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 November 22, Grayscale Investments (Grayscale) submitted an amended Form S-3 registration statement to the Securities and Exchange Commission (SEC) for its proposed Grayscale Bitcoin Trust (BTC), seeking to convert Grayscale’s existing Bitcoin Trust (GBTC) (a futures-based mutual fund) into a spot-based exchange-traded fund, which mirrors Bitcoin’s real-time price action in the public markets. Grayscale filed its amended Form S-3 registration statement only a few days after a formal meeting with the SEC. For more information, click here.
- On November 22, the Federal Communications Commission (FCC) issued a Second Report and Order, which is directed at robotexting. This item, if adopted, would require mobile wireless providers to block all text messages from a number when notified that the number is sending illegal text messages, and would codify that the National Do-Not-Call Registry’s protections extend to text messages. For more information, click here.
- On November 22, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency announced that the comment period on their long-term debt proposed rule to improve the resolvability of large banks and enhance financial stability, will be extended until January 16, 2024. The agencies extended the comment period to allow interested parties more time to analyze the issues and prepare their comments. For more information, click here.
- On November 21, the U.S. Department of Justice (DOJ) unsealed its criminal indictment against com (Binance), the world’s largest cryptocurrency exchange, and its CEO, Changpeng “CZ” Zhao (CZ). The indictment contains three charges: (1) conspiracy to conduct an unlicensed money transmitting business and failure to maintain an effective anti-money laundering program; (2) conducting an unlicensed money transmitting business; and (3) a willful violation of the International Emergency Economic Powers Act (IEEPA). Nevertheless, in a November 21 press conference, Attorney General (AG) Merrick Garland announced Binance and CZ have pled guilty to all charges, the DOJ is requiring Binance to pay $4.3 billion in penalties and forfeiture, and CZ must resign as Binance’s CEO. For more information, click here.
- On November 21, the Federal Trade Commission (FTC) announced that it approved an omnibus resolution authorizing the use of compulsory process in nonpublic investigations involving products and services that use or claim to be produced using artificial intelligence, or which claim to detect its use. For more information, click here.
- On November 20, the SEC charged Kraken, a major U.S. cryptocurrency exchange, with operating as an unregistered broker, dealer, exchange, and clearing agency, in violation of the Securities Exchange Act. The SEC’s lawsuit aims to prohibit Kraken from continuing these activities and seeks civil money penalties, although the SEC’s complaint does not specify an amount. For more information, click here.
- On November 20, the Consumer Financial Protection Bureau (CFPB) and 11 states (the regulators) announced that a company, which operated a 12-week online training program claiming to prepare students for entry-level positions as software sales development representatives, will provide more than $30 million in relief to student borrowers for making false promises of job placement, trapping students with “income share” loans that violated the law, and resorting to abusive debt collection practices when borrowers could not pay. For more information, click here.
State Activities:
- On November 20, North Carolina AG Josh Stein secured a court order requiring a lender to permanently shut down its operations, resolving allegations that the lender made false representations to students about job placement, saddled students with unlawful loans, and employed abusive practices to collect debt from student borrowers. In addition to permanently enjoining the company’s operations, the order also requires the lender to pay $4.2 million in restitution to borrowers harmed by its actions and to void nearly $27 million in outstanding loans. Ten other AGs and the federal government joined Stein in the effort to end the lender’s alleged misconduct. For more information, click here.
- On November 20, Pennsylvania AG Michelle Henry announced a settlement agreement with a local property management company, resolving allegations that the company violated the federal Consumer Review Fairness Act and the commonwealth’s consumer protection laws. Specifically, the company is accused of having prevented tenants from posting unfavorable reviews of it online, subjecting tenants to financial penalties for such reviews, pursuant to lease terms. Under the terms of the settlement, the company is no longer permitted to use similar clauses in future leases, and the company must notify tenants that the clauses in current leases are not applicable. For more information, click here.
- On November 17, Wisconsin Governor Tony Evers signed SB259. The bill exempts any transaction from payday loan regulation, in which no finance charge or other charge or fee is imposed against or accepted from the loan recipient. This bill creates a transaction-based exemption from the requirements and restrictions applicable to payday loans. These requirements and restrictions do not apply to any transaction in which no finance charge, as defined under federal Truth-in-Lending Act regulations, and no other fees or charges of any kind, are required or accepted, at any time, from the person receiving the loan. For more information, click here.
