August 19, 2022

The Federal Reserve Board (FRB) provided additional information for banking organizations engaging or seeking to engage in crypto-asset-related activities. The supervisory letter outlines the steps Board-supervised banks should take prior to engaging in crypto-asset-related activities, such as assessing whether such activities are legally permissible and determining whether any regulatory filings are required. Additionally, the supervisory letter states that Board-supervised banking organizations should notify the Board prior to engaging in crypto-asset-related activities.  

The FRB announced final guidelines that establish a transparent, risk-based, and consistent set of factors for Reserve Banks to use in reviewing requests to access Federal Reserve accounts (“master accounts”) and payment services.  The FRB notes, “The new guidelines include a tiered review framework to provide additional clarity on the level of due diligence and scrutiny that Reserve Banks will apply to different types of institutions with varying degrees of risk… In response to public comments, the tiered review framework in the final guidelines was refined to provide more comparable treatment between non-federally-insured institutions chartered under state and federal law.” The new guidelines will be effective upon publication in the Federal Register. 

Following President Biden signing the Inflation Reduction Act into law, the U.S. Department of the Treasury (Treasury) and Internal Revenue Service (IRS) published initial information on changes to the tax credit for electric vehicles strengthened by the legislation.

The FRB announced it fined EagleBank $9.5 million for violation of the Board’s insider lending regulation. The bank improperly extended credit to entities owned or controlled by its then-CEO and Chairman, Ronald D. Paul.

The Securities and Exchange Commission (SEC) charged 18 individuals and entities for their roles in a fraudulent scheme in which dozens of online retail brokerage accounts were hacked and improperly used to purchase microcap stocks to manipulate the price and trading volume of those stocks. 

A federal court in the Central District of California entered an order authorizing the IRS to serve a John Doe summons on SFOX, a cryptocurrency prime dealer headquartered in Los Angeles, California, seeking information about U.S. taxpayers who conducted at least the equivalent of $20,000 in transactions in cryptocurrency between 2016 and 2021 with or through SFOX. “Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable,” said Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division. The IRS has used John Doe summons since 2018 to gather information about taxpayers from cryptocurrency companies.

Pennsylvania Attorney General Josh Shapiro announced he is leading a multistate lawsuit against Mariner Finance, a personal loan company, for widespread violations of multiple consumer protection laws. The suit alleges that Mariner Finance charged consumers for hidden add-on products that consumers either didn’t know about or didn’t agree to buy.  

FRB Governor Michelle Bowman gave a speech entitled “Technology, Innovation, and Financial Services.” In her remarks, Bowman stated that it is “critically important” for banking regulators to support innovation in banking and stated that the Fed is working to articulate supervisory expectations for banks on a variety of digital asset-related activities. 

Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ), Energy Subcommittee Chairman Bobby Rush (D-IL), Oversight and Investigations Subcommittee Chair Diana DeGette (D-CO), and Environment and Climate Change Subcommittee Chairman Paul Tonko (D-NY) wrote to four cryptomining companies as part of the Committee’s continued oversight of the environmental and energy impacts of blockchain technology. The four Committee leaders are seeking answers on how each company is mitigating those impacts and what steps are being taken to ensure their operations do not strain the energy grid or undermine the nation’s climate goals.

The Federal Open Market Committee (FOMC), which consists of the Federal Reserve Board, President of the New York Federal Reserve Bank, and four Federal Reserve Bank Presidents (currently St. Louis, Boston, Kansas City, and Cleveland), discussed during their July meeting financial stability concerns with respect to digital assets. The participants “saw digital assets’ rising importance and growing interconnectedness with other segments of the financial system as underscoring the need to establish a robust supervisory and regulatory framework for this industry that would appropriately limit potential systemic risks”, and a few participants “mentioned the need to strengthen the oversight and regulation of certain types of nonbank financial institutions.” 

The Federal Deposit Insurance Corporation (FDIC) is issuing guidance to FDIC-supervised institutions to address certain consumer compliance risks associated with assessing multiple non-sufficient funds (NSF) fees arising from the re-presentment of the same unpaid transaction,  Additionally, the FDIC is sharing its supervisory approach when a violation of law is identified, as well as  expectations for full corrective action.  

The Treasury announced an additional group of four state plans approved under the State Small Business Credit Initiative (SSBCI) for up to $750 million in funds to expand access to capital for small businesses.

U.S. Senators Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT) sent a letter to the Office of the Comptroller of the Currency (OCC) requesting that Acting Comptroller of the Currency, Michael Hsu, rescind the previously issued cryptocurrency guidance and replace it with more comprehensive guidance, in coordination with other prudential regulators. The lawmakers also asked for details regarding the extent to which banks are currently engaging in crypto-related activities.

“In light of recent turmoil in the crypto market, we are concerned that the OCC’s actions on crypto may have exposed the banking system to unnecessary risk, and ask that you withdraw existing interpretive letters that have permitted banks to engage in certain crypto-related activities,” wrote the lawmakers. 

DC Fintech Week will be held October 11th and 12th and is welcoming submissions of 10,000 words or less from experts from the academy, industry, government, and nonprofits that significantly advance academic and policy understandings of the conference’s themes and panels. Papers are due September 1 and can be submitted to

The 2022 Black Blockchain Summit will be held at Howard University from September 22nd to September 24th. Tickets can be purchased here.

The OCC announced that it will host virtual Innovation Office Hours on September 28th and 29th to promote responsible innovation in the federal banking system.