To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Financial Services industry over the past week:

Federal Activities

State Activities

Federal Activities:

• On March 25, the European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, released its first Final Report under the Markets in Crypto-Assets Regulation (MiCA) initiative. The report follows a consultation period in which ESMA sought stakeholder views on proposals for regulatory and implementing technical standards. The report aims to enhance clarity and predictability, promote fair competition among crypto-asset service providers (CASPs), and create a safer environment for investors. It includes proposals on the information required for CASP authorization, notification of intent to provide crypto-asset services, assessment of intended acquisition of a qualifying holding in a CASP, and how CASPs should handle complaints. ESMA has submitted the Final Report to the European Commission and will provide further advice and technical guidance if requested. For more information, click here.
• On March 22, Chair of the Securities and Exchange Commission (SEC) Gary Gensler, delivered a speech at Columbia Law School, focusing on the benefits of mandatory disclosures in securities law. Gensler highlighted the importance of such disclosure, a principle established 90 years ago by President Franklin Roosevelt, which requires companies raising public funds to provide “complete and truthful disclosure.” Gensler outlined three main benefits of mandatory disclosure: it serves as a public good, it addresses the misalignment of interests between management and shareholders, and it enables efficient valuation and price discovery of securities. He also discussed recent SEC rulemakings on emerging risks like climate and cybersecurity, and executive compensation. Gensler concluded by reaffirming his support for mandatory disclosure, arguing that it protects investors, lowers the cost of capital for issuers, and promotes market efficiency. For more information, click here.
• On March 21, the Federal Trade Commission (FTC) announced that it will hold a virtual informal hearing on April 24, on its proposed Rule on Unfair or Deceptive Fees, also known as junk fees. During the public hearing, which will be viewable on the FTC’s website, interested organizations will have the opportunity to provide statements. For more information, click here.
• On March 21, the Biden-Harris administration announced the approval of $5.8 billion in additional student loan debt relief for 77,700 borrowers. These approvals are the result of fixes made by the Administration to Public Service Loan Forgiveness (PSLF). For more information, click here.
• On March 21, The Estonian government approved a bill to regulate cryptocurrency service providers, which now awaits parliamentary approval. Under the proposed legislation, crypto service providers would come under the supervision of the Financial Supervision Authority (FSA) and would need to adhere to anti-money laundering rules. The FSA would start issuing licenses in 2025, and existing license holders would need to apply for FSA licensing by the end of that year. The bill would align Estonia with the EU’s Markets in Crypto-Assets regulations and increase the securities prospectus requirement threshold to €8 million. Estonia has been known for its crypto-friendly stance since 2017, but it has tightened regulations in recent years, leading to a decrease in the number of licensed crypto firms in the country. For more information, click here.
• On March 21, U.S. Senators Sherrod Brown (D-OH), Jack Reed (D-RI), Elizabeth Warren (D-MA), Tina Smith (D-MN), Raphael Warnock (D-GA), John Fetterman (D-PA), Laphonza Butler (D-CA), Jeff Merkley (D-OR), Chris Murphy (D-CT), and Ben Ray Luján (D-NM) wrote a letter urging the Consumer Financial Protection Bureau (CFPB) to “protect Americans from predatory medical debt collection practices.” Last year the CFPB announced several potential proposals to remove medical debt from consumer credit reports. In their letter, the Senators urged the CFPB to move forward with implementing these proposals. For more information, click here.
• On March 18, Director of the CFPB Rohit Chopra, issued prepared remarks at the Peterson Institute for International Economics Event on Revitalizing Bank Merger Review. For more information, click here.
• On March 20, the SEC reportedly issued subpoenas to several companies in relation to efforts to classify Ether as a security. The subpoenas request documents and financial records related to dealings with the Ethereum Foundation. The SEC’s campaign to classify ETH as a security reportedly began after the blockchain’s transition from proof-of-work to proof-of-stake in 2022. While the SEC has approved exchange-traded funds tied to Ether futures, it has yet to decide on spot ETH exchange-traded funds (ETFs). For more information, click here.
• On March 20, the SEC postponed its decision on the spot Ethereum ETFs proposed by Hashdex and Ark 21Shares until May. This delay reflects the SEC’s cautious stance toward cryptocurrency ETFs, as it continues to evaluate potential regulatory issues and implications of such products. Despite growing interest in cryptocurrencies, the SEC has consistently delayed or denied cryptocurrency ETF applications, citing concerns over market manipulation, liquidity, and investor protection. The SEC’s decision underscores the challenges digital asset management firms face in gaining regulatory approval for crypto-related investment products. For more information, click here.
• On March 19, the U.S. Court of Appeals for the Third Circuit filed an opinion remanding a case between the CFPB and defendant statutory trusts to the District Court. After issuing a civil investigative demand in 2014, the CFPB initiated an enforcement action in September 2017 against a collection of 15 Delaware statutory trusts that furnished over 800,000 private loans and their debt collector for, among other things, allegedly filing lawsuits against consumers for private student loan debt that they could not prove was owed or was outside the applicable statute of limitations. Then, early last year, the parties reached a settlement and asked the court to enter a consent judgment, which was denied. For more information, click here.
• On March 19, the SEC announced that Genesis Global Capital, LLC agreed to pay a $21 million civil penalty to resolve allegations to its alleged unregistered offer and sale of securities through its crypto asset lending program, Gemini Earn. The SEC accused Genesis of failing to register its retail crypto lending product before offering it to the public, bypassing disclosure requirements designed to protect investors. The settlement includes a permanent injunction, and the SEC will not receive any portion of the penalty until after all other allowed claims by the bankruptcy court are paid. Genesis filed for Chapter 11 bankruptcy in January 2023. For more information, click here.
• On March 19, the CFPB published a blog about state UDAAP developments. The blog mentions a letter the CFPB wrote to New York Governor Kathy Hochul and state leaders highlighting the importance of the ban on abusive conduct. The CFPB shared how the ban would arm the state with more tools to combat corporate misconduct. The CFPB said, “As you consider legislation in this area, we believe the ‘reasonable reliance’ component of the abusive prohibition is critical.” ‘Reasonable reliance’ is defined as the expectation that people “often reasonably expect that certain businesses will help them make difficult financial decisions.” For more information, click here.
• On March 19, the EU Parliament’s lead committees approved new anti-money laundering laws, including a ban on anonymous cash payments over €3,000 in commercial transactions and over €10,000 in business transactions. Anonymous payments in cryptocurrencies to hosted wallets will also be prohibited. Member of the European Parliament (MEP) Dr. Patrick Breyer voted against the proposal, arguing that it would have minimal impact on crime but would infringe on citizens’ financial freedom. He expressed concerns about the potential for negative interest rates, increased bank dependency, and the risk of banks cutting off the money supply. Breyer also highlighted the need to preserve the privacy attributes of cash in the digital age. The public previously opposed cash payment limits in a 2017 consultation, viewing anonymous cash payments as an essential personal freedom. Breyer also noted that cryptocurrencies like Bitcoin can be traced on the blockchain, making regulation difficult and potentially unnecessary. For more information, click here.
• On March 19, BlackRock, the world’s largest asset manager, filed a SEC Form D for the BlackRock USD Institutional Digital Liquidity Fund, marking the launch of its first tokenized asset fund. The fund, created in 2023, will be tokenized on the Ethereum blockchain with an ERC-20 token called BUIDL. The fund will have a minimum investment of $100,000 and will be offered by Securitize, a U.S. digital assets securities firm, which will also handle the sale of the tokens. BlackRock CEO Larry Fink has previously expressed his belief in the potential of tokenization of financial assets, praising its ability to facilitate customization strategies and instantaneous settlement. For more information, click here.
• On March 18, U.S. Senator Elizabeth Warren (D-Mass.), chair of the U.S. Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Economic Policy, sent a letter to the CEO of the Higher Education Loan Authority of the State of Missouri (MOHELA) Scott Giles, inviting him to testify before Congress to explain MOHELA’s handling of student loan borrowers’ experience with return to repayment and the Public Service Loan Forgiveness (PSLF) program. For more information, click here.
• On March 18, the FBI released its 2023 Internet Crime Report, which revealed that investment fraud involving cryptocurrency caused $3.9 billion in losses. These losses marked a significant increase from $2.57 billion in 2022, and accounted for the majority of all investment fraud losses. Other significant losses were due to business email compromise, tech support fraud, and personal data breaches. The report further noted that the SEC increased its enforcement actions against dubious crypto firms, with 46 actions in 2023, marking a 53% rise from 2022. For more information, click here.
• On March 18, Chopra, in his capacity as a voting member of the Federal Financial Institutions Examination Council (FFIEC), released a comment letter regarding the recent Appraisal Subcommittee hearings. He opened on how the appraisal process was governed, not by a governmental agency, but instead by a not-for-profit corporation, leading to “key issues” related to appraisal bias. For more information, click here.
• On March 18, the FTC announced that it is acting against two companies — Biz2Credit and Womply — that allegedly made false promises to small businesses seeking to take part in the Paycheck Protection Program (PPP), delaying and sometimes preventing them from obtaining funds they needed to keep their businesses afloat during the COVID-19 pandemic. For more information, click here.
• On March 15, the Biden-Harris administration issued a Fact Sheet, announcing new steps to crack down on junk fees as part of President Biden’s agenda to lower costs for students and families paying for college. For more information, click here.
• On March 13, the CFPB submitted a brief to the U.S. District Court for the Northern District of Texas in opposition to a motion for preliminary injunction filed by a group of industry associations, urging the court to block the implementation of a new rule that would limit the ability of large credit card issuers to charge late fees. For more information, click here.
• On March 12, U.S. Senator Josh Hawley (R-MO) sent a letter to Assistant Attorney General (AG) Jonathan Kanter urging the Department of Justice to investigate the Fair Isaac Corporation’s (FICO) potentially anticompetitive practices. “The credit score market is dominated by FICO, a for-profit company operated under a sweetheart deal from the federal government,” wrote Senator Hawley. “Because of this government-granted monopoly, FICO enjoys a 90 percent market share in the business-to-business credit scoring market. It is the only real competitor in the space.” For more information, click here.

State Activities:

• On March 22, South Carolina AG Alan Wilson issued an order requiring a money transmitter to cease operations within the state amid concerns about the company’s financial health. Wilson’s order is a part of a coordinated effort involving 39 states, Puerto Rico, and the District of Columbia. The company has reportedly failed to complete multiple money orders and transmission and as also failed to maintain adequate net worth and permissible investments to cover its liabilities. For more information, click here.
• On March 20, Massachusetts AG Andrea Joy Campbell filed a motion for preliminary injunction against two related debt buying companies, their owner, and the company collecting debts on their behalf to prevent ongoing alleged harmful debt practices. According to the complaint that Campbell filed against the companies back in February, the companies purchased old judgments and defaulted consumer debt, and subsequently used aggressive methods to collect the debts. The complaint alleges that the companies’ practices included placing telephone calls, sending letters, text messages, and emails, filing litigation, garnishing wages, recording liens on real property, and seizing personal property. Additionally, the complaint alleges that the companies’ collection practices also included seizing consumers’ vehicles to coerce payments from them, even when the value of some consumers’ vehicles made them exempt from seizure under applicable law. If granted, the injunction would, among other things, immediately prohibit the companies from selling any car seized from a Massachusetts consumer and from seizing other vehicles from consumers. The order would also prevent the companies from filing or appearing in any legal proceeding without an attorney. For more information, click here.
• On March 19, California AG Rob Bonta announced a settlement with a skilled nursing care facilities operator, resolving claims that the company violated the state’s unfair competition and false advertising laws. Specifically, Bonta alleged that the company understaffed its facilities and subjected its patients to negligent care, while inflating its ratings to the Center for Medicare and Medicaid Services. As a part of the settlement, the company will be required to, among other things, pay $2.25 million in costs and up to $15.5 million in civil penalties, as well as revise its practices and services for California residents. For more information, click here.