Today, the OCC released an interpretive letter concluding that national banks and federal savings associations (together, “banks”) may permissibly provide cryptocurrency custody services for customers.  The letter, written by Chief Counsel Jonathan Gould, describes custody of cryptocurrency as a modern form of the traditional banking activity of providing safekeeping and custody services, which the agency has previously permitted banks to conduct through electronic means.  The letter also “reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”

Continue Reading OCC Interpretation Paves Way for Banks to Custody Cryptocurrency

On May 29, 2020, the Office of the Comptroller of the Currency (the “OCC”) issued a final rule to clarify that the interest on a loan originated by a national bank (or a Federal savings association), if permissible when the loan was originated, continues to be permissible after the loan is sold, assigned, or otherwise transferred to a third party. The OCC’s regulation interprets section 85 of the National Bank Act, which prescribes the interest that a national bank may charge a loan, to incorporate the common law “valid-when-made” doctrine.

Continue Reading OCC Issues Final Rule Clarifying Permissible Interest on Loans Sold to Third Parties by National Banks and Federal Savings Associations

On April 3, 2020, the European Commission launched two public consultations on a new digital finance strategy for Europe and on a retail payment strategy for Europe, which will both run until July 15, 2020.  The consultations follow two other consultations on an EU framework for markets in crypto-assets and on a potential initiative on digital operational resilience in the area of financial services, both launched in December 2019.  The efforts are part of the larger Commission’s Digital Finance Outreach 2020 to prepare the new digital finance strategy.  However, due to the COVID-19 pandemic, most events have either been cancelled or postponed.  An overview of upcoming events, such as DG FISMA’s online roundtables and other national events, is available here.
Continue Reading European Commission Launches Key Consultations Regarding Digital Finance

On May 6, the Securities and Exchange Commission (“SEC”) issued an order (“Order”) directing the registered equity exchanges and the Financial Industry Regulatory Authority (“FINRA”) (together, the “Self-Regulatory Organizations” or “SROs”) to submit to the SEC a new National Market System (“NMS”) plan to govern the public dissemination of real-time, consolidated market data for NMS stocks. This new plan would replace the three existing NMS data plans for equities with a single, consolidated plan. Only SROs have voting power on the operating committees for the existing NMS data plans, but the Order directs that the new consolidated plan provide for voting by non-SROs for the first time. The Order discusses at length comments received in response to the Notice of Proposed Order issued by the SEC on January 8, 2020.

Continue Reading SEC Orders Equity Exchanges and FINRA to Submit New Single National Market System Plan for Equity Market Data

On February 26, 2020, the Consumer Financial Protection Bureau hosted a symposium titled “Consumer Access to Financial Records.”  Video of the Symposium is available here.  The agenda included discussion among panelists from large financial institutions, fintechs, consumer groups, policy centers, and the CFPB.  Director Kathleen L. Kraninger also delivered brief opening remarks describing the history of regulation of financial data access.

Much of the symposium’s discussion focused on Section 1033 of the Dodd-Frank Act, which governs consumers’ rights to access their financial data.  While the CFPB has the authority to issue rules interpreting Section 1033, it has not done so (although it has issued non-binding “Consumer Protection Principles” on financial data sharing and aggregation).

Continue Reading CFPB Hosts Symposium on Consumer Access to Financial Records

The House Financial Services Committee (“HFSC”) announced that it will convene hearings this month to consider both the trend of financial technology firms partnering with chartered banks to provide financial services and the rise of mobile payments. More information about the hearing schedule is available on the HFSC’s website.
Continue Reading House Financial Services Committee to Consider Two Fintech Issues In January

On December 19, 2019, the Office of the Comptroller of the Currency (OCC) appealed a decision from the U.S. District Court for the Southern District of New York holding that the OCC cannot offer special purpose national bank charters to fintech companies. Lacewell v. Office of the Comptroller of the Currency, Case 1:18-cv-08377 (S.D.N.Y. Sept. 14, 2018).
Continue Reading OCC Appeals Fintech Charter Ruling to Second Circuit

On December 10, the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) held a joint workshop on accuracy in consumer reporting. The workshop included remarks from FTC Commissioner Noah Joshua Phillips, CFPB Assistant Director for Supervision Policy Peggy Twohig, CFPB Deputy Director Brian Johnson, and FTC Deputy Director for the Bureau of Economics Andrew Stivers. The workshop included four panels:

  • Panel 1: Furnisher Practices and Compliance with Accuracy Requirements
  • Panel 2: Current Accuracy Topics for Traditional Credit Reporting
  • Panel 3: Accuracy Considerations for Background Screening
  • Panel 4: Navigating the Dispute Process

Panelists included a range of stakeholders in the consumer reporting ecosystem, including representatives from consumer reporting agencies (“CRAs”), trade associations, furnishers, and consumer advocacy organizations.

In her closing remarks, Maneesha Mithal, Associate Director in the FTC’s Division of Privacy & Identity Protection, discussed three key takeaways and themes from the workshop:

  • (1) Alternative Data: Mithal noted that the issue of alternative data came up on almost every panel, and that there appeared to be a consensus that using some types of alternative data may benefit consumers and the industry. Mithal noted that a number of panelists expressed caution about using “fringe data,” including social media data.In a panel discussion, Michael Turner, founder and President of the Policy and Economic Research Council (“PERC”), drew a distinction between “proven payment data,” including payments for utilities, media, and rent, and unproven “fringe data” or “unstructured data,” including information from social media. Turner, along with a number of other panelists, believed that reporting proven payment data would be beneficial for consumers. Francis Creighton, President and CEO of the Consumer Data Industry Association (“CDIA”), noted that consumers are currently experiencing the “downside” impacts of the reporting of negative information about the non-payment or late payment of obligations for utilities, media, and rental housing, but are not receiving the “upside” benefits of reporting on the positive payment histories on those recurring obligations. Consumer advocates, such as Ed Mierzwinski of U.S. Public Interest Research Group (“PIRG”), expressed skepticism regarding the use of certain alternative data, such as utility payment data, and the ability of the industry to ensure the accuracy of such data.
  • (2) Role of Technology: Mithal also noted that there was some consensus that technology, including Artificial Intelligence (“AI”) and pattern recognition, may improve the quality and accuracy of consumer report information. Mithal stated that there appeared to be less consensus regarding the use of technology in data matching, with some panelists expressing the view that manual review is still necessary to ensure maximum possible accuracy. Mithal also noted that some panelists expressed the view that the CFPB should exercise its supervisory authority to examine CRAs and furnishers’ use of technology in consumer reporting.
    • In general, industry panelists spoke favorably about the prospects for AI and other technologies. For example, Eric Ellman, Senior Vice President, Public Policy and Legal Affairs at CDIA, discussed the use of technology in dispute intake, including filtering credit repair disputes from legitimate consumer disputes. Chi Chi Wu of the National Consumer Law Center expressed skepticism about relying on AI and other technologies for data matching and dispute investigations.
  • (3) Accuracy: Mithal concluded by discussing the accuracy of consumer reporting more generally, and stated that some panelists believe that the regulators should issue specific guidance in this area. Mithal also noted that panelists discussed both the importance of data accuracy with respect to consumer reports and furnished data, including ways in which CRAs may oversee furnishers.
    • In general, industry panelists pointed to substantial improvements made in recent years with regard to the accuracy of consumer reports, with repeated emphasis on improvements brought about by the National Consumer Assistance Plan (“NCAP”), an outgrowth of a multi-state attorney general settlement with the three nationwide CRAs in May 2015. Turner discussed improvements between the early and more recent studies of data accuracy. Consumer advocates stressed continuing problems with data accuracy, including the reappearance of derogatory information on consumer reports.


Continue Reading FTC and CFPB Host Workshop on Accuracy in Consumer Reporting

On November 19, the Basel Committee on Banking Supervision (the “BCBS”) released a report on open banking and application programming interfaces (“APIs”), focusing specifically on aspects of open banking related to customer-permissioned data sharing, including sharing between a customer’s bank and various third party firms. The report builds on the BCBS’ February 2018 paper (“Sound Practices: Implications of fintech developments for banks and bank supervisors”), which noted the increasing adoption of advanced technologies—including APIs—by banks, service providers, and fintech firms to deliver innovative financial products and services. The key findings from the report are outlined below.

Continue Reading Basel Committee on Banking Supervision Releases Report on Open Banking

Last July, the IRS announced its Virtual Currency Compliance Campaign, designed to intensify the IRS’s efforts to counter the underreporting of income related to cryptocurrency use. Through the campaign, the IRS will address noncompliance through taxpayer education, increased audits and initiations of criminal investigations.

This past week the IRS began sending “educational” letters to more than 10,000 taxpayers who either potentially failed to report income and pay the tax from cryptocurrency transactions, or did not report their transactions properly. The IRS sent out three variations of the letters — Letter 6173, Letter 6174, or Letter 6174-A — depending on the severity of the perceived violation. Letters 6174 and 6174-A ask taxpayers to review their returns and file an amended return if necessary; Letter 6173 is a more serious warning that also requires a signature under perjury from the taxpayer affirming U.S. tax law compliance.

Continue Reading IRS Ramps Up Efforts to Target Taxpayers Who Deal in Cryptocurrency