To keep you informed of recent activities, below are several of the most significant federal and state events that have influenced the Consumer Finance Services industry over the past week:
Federal Activities
State Activities
Federal Activities:
- On October 2, UBS Asset Management announced the launch of a tokenized money market fund pilot as part of a wider umbrella designed to bring real world assets onto the blockchain. Using UBS’ in-house tokenization service, the company launched the fund as a tokenized asset on the Ethereum public block chain. The fund’s tokenization allows UBS Asset Management to carry out various activities on the blockchain, including fund subscriptions and redemptions. For more information, click here.
- On October 2, Grayscale Investment submitted its filing to the Securities and Exchange Commission (SEC) to convert its Ethereum Trust into a spot exchange traded fund (ETF). New York Stock Exchange Arca filed for the conversion with the SEC on October 2. The Ethereum Trust launched in March 2019 and became an SEC reporting company in October 2020. For more information, click here.
- On September 29, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) filed a joint amicus brief in the U.S. Court of Appeals for the Second Circuit urging reversal of a district court decision that the agencies say overlooked the Fair Credit Reporting Act (FCRA) requirement to delete information disputed by a consumer that cannot be verified by the furnisher. In the case, a consumer disputed information on her credit report alleging that multiple credit card accounts were opened without her knowledge. The consumer reporting agencies (CRAs) sent the dispute to the credit card companies for investigation. One creditor did not remove the information, and the consumer sued under the FCRA. The consumer appealed after the district court granted summary judgment to the creditor finding the consumer could not show harm for the creditor’s failure to conduct a reasonable investigation. In their amicus brief, the FTC and CFPB disputed the district court’s interpretation of the FCRA. They noted that under the FCRA, if a furnisher of credit information cannot determine whether the disputed consumer information is accurate, it must tell the CRAs that the information could not be verified and delete it from the data that it reports to the CRAs. For more information, click here.
- On September 29, the Commodity Futures Trading Commission (CFTC) announced that it filed charges against eight Florida-based entities for fraudulently claiming to be CFTC-registered futures commission merchants and retail foreign exchange dealers. Each of the eight complaints filed by the CFTC allege that the entities offered a variety of services to their customers in connection with trading several products including but not limited to digital assets, which the CFTC characterized as “commodities in interstate commerce.” For more information, click here.
- On September 28, the Bank for International Settlements (BIS) announced that it successfully demonstrated the technical feasibility of automated market-makers for cross border trading and settlement. BIS, along with the central banks of France, Singapore, and Switzerland, assisted with the proof of concept, known as Project Mariana. The project successfully conducted a simulated swap of a hypothetical euro, Singapore dollar, and Swiss franc. The project relied on a common token standard on a public blockchain, which facilitated interoperability and seamless exchange across varied local payment and settlement systems maintained by participant central banks. For more information, click here.
- On September 28, the Office of the Comptroller of the Currency (OCC) released its bank supervision operating plan for fiscal year (FY) 2024. The plan outlines the OCC’s supervision priorities and objectives for the year. It also facilitates the implementation of supervisory strategies for individual national banks, federal savings associations, federal branches and agencies of foreign banking organizations, and third-party service providers subject to OCC examination. OCC staff uses this plan to guide its supervisory priorities, planning, and resource allocations. For more information, click here.
- On September 27, the CFTC announced that it filed a civil enforcement action against Mosaic Exchange Limited (Mosaic), a digital asset trading platform, and its chief executive officer, Sean Michael, for running a fraudulent digital asset scheme. Among other things, the CFTC alleges that Mosaic and Michael falsely represented and advertised that Mosaic “was a cryptocurrency trading platform with tens of millions of dollars in assets under management” and “offered a Mosaic-designed proprietary trading algorithm” to trade spot and futures digital asset contracts. For more information, click here.
- On September 27, the CFPB released its annual report on residential mortgage lending activity and trends. For more information, click here.
- On September 27, the Department of Education announced the release of final regulations that will, per the press release, protect against “unaffordable debt or insufficient earnings for postsecondary students.” For more information, click here.
- On September 27, the OCC reported on the performance of first-lien mortgages in the federal banking system during the second quarter of 2023. The OCC Mortgage Metrics Report, Second Quarter 2023 showed that 97.3% of mortgages included in the report were current and performing at the end of the quarter, compared with 97.6% in the first quarter of 2023. Performance improved compared to the second quarter of 2022 when 97% of mortgages were current and performing. For more information, click here.
- On September 26, the SEC announced that it is delaying its response to several pending spot-Bitcoin ETFs applications until December 2023 and/or January 2024. For example, the SEC’s response to 21Shares and Ark Investments’ spot-Bitcoin ETF application was due November 11. However, the SEC has extended its deadline up and until January 10, 2024, to respond. For more information, click here.
- On September 21, the Federal Communications Commission adopted rules that would strengthen and modernize the requirements that providers under the Voice over Internet Protocol (VoIP) need to abide by to obtain direct access to telephone numbers. For more information, click here.
State Activities:
- On September 30, New York Attorney General (AG) Letitia James issued a consumer alert sharing advice with New Yorkers on how to manage their student loan debt. After more than three years of administrative forbearance in connection with the COVID-19 pandemic, federal student loans payments are set to resume in October. To assist the state’s federal student loan borrowers with the transition back to making regular monthly payments, the AG advises, among other things, that borrowers should: (a) update their contact information on their loan servicer’s website; (b) set up or update their Federal Student Aid accounts; (c) obtain an estimate of their upcoming payment, interest rate, and due date from their loan servicers; (d) confirm whether they are eligible for the Biden administration’s new SAVE Plan; (e) research income-driven repayment plans if they feel their monthly payment is too high; and (f) implement automatic debits. Additionally, the AG warns borrowers to be aware of scammers who may be seeking to take advantage of borrowers’ confusion during this transition period. The AG offers several tips for how borrowers can protect themselves and their personal data. For more information, click here.
- On September 29, Massachusetts AG Andrea Joy Campbell led a coalition of 19 AGs in submitting a letter to the White House and U.S. Department of Education, urging President Biden and Secretary Cardona to take action to provide additional protections to student loan borrowers whose monthly loan payments are set to resume in October. In the letter, the AGs highlight the fact that many of them have already received borrower complaints related to loan servicers’ lack of timely resolution of issues that borrowers are experiencing, including billing issues, inaccurate account information, placement in incorrect repayment plans, and excessive call wait times. Moreover, the AGs note the apparent difficulty that several servicers are having with operationalizing the Biden administration’s new SAVE Plan. The letter also underscores the overarching concern that these issues are largely impacting low-income borrowers. Accordingly, the AGs urge the Biden administration to do more to shield borrowers from the harm that may result due to the various servicer issues that have arisen thus far, including, but not limited to, pausing billing for borrowers who have experienced these issues with their servicers and those awaiting loan forgiveness. For more information, click here.
- On September 28, the California Department of Financial Protection and Innovation (DFPI), in conjunction with the CFTC, filed a lawsuit against a California-based precious metals dealer and two of its principals, alleging the unlawful offer and sale of precious metals within the state. According to the lawsuit, the defendants engaged in a nationwide scheme to defraud and misappropriate consumer funds that largely consisted of retirement savings. The complaint alleges that the defendants diverted consumer funds to pay for certain business and personal expenses, instead of purchasing precious metals. According to the complaint, the scheme involved approximately $21 million of consumer funds. DFPI commented that it “seeks to put a stop to unlawful and unscrupulous conduct that targets consumers’ hard-earned retirement savings.” This action follows another joint enforcement action that DFPI and CFTC filed against another precious metals dealer in May of this year. The DFPI urges consumers to submit a complaint via its website if they have experienced fraudulent practices in connection with investment advisory services or the sale of commodities. For more information, click here.
