023 letter describes Silvergate’s response to the 2022 letter as “evasive and incomplete” and lacking “information needed to assess the extent to which Silvergate is responsible for the improper transfer of FTX customer funds to Alameda … .” For more information, click here.

• On January 30, Federal Housing Administration (FHA) announced that it will expand and enhance its set of loss mitigation options used to help borrowers struggling to make mortgage payments on their FHA-insured mortgages. The enhancements will extend FHA’s COVID-19 loss mitigation options to all eligible borrowers who fall behind on their mortgage payments, regardless of the cause of their delinquency. The updates also will enable mortgage servicers to use the full 30% of FHA’s partial claim option, rather than the previously permitted 25%, to help maximize the number of borrowers able to retain their homes. Although the changes become effective on April 30, mortgage servicers may begin immediately offering these options to borrowers. For more information, click here.

• On January 27, the Federal Reserve Board issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement makes clear that Fed-supervised uninsured and insured banks will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities. For more information, click here.

• On January 27, the FDIC released a list of 17 administrative enforcement action orders taken against banks and individuals in December 2022; currently, no administrative hearings occur in February 2023. The administrative enforcement actions in those orders consisted of one order to pay civil money penalty, two consent orders, one combined personal consent order and order to pay, two Section 19 orders, four prohibition orders, and seven orders of termination of insurance. For more information, click here.

• On January 27, the Biden administration issued a blog titled, “The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks.” In the blog, the administration pinpointed certain risks currently associated with digital assets and how the administration intends to limit the extent by which consumers, as well as financial institutions, are subject to those risks. For example, the administration examined “misuses of customers’ assets” and potential disclosure requirement solutions that would enable investors to “make more informed decisions about financial risks” associated with digital asset investing. For more information, click here.

• On January 26, Representative French Hill (R-AK), the inaugural chairman of the newly established subcommittee of the U.S. House Financial Services Committee — the Subcommittee on Digital Assets, Financial Technology, and Inclusion — delivered remarks on CNBC‘s Squawk Box and noted that although “blockchain is not ready for real-time payments,” “blockchain and distributed ledger technologies are part of [the future of fintech].” For more information, click here.

• On January 26, the International Swaps and Derivatives Association (ISDA) published a whitepaper concerning a new standard for trading digital asset derivatives through the ISDA Digital Asset Derivatives Definitions, intended to establish an “unambiguous contractual framework” to reduce credit and market risk in digital asset derivatives transaction by setting clear provisions for execution and settlement. For more information, click here.

State Activities:

• On February 3, the New Jersey Bureau of Securities (NJ Bureau) issued cease-and-desist orders to MetaCapitals Ltd., Cresttrademining Ltd., and Forex Market Trade, and accused each company of either selling unregistered securities, making materially misleading statements of material fact to New Jersey residents, or acting as a broker-dealer in violation of state securities laws. According to the NJ Bureau, each of these companies engaged in “pig butchering” scams that require a fraudster to gain a victim’s trust before manipulating the victim to invest his/her funds into a phony investment controlled by the fraudster. For more information related to the cease-and-desist order entered against MetaCapitals Ltd., click here. For more information related to the cease-and-desist order entered against Cresttrademining Ltd., click here. For more information related to the cease-and-desist order entered against Forex Market Trade, click here.

• On February 2, the Supreme Court of Illinois held that the five-year statute of limitations in Illinois Code Section 13-205 applies to actions filed under the Biometric Information Privacy Act (BIPA). The plaintiff filed a class-action lawsuit against his former employer, alleging that his employer violated sections of the BIPA regulating the retention and deletion of biometric information, as well as sections governing the consensual collection and disclosure of biometric identifiers and information, when it scanned the plaintiff’s fingerprints. The plaintiff’s employer moved to dismiss the complaint as untimely, arguing that the one-year limitations period in another section of the Illinois Code applied. The circuit court found that the five-year statute of limitations applied, noting that although the BIPA is a privacy statute, the one-year statute applies in cases where publication of biometric data is at issue, which, as the court found, was not the case with the plaintiff’s claims. The appellate court decided, however, that the one-year statute of limitations was appropriately applied to claims where publication or disclosure of biometric data is an element of the claim. Ultimately, the Illinois Supreme Court determined the BIPA claims were subject to a five-year limitations period. For more information, click here.

• On February 1, District of Columbia Mayor Muriel Bowser signed B25-0015 — the Public Health Emergency Credit Alert Extension Congressional Review Emergency Amendment Act of 2023. The bill extends certain requirements and limitations on credit reporting agencies and users of credit reports. Among other things, the bill requires credit reporting agencies to accept a personal statement from a consumer, indicating that the consumer experienced financial hardship due to a public emergency and notifying residents of the right to request a personal statement. Additionally, the bill prohibits users of information from considering adverse information in a report resulting from the consumer’s action or inaction during the public health emergency. The bill allows consumers a private right of action for violations of the provisions contained therein. The bill will remain in effect for 90 days. For more information, click here.

• On February 1, the Superintendent of Financial Services Adrienne Harris announced that the New York State Department of Financial services completed the process for adopting new commercial financing regulation 23 NYCRR 600. The regulation applies to multiple types of commercial financing products and requires providers to issue disclosures when “extending a specific offer” for various types of commercial financing. For more information, click here.

• On January 30, the California Department of Financial Protection and Innovation (DFPI) announced that it commenced enforcement actions against multiple debt collectors for unlicensed activity under the Debt Collection Licensing Act and unlawful and deceptive acts or practices in violation of the California Consumer Financial Protection Law. The desist-and-refrain orders allege that, among other things, the named companies attempted to collect debts that a consumer did not owe, made false claims of pending lawsuits, unlawfully threatened to seize property, and failed to provide validation notices as required by federal law. In addition to thwarting the subject companies’ continued violations of the state’s consumer protection laws, the DFPI also seeks penalty payments, totaling $120,000. For more information, click here.

• On January 26, the California Department of Motor Vehicles (CA DMV) announced its collaboration with liquid proof-of-stake-based blockchain Tezos and crypto-software developer firm Oxhead Alpha to launch a proof-of-concept blockchain to create digital representations of auto titles through non-fungible tokens (NFTs), which will enable the CA DMV to remove persistent points of friction in the auto title process. For more information about NFTs, click here. For more information about the CA DMV’s collaborative auto title project, 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 January 27, the Federal Reserve Board (Fed) announced its decision to deny Custodia Bank’s (Custodia) application to become a member of the Federal Reserve System. The Fed denied Custodia’s application because Custodia’s proposed business model involved issuing crypto-assets on blockchain networks — an activity the Fed previously called “inconsistent with safe and sound banking practices.” The Fed also exhibited concern with Custodia’s ability to mitigate money laundering and terrorism financing. For more information, click here.
• On January 27, the Fed issued a policy statement, interpreting Section 9(13) of the Federal Reserve Act as providing the Fed with discretion to rebuttably presume that a state member bank cannot engage in any impermissible activity for a national bank, unless permissible via federal statute or applicable regulations promulgated by the Federal Deposit Insurance Corporation (FDIC). The statement discussed the permissibility of certain crypto-asset-related activities for state member banks and how the Fed would apply the rebuttable presumption to those activities:
  • Holding Crypto-Assets as Principal. Since the Fed has not identified any authority that permits national banks or state banks to hold crypto-assets as principal, the Fed would presumptively prohibit state member banks from holding crypto-assets as principal. The Fed noted that this rebuttable presumption is “bolstered by safety and soundness concerns” since the ostensibly opaque nature of the digital asset market “may make it difficult or impossible to assess market and counterparty exposure risks.”
  • Issuing Dollar Tokens. In 2021, the Office of Comptroller of Currency (OCC) issued Interpretive Letters 1174 and 1179, governing the permissibility of national banks to issue dollar tokens. Although the Fed reasoned that engaging in this type of activity is “inconsistent with safe and sound banking practices,” the letters’ existence rebuts the presumption in favor of prohibition, and a state member bank that proposes to engage in this activity would be required to adhere to certain conditions set forth by the OCC in the letters. Those conditions include, but are not limited to, obtaining a nonobjection letter from the OCC and demonstrating that the state bank has controls in place to conduct the activity in a safe and sound manner.

For more information, click here.

• On January 26, the Securities and Exchange Commission (SEC) rejected Cboe BZX Exchange’s (BZX) request to list and trade Ark 21Shares, the proposed spot-Bitcoin exchange traded fund (ETF) managed by asset managers ARK Investment Management and 21Shares (collectively hereinafter, the “trust). BZX’s request required the SEC to determine whether permitting approving the ETF would be consistent with Section 6(b)(5) of the Exchange Act, which requires that the rules of a national securities exchange be designed “to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest.” With respect to a spot-Bitcoin ETF, a listing exchange may demonstrate compliance with these mandates by proffering evidence that the listing exchange has entered a comprehensive “surveillance-sharing agreement” with a regulated market “of significant size” related to spot-Bitcoin, or the listing exchange has held Intermarket Surveillance Group (ISG) membership in common with such regulated market. Due to common ISG membership of BZX and the Chicago Mercantile Exchange (CME), which lists and trades Bitcoin future contracts, the SEC recognized that BZX has the equivalent of a “comprehensive surveillance-sharing agreement” with CME. However, the SEC concluded that the CME Bitcoin futures market is not a market of significant size related to spot-Bitcoin, which is the underlying assets that would be held by the trust. This marks the second time the SEC rejected a request by BZX to list a spot-Bitcoin ETF on its platform. For more information, click here.
• On January 26, the Office of Science and Technology Policy (OSTP) issued a notice of request for information (RFI) that recommended the U.S. government develop and periodically update a National Digital Assets Research and Development (R&D) Agenda, currently being developed by the OSTP and the Fast Track Action Committee on Digital Assets Research and Development of the Subcommittee on Networking and Information Technology Research and Development (NITRD) of the National Science and Technology Council, the National Science Foundation, and the NITRD National Coordination Office. The RFI requests public comments to help identify priorities for R&D related to designing digital assets — particularly, a central bank digital currency. For more information, click here.
• On January 26, U.S. Senator Elizabeth Warren (D-MA) applauded the SEC’s crypto-related enforcement actions to date, while delivering remarks during a virtual event co-hosted by the American Economic Liberties Project and Americans for Financial Reform. For more information, click here.
• On January 25, U.S. Senators Elizabeth Warren (D-MA) and Ron Wyden (D-OR) delivered a letter to the Public Company Accounting Oversight Board (PCAOB), discussing the role that insufficient accounting could have played in misleading consumers about the financial soundness of crypto-related companies. In the letter, Senators Warren and Wyden criticized “proof-of-reserves” audits, which have become a consumer protection and compliance talking point among digital-asset stakeholders after the implosion of FTX. Senators Warren and Wyden noted that “proof-of reserves examinations fall significantly short of real audits, as proof-of-reserves reports do not follow established standards, are not overseen by the PCAOB, and do not prove that listed assets actually belong to customers.” For more information, click here.
• On January 25, the Consumer Financial Protection Bureau (CFPB) released a blog post on consumer credit score transitions during the COVID-19 pandemic. The CFPB examined the transition of consumers across five credit score tiers: (1) deep subprime (300-579); subprime (580-619), near-prime (620-659); prime (660-719), and superprime (720-850). Trends in the CFPB-analyzed data demonstrated that transitions from the deep subprime credit tier became more common during the pandemic. Additionally, the data showed that transitions out of the subprime credit tier were also more common during the pandemic. The CFPB also found that consumers with near-prime, prime, or superprime credit scores were less likely during the pandemic to transition to a lower credit score tier and that a larger percentage of consumers with near-prime credit scores transitioned into a higher credit score tier during the pandemic compared to pre-pandemic. The CFPB noted that the improvement in consumer credit scores during the pandemic were largely driven by consumers with deep subprime and subprime scores, but consumers across all tiers were more likely to transition to a higher tier and less likely to transition to a lower tier than before the pandemic. For more information, click here.
• On January 25, the Biden administration announced new actions to increase fairness in the rental market and further principles of fair housing. The actions aligned with the new Blueprint for a Renters Bill of Rights also released by the administration on the same date. Some of the actions include:
  • An announcement by the Federal Trade Commission (FTC) and the CFPB that they will collect information to identify practices that unfairly prevent applicants from accessing or staying in housing;
  • An announcement by the Federal Housing Finance Agency (FHFA) that it will launch a new public process to examine proposed actions promoting renter protections and limits on egregious rent increases for future investments; and
  • An announcement that the U.S. Department of Housing and Urban Development will publish notice of proposed rulemaking that would require certain public housing authorities and certain property owners to publish at least 30 days’ notice of intent to terminate a lease for nonpayment.

For more information, click here.

• On January 24, the CFPB issued a request for information, seeking public input on how the consumer credit market is functioning. The request intends to obtain information necessary for the CFPB’s biennial review of the credit card market as mandated by the Credit Card Accountability Responsibility Disclosure Act (CARD Act) enacted by Congress in 2009. Specifically, the CFPB seeks more and current information about various aspects of consumers’ experience with credit cards, including, among other things: (1) the terms of credit card agreements, (2) the effectiveness of disclosures, (3) the adequacy of protections against unfair and deceptive acts or practices, (4) the cost and availability of consumer credit cards, (5) the safety and soundness of credit card issuers, (6) the use of risk-based pricing for consumer credit cards, and (7) consumer credit card product innovation. The comment period for this request will end on April 24. For more information, click here.
• On January 24, the Federal Communications Commission’s (FCC) Robocall Response Team took action to shut down an apparent robocall scam campaign targeting homeowners. The FCC’s Enforcement Bureau ordered telecommunications companies to mitigate suspected illegal traffic from a particular dialing platform believed to have been used to facilitate the calls. The bureau also required a particular voice service provider to cease and desist from carrying the suspected illegal robocall traffic. According to the FCC, at least three state attorneys general sued the real estate brokerage firm accused of originated the robocall traffic. For more information, click here.
• On January 23, the FCC released a public notice, mandating compliance with its Telephone Consumer Protection Act (TCPA) amendments as of July 20. In late December 2020, the FCC released the TCPA exemptions order to implement Section 8 of the Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act. In that rulemaking, the FCC amended several provisions of the TCPA related to exemptions for noncommercial calls to residential numbers, commercial calls to residential numbers that do not include an advertisement or constitute telemarketing, tax exempt nonprofit organization calls to residential numbers, and Health Insurance Portability and Accountability Act-related calls to residential numbers. The amendments limited the number and frequency of calls to residential numbers, and also required the callers placing such calls to allow consumers to opt out of any future calls. For more information, click here.
• On January 23, the Federal Bureau of Investigation (FBI) announced that an investigation confirmed that the Lazarus Group was responsible for the theft of $100 million virtual currency from blockchain Harmony One’s cross-chain bridge, Horizon Bridge. On January 13, the Lazarus Group utilized RAILGUN, a zero-knowledge, proof-based blockchain that enables users to send or receive transactions without revealing either assets or identities, to launder over $60 million Ethereum stolen during the heist. Harmony One originally reported the heist to the FBI in June 2022. For more information, click here.
• On January 20, the CFPB urged mortgage servicers to remind homeowners with sufficient home equity that a traditional sale could provide a better alternative to foreclosure. The CFPB also noted that servicers can refer homeowners to HUD-approved housing counselors and may consider suggesting that interested homeowners contact a real estate agent. The CFPB noted that although foreclosure starts are relatively low when compared to pre-pandemic levels, an increase (by 23,400) of foreclosure starts occurred in November 2022. The CFPB also noted that the foreclosure process can be expensive for homeowners and can impact wealth accumulation. The CFPB pointed out that rising rents may mean it is best for homeowners to remain in their homes, if possible, and to consider other options, such as payment deferral, allowing them to do so. However, for those without such home-retention strategies, the CFPB highlighted a traditional sale as one alternative to foreclosure. For more information, click here.
• On January 20, the SEC filed a civil complaint against Avraham Eisenberg for allegedly orchestrating an attack on a crypto-asset trading platform known as Mango Markets (MNGO) in violation of anti-fraud and market manipulation provisions of federal securities laws. The SEC alleged that Eisenberg stole $116 million in crypto assets from Mango Markets’ platform by selling many perpetual futures for MNGO tokens and then subsequently purchasing those same perpetual futures using a separate account maintained on MNGO. The SEC further alleged that these actions enabled Eisenberg to artificially raise the price of his MNGO perpetual futures position to borrow and withdraw approximately $116 million in various crypto-assets from MNGO, which effectively drained all the available assets on MNGO’s platform. Eisenberg also faces parallel criminal charges brought by the Department of Justice and the Commodities Futures Trading Commission. For more information, click here.
• On January 17, the Monetary and Economic Department of the Bank for International Settlements (BIS) issued a white paper titled, The Technology of Decentralized Finance. According to the white paper, BIS considers decentralized finance (DeFi) “a relevant development because it harnesses innovative technology that might shape the future of the financial ecosystem” through its “algorithmic automation of financial activity.” Nevertheless, the white paper also notes that a “deep understanding of DeFi is still lacking in many circles,” as evidenced by the rapid collapse of Terra Labs’ algorithmic stablecoin protocol and its associated crypto-assets LUNA and UST. For more information, click here.

State Activities:

• On January 27, California Attorney General Rob Bonta announced an investigative sweep, targeting businesses with mobile apps that do not comply with the state’s Consumer Privacy Act (CCPA). The sweep focuses on retail, travel, and food service industries that have not complied with consumer opt-out requests or do not offer a way for consumers to opt out of the sale of their data. The sweep also seeks out those businesses that have failed to process consumer requests as required by the CCPA. For more information, click here.
• On January 26, New York Assembly member Clyde Vanel (D) introduced A 2532, a bill permitting New York state agencies to accept “cryptocurrency” as a method of payment of fines, civil penalties, rent, rates, taxes, fees, charges, revenue, or other financial obligations owed to state agencies. If enacted, the bill would enable New York state agencies to enter agreements with “cryptocurrency issuers” to facilitate acceptance of cryptocurrency by the state of New York. Notably, A 2532 is substantively identical to Arizona Senator Wendy Rogers’ bill SB 1239 discussed below. For more information about A 2532, click here.
• On January 25, Arizona Senator Wendy Rogers (R) introduced SB 1235 and SB 1239, which propose to include Bitcoin as a form of legal tender and enable Arizona state agencies to accept “cryptocurrency” as a method of payment for any financial obligations and special assessments due to the state agency, respectively. Notably, SB 1239 defines “cryptocurrency” as any form of digital currency using encryption techniques to regulate the generation of units of currency and verify the transfer of monies, operating independently of a central bank, including Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. For more information regarding SB 1235, click here. For more information regarding SB 1239, click here.
• On January 23, Colorado Attorney General Phil Weiser sent a consumer lending study that examines the availability and safety of “small-dollar” loans (up to $1,000) and larger installment loans (exceeding $1,000) to the Colorado General Assembly. This study comes on the heels of voter approval of Proposition 111, an initiative designed to cap rates on deferred deposit loans at 36%, which led several lenders to offer alternative loans available under Colorado law that permit rates that exceed this cap. According to the study, it appears consumers who qualify can obtain alternative charge loans, despite a drop in the number of retail outlets, due to the growth of online lending. Additionally, the study’s authors note that affordability of alternative charge borrowers is mixed. For example, some measures indicate that one in five borrowers experience substantial difficulty making the required payments, while other measures suggest a lower percentage. As for large loans, the study indicates that the share of Coloradans obtaining an unsecured installment loan is well below the share in comparable states, including some without a usury limit, for consumers in the subprime and deep subprime credit tiers and consumers without a credit score. When compared to states without usury limit, the study notes that on most measures, the borrowers in the comparison states generally experience greater levels of repayment difficulty than Colorado borrowers. 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 January 19, the Consumer Financial Protection Bureau (CFPB) issued a new circular, affirming that companies offering “negative option” subscription services must comply with federal consumer financial protection law. Negative option programs include subscription services that automatically renew unless the consumer affirmatively cancels, as well as trial marketing programs that charge a reduced fee for an initial period and then automatically begin charging a higher fee. Companies risk violating the law if they do not clearly and conspicuously disclose the terms of their subscription services and obtain consumers’ informed consent or if they make it unreasonably difficult for consumers to cancel. For more information, click here.

• On January 19, the Securities and Exchange Commission (SEC) filed a consent order, memorializing crypto-lending firm Nexo Capital, Inc.’s (Nexo) assent to pay a $45 million fine to remedy its offering of an interest-bearing cryptocurrency deposit product called the “Nexo Earn Interest Product” (EIP), which the SEC alleged constituted the offering and selling of unregistered securities in violation of federal securities law. Critically, under the consent order, Nexo must “cease the EIP to all U.S. investors by April 1, 2023 and [must] exit the U.S. entirely shortly thereafter.” For more information, click here.

• On January 18, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order, identifying Hong Kong-based cryptocurrency exchange Bitzlato Limited (Bitzlato) as a “primary money laundering concern” due to Bitzlato’s alleged connection to illicit Russian finance and ransomware activities. FinCEN’s order prohibits all “covered financial institutions” from transmitting any funds involving Bitzlato. Notably, FinCEN alleged that public reporting demonstrated that Bitzlato did not effectively implement policies and procedures designed to combat money laundering and illicit finance. For more information, click here.

• On January 18, the CFPB released the updated “Mortgage Servicing Examination Procedures,” providing transparency to stakeholders about how we do our work. The examination procedures describe the types of information that CFPB examiners gather to evaluate mortgage servicers’ policies and procedures; assess whether servicers are complying with applicable laws; and identify risks to consumers related to mortgage servicing. The updated examination procedures include CFPB guidance released since the last update in June 2016. For more information, click here.

• On January 18, the U.S. Department of Justice (DOJ) charged Anatoly Legkodymov, the founder of Hong Kong-based cryptocurrency exchange Bitzlato, with conducting a money transmitting business that transmitted illicit funds and with failing to develop and implement an effective KYC/AML program in violation of the Bank Secrecy Act. According to the DOJ, Bitzlato had been responsible for processing approximately $4.58 billion worth of cryptocurrency transactions since 2018. For more information, click here.

• On January 17, during an interview with Bloomberg, CFTC Commissioner Caroline Phan noted that she believes “crypto financial instruments should be held to the same standard as other financial instruments,” and she is hopeful that the CFTC and other federal regulatory agencies will provide more crypto-related guidance throughout 2023. For more information, click here.

• On January 17, FinCEN published two notices and requests for comment in the Federal Register related to the reporting process the agency intends to use to collect data. Specifically, FinCEN is issuing a final rule, requiring certain entities to file with FinCEN reports that identify two categories of individuals: the beneficial owners of the entity and individuals who have filed an application with specified governmental authorities to create the entity or register it to do business. These regulations implement Section 6403 of the Corporate Transparency Act, enacted into law as part of the National Defense Authorization Act for Fiscal Year 2021, and describe who must file a report, what information must be provided, and when a report is due. Comments are due by March 20. For more information, click here.

• On January 17, Acting Comptroller of the Currency Michael Hsu delivered remarks at the Brookings Institute about the limits of large bank manageability. He stated that “[e]nterprises can become so big and complex that control failures, risk management breakdowns, and negative surprises occur too frequently — not because of weak management, but because of the sheer size and complexity of the organization.” He spoke about his belief that the “most effective and efficient way to successfully fix [these] issues … is to simply if — by divesting businesses, curtailing operations, and reducing complexity.” For more information, click here.

• On January 17, the World Economic Forum (WEF) released a “toolkit” for decentralized autonomous organizations (DAOs). The “toolkit” is comprised of a set of resources that the WEF hopes will help developers, policymakers, and stakeholders in the crypto industry “realize the full potential” of evaluating, engaging, or developing DAOs. The WEF’s toolkit is segmented into five sections:
  • What are DAOs?;
  • DAO operations;
  • DAO governance;
  • Legal structures; and
  • Recommendations.

  For more information about the WEF’s DAO toolkit, click here. For more information about DAOs, click here.

State Activities:

• On January 20, California Attorney General Rob Bonta submitted a comment letter, applauding the CFPB for its preliminary determination that the state’s Commercial Financing Disclosure Law (CFDL) is not preempted by the federal Truth in Lending Act (TILA). CFDL was enacted in 2018 as a tool for small businesses seeking to navigate the complex commercial financing market. The CFDL requires uniform disclosures of certain credit terms in a manner similar to those mandated by TILA’s provisions, but for commercial transactions not regulated by TILA. Before the CFDL’s adoption, there were no federal or state law disclosure requirements for commercial financing. For more information, click here.

• On January 19, New York Attorney General Letitia James and a multistate coalition obtained up to $24 million from cryptocurrency companies Nexo, Inc. and Nexo Capital, Inc. (Nexo) for “engaging in the unregistered offer and sale of securities and commodities” and for allegedly “lying to investors about their registration status.” The agreement represents the culmination of a civil lawsuit brought by the AG in September 2022 and administrative actions by securities regulators in nine other states. Nexo is now banned from the New York securities industry for five years and must notify its investors to withdraw their assets from the platform. For more information, click here.

• On January 19, New Hampshire Governor Chris Sununu released the final report and recommendations compiled by the governor’s Commission on Cryptocurrencies and Digital Assets, which was established on February 9, 2022. Principally, the commission’s final report touched on three points:
  • Blockchain technology (digital databases secured by cryptographic software protocols distributed across connected computers) will be an important technical innovation with many potentially important applications in our human societies and economies;
  • The legal and regulatory status of blockchain technologies and applications, such as cryptocurrencies and digital assets, is highly uncertain, and this legal and regulatory uncertainty is materially undermining innovation and economic development of new technologies, activities, and industry, as well as protections for investors and consumers; and
  • The New Hampshire government (governor, legislature, executive branch agencies, and courts of our judicial branch) should devote resources to establishing a state legal regime that will offer an attractive jurisdiction for the best responsible blockchain innovators, entrepreneurs, and businesses, while protecting investors and consumers using their applications.

  For more information, click here.

• On January 18, the New York Department of Financial Services (DFS) announced that it adopted an updated check cashing regulation initially proposed in June 2022. The regulation implements a new method for calculating fees that accounts for the needs of licensees and consumers who utilize check cashing services. In 2005, New York became the only state to grant automatic increases to the maximum percentage check cashing fee, anchoring the increases to the Consumer Price Index (CPI). However, this method did not account how inflation disproportionately impacts underserved New Yorkers who rely on check cashing services to access their funds. The regulation eliminates automatic increases based on CPI, creating instead a two-tier system of fees for check cashers. For more information, click here.