January 31, 2024

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.”

The Office of the Comptroller of the Currency (OCC) requested comment on a proposal to update its rules for business combinations involving national banks and federal savings associations. The proposal also includes a policy statement to clarify the OCC’s review of applications under the Bank Merger Act (BMA). Comments are due 60 days from the date of publication in the Federal Register.

OCC Acting Comptroller of the Currency Michael Hsu discussed the proposed rulemaking in remarks at the University of Michigan School of Business. Acting Comptroller Hsu also discussed improving transparency and trust in the bank merger process and how developing a view on the overall structure of the U.S. banking system could help ensure that it remains diverse, dynamic, and balanced with the economy, as well as inform bank merger policy and decisions.

The Consumer Financial Protection Bureau (CFPB) published a blog summarizing their enforcement work in 2023 and what it expects in the year ahead. The blog states that the CFPB is significantly expanding its enforcement capacity in 2024. 

The Securities and Exchange Commission (SEC) charged Xue Lee (aka Sam Lee) and Brenda Chunga (aka Bitcoin Beautee) for their involvement in a fraudulent crypto asset pyramid scheme known as HyperFund that raised more than $1.7 billion from investors worldwide. According to the SEC’s complaint, from June 2020 through early 2022, Lee and Chunga promoted HyperFund “membership” packages, which they claimed guaranteed investors high returns, including from HyperFund’s supposed crypto asset mining operations and associations with a Fortune 500 company. As the complaint alleges, however, Lee and Chunga knew or were reckless in not knowing that HyperFund was a pyramid scheme and had no real source of revenue other than funds received from investors. In 2022, the HyperFund scheme collapsed and investors were no longer able to make withdrawals.

The U.S. Energy Information Administration (EIA) is initiating a provisional survey of electricity consumption information from identified cryptocurrency mining companies operating in the United States. Beginning next week, EIA will survey identified commercial cryptocurrency miners, which are required to respond with details related to their energy use. The Office of Management and Budget (OMB) authorized the survey on January 26, 2024, as an emergency collection of data request. EIA will also be soliciting public comment on the collection of cryptocurrency miners’ energy use data.

Senators Elizabeth Warren (D-MA), a member of the Senate Banking, Housing, and Urban Affairs Committee, John Hickenlooper (D-CO), Jacky Rosen (D-NV), and Sheldon Whitehouse (D-RI) sent a letter to Federal Reserve (Fed) Chair Jerome Powell, calling on the Fed to reverse its interest rate hikes, stating that they have driven mortgage rates to 20-year highs and have put affordable housing out of reach for many Americans.

Rep. French Hill said in an interview that revised text of House Republicans’ cryptocurrency legislation, the Financial Innovation and Technology for the 21st Century Act, includes language that would provide safeguards against money laundering, Politico reported. The changes, which touch on areas such as insider trading and whistleblower protections, reflect concerns raised by House Agriculture and Financial Services Committee members during July markups, Hill said.

The Federal Trade Commission (FTC) announced that it issued orders to five companies requiring them to provide information regarding recent investments and partnerships involving generative artificial intelligence (AI) companies and major cloud service providers. The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape.  The compulsory orders were sent to Alphabet, Inc.,, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc. 

Need to catch up on what happened last week? Check out our January 26th End of Week Wrap Up here