August 11, 2023

President Biden issued an executive order (EO) on addressing United States investments in certain national security technologies and products in countries of concern. Specifically, the EO addresses these countries’ developing and exploiting sensitive or advanced technologies and products critical for military, intelligence, surveillance, or cyber-enabled capabilities. The EO provides for the establishment of a new and targeted national security program to be implemented and administered by the U.S. Department of the Treasury (Treasury), in consultation with other agencies, including the U.S. Department of Commerce. The program would, pursuant to implementing regulations: (1) require U.S. persons to notify Treasury of certain transactions, and (2) prohibit U.S. persons from undertaking certain other transactions, in either case involving certain entities engaged in activities related to narrow sub-sets of three advanced technology areas identified in the EO.

The Treasury issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking public comment related to the implementation of the EO.

House Financial Services Committee Chairman Patrick McHenry (R-NC) and Chairman of the Subcommittee on National Security, Illicit Finance, and International Financial Institutions, Blaine Luetkemeyer (R-MO) issued a statement in response to the EO, commending the Biden Administration for taking a “more thoughtful and targeted approach than initially reported” and calling for Congress to take stronger action to confront the Chinese Communist Party.

Maxine Waters, Ranking Member of the House Financial Services Committee, also issued a statement welcoming the Biden Administration’s actions but that the EO must be broadened and strengthened. 

The Biden-Harris Administration launched a two-year competition challenging competitors across the United States to identify and fix software vulnerabilities using artificial intelligence (AI).

The Treasury and Internal Revenue Service (IRS) issued final rules and procedural guidance for the Low-Income Communities Bonus Credit program, which provides up to a 20-percentage point boost to the Investment Tax Credit for qualified solar or wind facilities in low-income communities. Deputy Secretary of the Treasury Wally Adeyemo’s remarks supporting the program can be found here

The Securities and Exchange Commission (SEC) is moving to appeal a federal judge’s ruling that certain sales of the XRP tokens did not violate federal securities laws. In a court filing, the SEC on Wednesday told Judge Analisa Torres of the Southern District of New York that the agency would appeal her recent decision regarding the sales of Ripple Labs’ XRP token on digital asset exchanges. The SEC also asked the court to put other parts of the Ripple case on pause, as the appeal process plays out.

The SEC announced that digital asset trading platform Bittrex Inc., and its co-founder and former CEO, William Shihara, agreed to settle charges that they operated an unregistered national securities exchange, broker, and clearing agency. Bittrex Inc.’s foreign affiliate, Bittrex Global GmbH, also agreed to settle charges that it failed to register as a national securities exchange.

Commodity Futures Trading Commission (CFTC) Commissioner Kristin N. Johnson announced that Tamika Bent has joined her executive staff as Chief Counsel.

The Consumer Financial Protection Bureau (CFPB) published a data spotlight on trends in reverse mortgage direct mail advertising. 

The CFPB published a blog announcing CFPB Director Rohit Chopra’s visit to New Mexico to discuss issues related to medical debt and junk fees with officials, tribal leaders, community leaders, and consumer advocates.

A group of House Republicans led by Rep. Andy Barr (R-KY), Chairman of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, sent a letter to Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg urging him to reconsider a proposed banking industry fee designed to replenish the deposit insurance fund after March’s bank failures.

Senator Sherrod Brown (D-OH), Chairman of the Senate Banking, Housing and Urban Affairs Committee, along with Senators Jack Reed (D-RI), Elizabeth Warren (D-MA), and John Fetterman (D-PA) sent a letter to Federal Reserve Chairman Jerome Powell and Vice Chair for Supervision Michael Barr, urging them to review and reconsider the Federal Reserve’s approach to big bank mergers, including the agency’s framework for evaluating a bank merger’s impact on financial stability.

New York Governor Kathy Hochul announced New York’s first statewide cybersecurity strategy aimed at protecting the State’s digital infrastructure from cyber threats. The strategy is intended to unify New York’s cybersecurity services in order to safeguard critical infrastructure, personal information, and digital assets from malicious actors. It also will provide a framework to align the actions and resources of both private and public stakeholders, including county and other local governments.  

Clothilde Hewlett, the Commissioner of the California Department of Financial Protection and Innovation (DFPI), announced the DFPI issued desist and refrain orders against three different entities for alleged violations of California securities laws. The orders allege that the entities offered and sold unqualified securities and made material misrepresentations and omissions to investors related to digital asset investments. 

The National Conference of State Legislatures released a report on approaches to regulating AI, hoping it will align legislatures across the U.S., and avoid the kind of legal patchwork that has emerged with privacy laws.

The Federal Reserve Board provided additional information on its program to supervise novel activities in the banks it oversees. Novel activities include complex, technology-driven partnerships with non-banks to provide banking services to customers and activities that involve crypto assets and distributed ledger technology. The Board also provided additional information on the process for a state bank supervised by the Federal Reserve to follow before engaging in certain dollar token or stablecoin activity, including demonstrating to its Federal Reserve supervisors that it has appropriate safeguards to conduct the activity safely and soundly.

Need to catch up on what happened earlier this week? Check out our Midweek Update here