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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 August 23, the U.S. District Court for the Northern District of California denied Payward, Inc. and Payward Ventures’ (d/b/a Kraken) motion to dismiss a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). The SEC alleges that Kraken operates as a broker, dealer, exchange, and clearing agency for crypto asset securities without proper registration. The court found that the SEC plausibly alleged that some of the cryptocurrency transactions facilitated by Kraken constitute investment contracts and are therefore subject to securities laws. A case management conference has been set for October 15. For more information, click here.
• On August 22, the U.S. Attorney’s Office for the Eastern District of North Carolina announced the seizure of nearly $5 million in Tether, a cryptocurrency pegged to the U.S. dollar. These funds were linked to cryptocurrency addresses allegedly involved in laundering proceeds from investment scams known as “pig butchering.” According to court filings, scammers approached their victims through the guise of a romantic relationship. The scammer would then claim to have a trick to quickly make large profits trading cryptocurrency and introduce their victim to a fictitious cryptocurrency trading platform that closely resembled a legitimate platform. Once the victims’ funds had been transferred to a cryptocurrency wallet under the scammers’ control, the funds were quickly moved through many other wallets to obfuscate the ownership of the fraudulent proceeds. The FBI traced the stolen funds through various cryptocurrency wallets, ultimately leading to the seizure. For more information, click here.
• On August 22, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of Hodl Law, PLLC’s case against the SEC for lack of subject matter jurisdiction. The court concluded that Hodl Law failed to demonstrate a “case or controversy” as required by Article III of the U.S. Constitution, noting the absence of any realistic danger of an SEC enforcement action against Hodl Law’s use of the Ethereum blockchain network or the digital asset Ether. Hodl Law’s complaint contained no allegations that the SEC had investigated or threatened to investigate the law firm’s use of Ether or Ethereum. The SEC has also not taken an official position as to whether Ether or Ethereum is a “security” under the Securities Act. Additionally, the court found that the SEC had not engaged in any “final agency action” that would be reviewable under the Administrative Procedure Act. The dismissal was upheld with prejudice, as any amendment to the complaint would be futile. For more information, click here.
• On August 21, a group of 11 financial services associations submitted a letter to the Federal Deposit Insurance Corporation (FDIC) requesting the withdrawal of the proposed rulemaking on brokered deposit restrictions or, alternatively, an extension of the public comment period. The associations expressed concerns that the proposal would significantly alter the FDIC’s brokered deposit framework without sufficient data or rationale, potentially leading to adverse effects on banks and customers. They emphasized the need for more robust data and analysis to support the proposed changes and requested an extension of the comment period to allow for thorough public consideration. For more information, click here.
• On August 20, the Federal Reserve Bank of New York published an analysis on the disparate outcomes of bank- and nonbank-financed private credit expansions. The study reveals that while increased access to credit generally boosts real activity, rapid credit expansions can lead to adverse outcomes such as lower GDP growth and financial crises. The research highlights that the composition of lending — whether from banks or nonbanks — significantly impacts subsequent economic performance, with bank credit growth associated with more persistent negative real outcomes compared to nonbank credit growth. For more information, click here.
• On August 16, the Consumer Financial Protection Bureau (CFPB) published a blog focusing on the buy now, pay later (BNPL) industry. The blog highlights CFPB’s issuance of an interpretive rule in May, explaining how existing federal laws like the Truth in Lending Act and Regulation Z apply to BNPL loans. The CFPB reports that many BNPL lenders are responding positively and working diligently to comply with these regulations. To further support this transition, the CFPB plans to release a set of frequently asked questions (FAQ) next month and will not seek penalties for good faith compliance efforts during this transition period. For more information, click here.
• On August 16, the CFPB released an updated 1071 filing instructions guide for small business lending data collected in 2025. The guide was updated to reflect the new compliance dates promulgated after the U.S. Supreme Court’s decision finding the funding structure of the CFPB to be constitutional in CFPB v. Community Financial Services Association of America. The guide is designed to assist data collection staff, technology support staff, and compliance officers, in filing small business lending data with the CFPB covering the period from July 18, 2025, to December 31, 2025. For more information, click here.
• On August 16, the FDIC published a series of questions and answers (Q&As) to clarify the final rule on Official Signs and Advertising Requirements, False Advertising, Misrepresentation of Insured Status, and Misuse of the FDIC Name or Logo. These Q&As address FAQs from various stakeholders and provide guidance on implementing the rule, which aims to help consumers better understand when their funds are protected by FDIC deposit insurance. The rule became effective April 1, with a compliance date of January 1, 2025. For more information, click here.
• On August 14, the Federal Trade Commission (FTC) announced a final rule banning fake reviews and testimonials, aimed at combating deceptive advertising practices. The final rule prohibits the sale or purchase of fake or false consumer reviews, insider reviews without proper disclosure, and misuse of fake social media indicators, among other practices. The rule also allows the agency to seek civil penalties against willful violators. The rule will become effective 60 days after its publication in the Federal Register. For more information, click here.

State Activities:

• On August 15, the Illinois Bankers Association, American Bankers Association, America’s Credit Unions, and Illinois Credit Union League filed a complaint against the Illinois attorney general (AG), in his official capacity, seeking declaratory and injunctive relief against the Illinois Interchange Fee Prohibition Act (IFPA), set to take effect on July 1, 2025. The plaintiffs argue that the IFPA, which bans interchange fees on portions of transactions attributable to taxes or gratuities and restricts the use of transaction data, would disrupt the payment card system and is preempted by federal laws such as the National Bank Act, Home Owners’ Loan Act, and Federal Credit Union Act. They contend that the IFPA unlawfully interferes with federally regulated financial institutions and would impose significant operational and financial burdens on banks and other participants in the payment system. For more information, click here.
• On August 15,the FTC and the state of Arizona announced a joint action against an Arizona-based motor vehicle dealership, and its former general manager, for allegedly engaging in deceptive pricing practices and discriminatory financing treatment of Latino consumers. The complaint alleges violations of the FTC Act, the Equal Credit Opportunity Act, and the Arizona Consumer Fraud Act. The defendants have agreed to a $2.6 million settlement, most of which will be used to provide refunds to affected consumers. For more information, click here.
• On August 12, a group of 15 Republican AGs submitted a letter to U.S. Treasury Secretary Janet Yellen, urging the Department of the Treasury not to politicize its regulation of artificial intelligence (AI) in the financial services sector. The letter emphasized the importance of focusing on actual risks to financial reliability and consumer protection, rather than advancing nonfinancial political agendas. The AGs highlighted the potential benefits of AI in areas such as fraud detection, credit evaluation, and investment management, while cautioning against heavy-handed regulations that could stifle innovation and competition. They also stressed the need to avoid preempting state laws that protect consumers and ensure fair competition. For more information, click here.