March 10, 2023

Federal Reserve Vice Chair for Supervision Michael Barr delivered remarks entitled “Supporting Innovation with Guardrails: The Federal Reserve’s Approach to Supervision and Regulation of Banks’ Crypto-related Activities.” Vice Chair Barr discussed concerns related to crypto, including illicit financing and liquidity and credit risks, and emphasized the importance of balancing innovation with safeguards. Vice Chair Barr also stated that the Board of Governors of the Federal Reserve (FRB) is “working with the other bank regulatory agencies to consider whether and how certain crypto-asset activity can be conducted in a manner that is consistent with safe and sound banking.” 

The California Department of Financial Protection and Innovation (DFPI) announced that Silvergate Bank, a state-chartered bank under the supervision of the DFPI, has voluntarily begun the process of liquidation. Silvergate Bank is based in La Jolla, California.

The Federal Trade Commission (FTC) published a consumer alert warning about crypto investment scammers. 

The FTC voted to extend the public comment period for its proposed new rule to ban employers from imposing noncompete agreements on their workers. With the extension, the FTC will now be accepting comments on the proposed rule until April 19. Originally, the deadline for submitting comments was March 20.

The Fair Hiring in Banking Act amended Section 19 of the Federal Deposit Insurance Act, which Section 19 prohibits a person from participating in the affairs of an FDIC-insured institution if he or she has been convicted of an offense involving dishonesty, breach of trust, or money laundering, or has entered into a pretrial diversion or similar program in connection with a prosecution for such an offense, without the prior written consent of the FDIC.

The Consumer Financial Protection Bureau (CFPB) released a special edition of its Supervisory Highlights that reports on unlawful junk fees uncovered in deposit accounts and in multiple loan servicing markets, including in mortgage, student, and payday lending. 

The CFPB announced that it is requesting the public’s input on the economic impact of the mortgage loan originator rules on small mortgage companies as part of a regular 10-year review of rules that have, or will have, a significant economic impact on small businesses. The CFPB stated that it may use the feedback it receives to inform potential changes to the rules. 

The CFPB and the National Labor Relations Board (NLRB) signed an information sharing agreement, creating a formal partnership between the two agencies aiming to better protect American families and to address practices that harm workers in the “gig economy” and other labor markets.

The Government Accountability Office (GAO) published a report entitled “Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity Is Needed.”

The Office of Financial Research published a blog entitled Five Risk Areas That Financial Regulators Should Watch in 2023. The areas include high inflation in the global economy, price volatilities across commodities that translate into financial market risks, market risk reinforcing other financial-stability vulnerabilities, further bond fund outflows that could strain fixed income markets, and cybersecurity risks growing in frequency and cost.

The Treasury Department released its Greenbook. The Greenbook includes proposals impacting the digital assets industry, including implementing a digital asset mining energy excise tax that would require “any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets” to be “subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.” The tax would be phased in over three years; applying the wash sale rules that apply to securities, commodities, and other assets traded on an established market to digital assets; expanding the rules for loans of securities as tax free to include digital assets, which would enable lending of digital assets with nonrecognition treatment; expanding the scope of the Foreign Account Tax Compliance Act (FATCA) to cover digital asset accounts; requiring reporting by certain taxpayers of foreign digital asset accounts; and amending the mark-to-market rules to include digital assets. 

President Biden released a proposed budget for Fiscal Year 2024 (FY24), aiming to lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit.

Acting Comptroller of the Currency Michael Hsu discussed how the failure of the Bank of Credit and Commerce International (BCCI) in 1991 led to significant changes in how global banks are supervised. He highlighted similarities between BCCI and cryptocurrency exchange FTX and offered thoughts on what lessons this may hold for crypto advocates and policymakers.

The Senate Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy held a hearing to discuss the federal debt limit and its economic and financial consequences. 

The Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services met to receive the semiannual monetary policy report from Federal Reserve Board of Governors (the Fed) Chairman Jerome Powell. 

The California Privacy Protection Agency (CPPA) Board held a public meeting regarding the Agency’s priorities, budget, the status of the California Privacy Rights Act of 2020 (CPRA) rulemaking process and the activities of the CPPA subcommittees.

The Data Privacy Act of 2023, introduced by House Financial Services Committee (HFSC) Chairman Patrick McHenry (R-NC), passed (26 – 21) during the Committee’s first markup of the 118th Congress. On March 2, Ranking Member Maxine Waters (D-CA) shared Committee Democrats’ amendments to Rep. McHenry’s legislation. Rep. Waters offered an amendment to strike the preemption section of the bill.