The Federal Reserve Board, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have issued a joint statement on crypto-asset risks to banking organizations.  The term “crypto-asset” refers to any digital asset implemented using cryptographic techniques.

The statement begins with the agencies’ observations that “[t]he events of the past year have been marked by significant volatility and the exposure of vulnerabilities in the crypto-asset sector” and that “[t]hese events highlight a number of key risks associated with crypto-assets and crypto-asset sector participants that banking organizations should be aware of.”… Continue Reading

On December 15, 2022, the New York Department of Financial Services (“NYDFS”) published an Industry Letter detailing the Department’s guidance regarding banking organizations that wish to engage in virtual currency-related activities.  In addition to reminding banks, trust companies, private bankers, savings banks, safe deposit companies, savings and loan associations, credit unions, investment companies, branches, and agencies of foreign banking organizations licensed by the NYDFS (together, “Banking Organizations”) of their preexisting obligation to seek approval from the NYDFS before engaging in new or significantly different virtual currency-related activity in New York or with a New York resident, the guidance describes the process and types of information that the NYDFS considers in connection with its approval process.… Continue Reading

The CFPB recently denied the petition of Nexo Financial LLC to modify the CFPB’s Civil Investigative Demand (CID) issued to Nexo, rejecting Nexo’s claim that the CFPB does not have jurisdiction to investigate crypto-lending products offered by Nexo such as its “Earn Interest Product.”  This is the first publicly-known action taken by the CFPB against a crypto-currency product provider.… Continue Reading

In remarks at the DC Fintech Week conference on October 11, 2022 and in a keynote address later the same day at a roundtable conducted by the Harvard Law School  Program on International Financial Systems, Acting Comptroller of the Currency Michael J. Hsu expressed concerns about risks to consumers and the financial system posed by crypto industry participants.… Continue Reading

On Friday, the Department of Justice (“DOJ”) announced two developments:  First, the release of a 66-page report, The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Assets (the “Report”), issued under President Biden’s March 9, 2022 Executive Order on Ensuring Responsible Development of Digital Assets. … Continue Reading

On August 10, 2022, four Senators, Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT), sent a letter to Acting Comptroller of the Currency Michael Hsu, asking him to reverse four interpretive letters regarding whether it is permissible for national banks to provide cryptocurrency services.

Under Mr.… Continue Reading

On August 19, 2022, the FDIC issued cease and desist letters to five crypto companies, alleging they made false and misleading statements about FDIC deposit insurance and demanding immediate corrective action.  The five companies are FTX US, Cryptonews.com, CryptoSec.info, SmartAsset.com, and FDICCrypto.com.  The FDIC’s actions come weeks after issuing an “Advisory to FDIC-Insured Institutions Regarding Deposit Insurance and Dealings with Crypto Companies” to address the agency’s concerns regarding misrepresentations about FDIC deposit insurance.… Continue Reading

The FDIC has issued an “Advisory to FDIC-insured institutions Regarding Deposit Insurance and Dealings with Crypto Companies” to address the agency’s concerns regarding misrepresentations about FDIC deposit insurance by certain crypto companies.  Of particular concern to the FDIC is the risk that consumer confusion or harm can arise from crypto assets offered by, through, or in connection with an insured bank particularly when a non-bank offers crypto assets to its customers while also offering an insured bank’s deposit products.… Continue Reading

The Office of the Comptroller of the Currency entered into a Consent Order with Anchorage Digital Bank (“Anchorage”), which requires Anchorage to create a compliance committee and take steps to remediate alleged shortcomings with respect to the implementation and effectiveness of Anchorage’s Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) program.  Notably, Anchorage will pay no civil penalty.

Continue Reading

With Democrats now firmly in control of the FDIC, Acting Chairman Martin Gruenberg released a list of the FDIC’s priorities for 2022.  His list of priorities included the following:

  • Community Reinvestment Act (CRA): The FDIC, Federal Reserve, and OCC plan to act jointly on a notice of proposed rulemaking in the near future that would strengthen and enhance CRA. 
Continue Reading