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
Federal Activities:
On July 14, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (FDIC) issued a statement addressing the safekeeping of crypto-assets by banking organizations. This statement clarifies how existing laws, regulations, and risk management principles apply to the safekeeping of crypto-assets, without introducing new supervisory expectations. Banking organizations can provide safekeeping services in either fiduciary or non-fiduciary capacities, adhering to applicable legal standards. The statement emphasizes the importance of effective risk management, particularly in controlling cryptographic keys, and highlights the need for banking organizations to adapt their risk governance frameworks to the evolving crypto-asset market. It also underscores the significance of cybersecurity and compliance with legal requirements such as the Bank Secrecy Act and anti-money laundering regulations. Additionally, the statement advises on third-party risk management and the necessity of robust audit programs to ensure safe and sound operations in crypto-asset safekeeping. For more information, click here.
On July 11, BlockFi concluded its $35 million dispute with the Department of Justice (DOJ), marking a significant step in the final stages of its bankruptcy proceedings. The crypto lender, which had filed for Chapter 11 in November 2022 following the collapse of FTX and Alameda Research, agreed to dismiss its lawsuit against the DOJ with prejudice, preventing any future refiling. This lawsuit, initiated in May 2023, accused the DOJ of infringing bankruptcy protections by attempting to seize control of crypto assets potentially belonging to BlockFi’s estate. The bankruptcy court had previously upheld its jurisdiction over the matter, rejecting DOJ’s motions to dismiss or transfer the case. With this dismissal, BlockFi moves closer to completing its wind-down process, having already distributed funds to 97% of its U.S. users, while non-U.S. clients face delays due to international legal complexities. For more information, click here.
On July 11, the Bank for International Settlements (BIS) released Bulletin No. 108, addressing the rapid growth of stablecoins and the associated policy challenges. The bulletin highlights the increasing integration of stablecoins with traditional financial systems, raising concerns about financial integrity, stability risks, and monetary sovereignty, particularly with foreign currency-denominated stablecoins. It underscores the limitations of the “same risks, same regulation” principle, advocating for tailored regulatory approaches that consider the unique characteristics of stablecoins. The bulletin also discusses the potential impact of stablecoins on market yields and monetary policy transmission, emphasizing the need for bespoke regulatory frameworks to manage these challenges effectively. International cooperation is deemed crucial to address the borderless nature of stablecoins, ensuring technological neutrality in regulation to maintain a level playing field. For more information, click here.
On July 8, a panel for the U.S. Court of Appeals for the Eighth Circuit issued a significant decision in the case of Custom Communications, Inc. v. Federal Trade Commission (FTC). The panel vacated the FTC’s amended Negative Option Rule aka the “click-to cancel” rule, citing procedural deficiencies in the rulemaking process. So-called negative option marketing is where consumers enroll in subscription plans that automatically renew unless consumers actively opt out before a given renewal. The panel found that the FTC failed to conduct a required preliminary regulatory analysis, which deprived stakeholders of the opportunity to comment on alternatives and engage with the FTC’s cost-benefit analysis. For more information, click here.
On July 8, during a virtual event hosted by the George Washington University Regulatory Studies Center, discussions centered around the transformative impact of artificial intelligence (AI) on the financial sector. The event highlighted AI’s potential to enhance inclusion, customer experiences, and democratize access to financial services, while improving accuracy, efficiency, and reducing transaction and compliance costs. AI and machine learning (ML) technologies are rapidly reshaping the financial landscape, driven by competitive pressures and technological advancements. These systems are enhancing compliance, market surveillance, and regulatory enforcement, offering new tools for regulators. However, the rapid adoption of AI also presents risks, including potential misuse by bad actors and challenges related to data security and integrity. The Commodity Futures Trading Commission (CFTC) has actively pursued enforcement actions against fraudulent AI practices, emphasizing the need for technology-neutral regulations. The event underscored the importance of developing cohesive strategies for integrating AI into regulatory workflows and called for heightened penalties for AI-related fraud. The establishment of an inter-agency task force was proposed to guide the responsible use and regulation of AI in financial services. For more information, click here.
On July 7, the House Committees on Financial Services and Agriculture reported H.R. 3633, known as the Digital Asset Market Clarity Act of 2025, or the CLARITY Act. This legislation aims to delineate the regulatory framework for digital commodities, granting the CFTC a central role while maintaining certain Securities and Exchange Commission (SEC) oversight over primary market crypto transactions. The bill introduces a definition for digital commodities, excluding securities, derivatives, and stablecoins, and sets criteria for mature blockchains. It provides exemptions from SEC registration for certain investment contracts involving digital commodities, subject to conditions like sales limits and reporting requirements. The CFTC is tasked with exclusive jurisdiction over transactions in digital commodities, requiring exchanges and brokers to register and comply with core principles. For more information, click here.
On July 3, the House Committee on Financial Services Chairman French Hill, House Committee on Agriculture Chairman GT Thompson, and House Leadership announced the week of July 14 as “Crypto Week,” marking a significant legislative push to position the U.S. as a global leader in digital assets. During this week, the House plans to consider pivotal legislation including the CLARITY Act, the Anti-CBDC Surveillance State Act, and the Senate’s GENIUS Act, aiming to establish a comprehensive regulatory framework for digital assets. This initiative underscores a commitment to innovation, consumer protection, and financial privacy, with House Republicans aligning closely with President Trump’s digital asset agenda. For more information, click here.
On July 2, SEC Chair Paul Atkins appeared on CNBC’s “Squawk Box” to discuss the evolving regulatory landscape concerning private markets and stock tokenization. Atkins emphasized the need to make IPOs more attractive by reducing red tape and addressing disclosure complexities that deter companies from going public. He highlighted the importance of innovation, particularly in tokenization, as a means to enhance market efficiency and transparency. Atkins also addressed the accredited investor standard, suggesting potential revisions to accommodate growing investor interest in private products while ensuring adequate investor protection. He acknowledged the challenges posed by SPACs and insider trading, advocating for clear regulatory frameworks that support innovation without compromising market integrity. Atkins underscored the SEC’s active role in safeguarding investors and fostering capital formation amidst these dynamic changes. For more information, click here.
On July 1, the SEC’s Division of Corporation Finance issued a statement providing clarity on the application of federal securities laws to crypto asset exchange-traded products (ETPs). These investment products, traded on national securities exchanges, are structured as trusts holding crypto assets or derivatives. The statement outlines disclosure requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934, emphasizing the importance of protecting investors, facilitating capital formation, and promoting market efficiency. It addresses specific disclosure practices observed in crypto asset ETP filings, including risk factors, business descriptions, and financial statements. The division encourages issuers to tailor disclosures to their specific circumstances and offers guidance on common issues, while also inviting inquiries for further assistance. For more information, click here.
State Activities:
On June 25, the Department of Financial Protection and Innovation (DFPI) in California issued a consent order against Coinme Inc., a company operating digital financial asset kiosks, commonly known as Bitcoin ATMs, across the state. This order comes after findings that Coinme violated several provisions of the California Consumer Financial Protection Law and the Digital Financial Assets Law (DFAL). Notably, this is the first enforcement action taken under the DFAL and signals that DFPI is focused on trying to prevent scammers from taking advantage of Californians. For more information, click here.
