This week in TechREG, the debate about which regulator should oversee crypto assets continued with a former head of the Office of the Comptroller of the Currency (OCC) suggesting that cryptocurrencies should be assessed as internet stocks. Gary Gensler, head of the Securities and Exchange Commission (SEC) admitted bitcoin is a commodity but didn´t extend the same treatment to ethereum. The Federal Reserve delayed the implementation of some changes in the Fedwire Funds Services to allow banks more time to focus on the implementation of the real-time-payment network FedNow.
Crypto
Crypto Is Being Assessed Incorrectly, Says Ex-OCC Head Brian Brooks
Former U.S. Acting Comptroller of the Currency Brian Brooks said recently that evaluating cryptocurrencies based on their capacity to serve as surrogates for the U.S. dollar is the wrong way to look at them, CNBC reported Tuesday (June 28).
Brooks, who now is CEO of Netherlands-based bitcoin mining company Bitfury, told CNBC it makes more sense to assess cryptocurrencies as if they were internet stocks.
“Most of crypto is about replacing the centralized banking system with networks that allow user control versus bank control … the crypto assets that have prices are more like internet stocks,” Brooks said. “It’s more like you bet on Google if you think there’s going to be high internet traffic; if you short it, it’s that people are going to go back to the post office, right?
Gensler Pushes Status of No. 2 Crypto Into Regulatory Limbo
SEC Chair Gary Gensler’s comments in an interview Monday (June 27) left little doubt that the power play for regulatory authority over the crypto industry against the Commodity Futures Trading Commission (CFTC) is far from settled.
In a big win for cryptocurrencies’ utility as a payments tool, the Securities and Exchange Commission chairman characterized top crypto bitcoin as a commodity — but what he left unsaid was just as important.
In what amounts to a break with his predecessors, Gensler refused to lump Ethereum’s ether, the No. 2 cryptocurrency, under the same label. That leaves the token used as a payments currency by the blockchain — on which more crypto and blockchain projects reside than any other — in a legal fog of uncertainty.
CFTC Director Tells Congress the Agency Is Ready for More Crypto Oversight
In light of the potential expansion of the CFTC’s powers to oversee digital assets, the Subcommittee on Commodity Exchanges held a hearing with CFTC Director of the Division of Market Oversight Vince McGonagle to learn more about the agency’s capabilities in this space.
From the beginning, McGonagle stated not only the capacity of the agency to supervise digital assets, but also that the agency has jurisdiction to do so. “Digital assets have been broadly determined by the CFTC and federal courts to be commodities under the Commodity Exchange Act,” he said in his testimony, adding, “the CFTC has broad regulatory oversight over any futures, options, and swaps listed by designated contract markets.”
Payments
CFPB: States Can Issue Their Own Credit Reporting Laws
States can issue their own fair credit reporting laws that protect residents, the U.S. Consumer Financial Protection Bureau (CFPB) said in a ruling Tuesday (June 28). The bureau’s interpretive ruling said that with a few exceptions, states can enact their own laws that are stricter than the federal Fair Credit Reporting Act (FCRA).
The 52-year-old FCRA establishes permissible uses of credit reports and sets up guidelines for the information they can include. It also gives people a way to dispute their information.
Fed Prioritizes FedNow, Delays Fedwire Funds Service Changes
The Federal Reserve Board announced on Monday (June 27), the final timeline and other implementation details for the adoption of a new Fedwire Funds Service message format. The Fed has decided to delay the implementation of these changes until March 10, 2025, from the original date of November 2023. The reason for this delay is that the Fed is prioritizing the implementation of the new real-time-payment network, known as FedNow Service, which is expected to be launched also in 2023.
CFPB’s 2022 Spring Rulemaking Agenda: What’s In and Out
The Office of Management and Budget (OMB) published on June 21 the CFPB’s Spring 2022 regulatory agenda, and surprisingly, only five rules have been included in the list, despite the CFPB’s crowded policy agenda.
The most notorious proposal, still in the pre-rule state, is the Dodd-Frank Act Section 1033: Rulemaking to Require Consumer Access to Financial Records. This rule would implement the Dodd-Frank’s requirements that the CFPB issue rules to require covered persons to provide consumers with access to their financial data.
CFPB Warns Debt Collectors About Fees
The CFPB on Wednesday (June 29) issued an advisory opinion warning debt collectors that most “pay-to-pay” fees that they often charge violate federal law.
These charges, commonly described by debt collectors as “convenience fees,” are imposed on consumers who want to make a payment in a particular way, such as online or by phone.
“Federal law generally forbids debt collectors from imposing extra fees not authorized by the original loan,” said CFPB Director Rohit Chopra. “Today’s advisory opinion shows that these fees are often illegal, and provides a roadmap on the fees that a debt collector can lawfully collect.”
Legal
DOJ Charges of NFT Insider Trading Show New Digital Focus, Report Says
As the first Department of Justice indictment comes down on an insider trading scheme for non-fungible tokens (NFTs), it remains to be seen how the DOJ will work with the wider NFT community, Bloomberg reported Wednesday (June 29). According to Wilson Elser attorneys John Cahill, Jana Farmer and William Behr, this case could possibly provide information on whether NFTs will be classified as securities. The DOJ will also be looking to increase its enforcement efforts.
FTC Takes Walmart to Court Over Money Transfer Fraud Allegations
The Federal Trade Commission has sued Walmart alleging that its money transfer services were corrupted by fraudsters — which reportedly resulted in customers being “fleeced out of hundreds of millions of dollars,” according to a Tuesday (June 28) press release from the consumer watchdog.
In its statement, the government agency claims Walmart had “turned a blind eye for years” as scammers took advantage of the retail giant’s lack of security for money transfer services.
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