February 2, 2024

Chairman of the House Financial Services Committee, Patrick McHenry (R-NC), Chairman of the Financial Institutions and Monetary Policy Subcommittee, Andy Barr (R-KY), and Chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee, French Hill (R-AR) sent a letter to Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg expressing concern over the agency’s “efforts to minimize engagement with the public on financial technology and innovation.” The lawmakers note the dismantling of the external facing portion of the agency’s FDITech Office as a catalyst for their inquiry and demand information regarding how the FDIC will provide regulatory guidance for burgeoning FinTech firms and financial innovators moving forward.

The White House Office of Management and Budget published a Statement of Administration Policy stating that the Administration strongly opposes passage of S.J. Res. 50, a joint resolution to disapprove of the SEC rule relating to informing investors about cybersecurity incidents and establishing uniform standards for corporate disclosures for oversight and governance of cyber risks. The statement also states that if President Biden were presented with the S.J. Res. 50, he would veto it.

The Federal Reserve issued a Federal Open Market Committee (FOMC) statement. The FOMC decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The FOMC also found that recent indicators suggest that economic activity has been expanding at a solid pace, job gains have moderated since early last year but remain strong, the unemployment rate has remained low, and inflation has eased over the past year but remains elevated. The FOMC also unanimously reaffirmed its “Statement on Longer-Run Goals and Monetary Policy Strategy.” The FOMC also announced updates to further enhance its policy on investment and trading that will increase the number of Federal Reserve System staff who will be covered by the most stringent restrictions on investment and trading activities and will tighten restrictions on all staff with access to confidential FOMC information. The updated policy supports a new compliance regime where staff with access to the most sensitive FOMC information may be directed to submit brokerage statements or other securities transaction statements to verify the accuracy of their financial disclosures.

The Office of the Comptroller of the Currency (OCC) assessed a $65 million civil money penalty against City National Bank, of Los Angeles, California, related to systemic deficiencies in the Bank’s risk management and internal controls. The agency also issued a cease-and-desist order requiring the bank to take broad and comprehensive corrective actions to improve its strategic plan, operational risk management, including internal controls; compliance risk management, including Bank Secrecy Act/anti-money laundering and fair lending; strategic risk management; and investment management practices.

The Securities and Exchange Commission (SEC) announced that Brian Sewell and his company, Rockwell Capital Management, agreed to settle fraud charges in connection with a scheme that targeted students taking Sewell’s online crypto trading course known as the American Bitcoin Academy. The SEC alleges that the fraudulent scheme cost 15 students $1.2 million. Defendant Rockwell Capital Management also agreed to pay disgorgement and prejudgment interest totaling $1,602,089 and Defendant Sewell agreed to a civil penalty of $223,229. The settlement is subject to court approval.

Senator Cynthia Lummis (R-WY) and Representatives Wiley Nickel (D-NC) and Mike Flood (R-NE) introduced a bipartisan, bicameral Congressional Review Act (CRA) resolution to overturn the SEC’s Staff Accounting Bulletin (SAB) 121. The SEC bulletin, which requires banks to include customers’ cryptocurrency assets on their balance sheets, was deemed a rule for purposes of the CRA according to the Government Accountability Office’s (GAO) October finding. House Financial Services Committee Chairman Patrick McHenry (R-NC) tweeted a statement supporting the joint resolution.

Senators Jack Reed (D-RI), Sherrod Brown (D-OH), and Elizabeth Warren (D-MA) announced their support for the Consumer Financial Protection Bureau’s (CFPB) November 7 proposed rule to supervise large providers of digital wallets and payment apps. The Senators sent a letter to CFPB Director Rohit Chopra supporting the rule. The letter follows House Financial Services Committee Chair Patrick McHenry and Reps. French Hill and Mike Flood’s letter earlier this week urging the CFPB to reopen the public comment period and to reconsider finalizing the rule as currently proposed

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published a report setting out the results of a stocktake of BigTech direct financial services provision in the EU. The report identifies the types of financial services currently carried out by BigTechs in the EU pursuant to EU licenses and highlights inherent opportunities, risks, regulatory and supervisory challenges. 

House Financial Services Committee Chairman Patrick McHenry (R-NC); Chairman of the Digital Assets, Financial Technology and Inclusion Subcommittee French Hill (R-AR); and Rep. Mike Flood (R-NE) sent a letter to CFPB Director Rohit Chopra regarding the Bureau’s proposed rule “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications.” The lawmakers are urging the CFPB to reopen and extend the public comment period as well as reconsider finalizing the rule as currently proposed given its “insufficient justification, unclear guidance regarding third-party service providers, unknown effects on the digital asset ecosystem, and an inadequate comment period.

Need to catch up on what happened earlier this week? Check out our January 31st Midweek Update here