August 5, 2022

U.S. Senators Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture, Nutrition, and Forestry, and John Boozman (R-AR), Ranking Member, along with Senators Cory Booker (D-NJ) and John Thune (R-SD) introduced the Digital Commodities Consumer Protection Act of 2022 to give the Commodity Futures Trading Commission (CFTC) new tools and authorities to regulate digital assets that are commodities. The bill expands  the CFTC’s regulatory authority and would require all “digital commodity platforms” to register with the CFTC. While the bill doesn’t delineate any specific responsibilities for the Securities and Exchange Commission (SEC) — since that is outside the Senate Agriculture Committee’s purview — it includes language that allows the CFTC’s new digital commodities registrants to also register with the SEC.

The U.S. Department of the Treasury will publish its Semiannual Regulatory Agenda in the Federal Register on August 8. The Agenda will include the proposed rule “Clarification of the Requirement to Collect, Retain, and Transmit Information on Transactions Involving Convertible Virtual Currencies and Digital Assets With Legal Tender Status” and the final rule “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.” The unpublished version can be found here.  

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra called for the Community Reinvestment Act (CRA) to apply to non-bank lenders.  

The SEC charged 11 individuals for their roles in creating and promoting Forsage, a fraudulent cryptocurrency pyramid and Ponzi scheme that raised more than $300 million from millions of retail investors worldwide, including in the United States. Among those charged include three U.S.-based promoters engaged by Foresage’s founders to endorse Forsage on its website and social media platforms. 

Acting Comptroller of the Currency Michael J. Hsu discussed cybersecurity risks facing the financial sector before the Financial and Banking Information Infrastructure Committee, a group led by the Treasury Department that coordinates efforts to improve the reliability and security of the financial sector infrastructure, and the Financial Services Sector Coordinating Council, a non-profit group that brings together 70+ member-partners from financial trade associations, financial utilities, and other critical financial firms. In his remarks, Acting Comptroller Hsu discussed the risk of evolving cybersecurity threats, the risk to critical operations, and the risk of complacency, and highlighted the need for collaboration among public- and private-sector stakeholders to safeguard confidence in the financial sector. 

Senator Elizabeth Warren (D-MA) is circulating a letter among her Senate colleagues that would ask the Office of the Comptroller of the Currency (OCC) to review a series of Trump-era interpretations that allowed banks to offer services like crypto custody for clients. A draft copy of the letter calls on the OCC to work with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation to replace the interpretations with an approach “that adequately protects consumers and the safety and soundness of the banking system.”  

Senate Banking Committee Ranking Member Pat Toomey (R-PA), along with Senators Mark Warner (D-VA), Cynthia Lummis (R-WY), Kyrsten Sinema (D-AZ), and Rob Portman (R-OH) introduced legislation to clarify the digital asset reporting requirements signed into law as part of last year’s bipartisan infrastructure framework.  

Five former Treasury secretaries from both Democratic and Republican Administrations signed a statement in support of the Inflation Reduction Act and noted that this bill will not increase taxes on families making less than $400,000 per year. They also reaffirmed that the legislation will boost global competitiveness, address the climate crisis, lower costs for families, and fight inflation. 

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee, Congresswoman Joyce Beatty (D-OH), Chair of the Subcommittee on Diversity and Inclusion, Congressman Al Green (D-TX), Chairman of the Subcommittee on Oversight and Investigations, Congressman Bill Foster (D-IL), Chairman of the Task Force on Artificial Intelligence, and Congressman Stephen Lynch (D-MA), Chairman of the Task Force on Financial Technology sent a letter to the nation’s 20 largest crypto, Web3, and digital assets companies, as well as prominent venture capital firms with investments in crypto, urging them to provide data around their diversity and inclusion practices. Notably, while the legislative calendar is limited, there’s still also the potential for a committee hearing to take place in November to discuss findings.

Superintendent of the New York State Department of Financial Services Adrienne A. Harris announced that Robinhood Crypto, LLC (“RHC”) will pay a $30 million penalty to New York State for significant failures in the areas of bank secrecy act/anti-money laundering (“BSA/AML”) obligations and cybersecurity that resulted in violations of the Department’s Virtual Currency Regulation, Money Transmitter Regulation, Transaction Monitoring Regulation, and Cybersecurity Regulation. In addition to the penalty, RHC will also be required, as part of the settlement, to retain an independent consultant that will perform a comprehensive evaluation of RHC’s compliance with the Department’s Regulations and RHC’s remediation efforts with respect to the identified deficiencies and violations.  

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, discussed the possibility of a central bank digital currency (CBDC), and said consumers already had access to instant digital payments through private-sector platforms without the privacy concerns that arise from a government-backed alternative.  

The Financial Stability Oversight Council (FSOC) held a meeting to discuss progress in identifying and addressing climate change related financial risks. Read our memo here

The House Financial Services Committee held a markup of eight bills intended to address “urgent housing needs” and other consumer protections. Read our memo here.  

The Senate Banking Committee held a hearing focused on protecting Americans from crypto-based scams and ensuring sufficient investor protections within the digital assets and securities markets. Read our memo here

The House Committee on Financial Services announced it will continue discussions on its bipartisan stablecoin legislation through the August recess. For more information, see our memo.  

Consumer Financial Protection Bureau Director Rohit Chopra participated in interviews with the American Banker and the Associated Press, covering topics such as overdraft fees, the agency’s enforcement posture, the application of Regulation E to payments applications, its investigation of large technology companies, data privacy concerns, the Federal Deposit Insurance Corporation (FDIC) Board controversy involving former Chair McWilliams, the qualified mortgage rule, use of machine learning in financial services, how the current economic cycle might affect consumers, and fraud and scams involving cryptocurrency.