To help you keep abreast of relevant activities, below find a breakdown of some of the biggest events at the federal and state levels to impact the Consumer Finance Services industry this past week:

Federal Activities

State Activities

Federal Activities:

• On September 16, the White House released a statement, addressing the nine reports on digital assets it received from federal agencies aligning with President Biden’s executive order (EO) on “Ensuring Responsible Development of Digital Assets,” as well as how those reports advance certain priorities in the EO: consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. For more information, click here.

• On September 16, U.S. Secretary for the Treasury Janet Yellen issued a statement after the Treasury Department published three reports under Sections 4, 5, and 7 of President Biden’s Executive Order 14067 on “Ensuring Responsible Development of Digital Assets.” The reports address the future of money and payment systems, consumer and investor protection, and illicit finance risks. For more information, click here.

• On September 16, the U.S. Department of Justice (DOJ) release its report under the President Biden’s March 9 EO on “Ensuring Responsible Development of Digital Assets: The Role of Law Enforcement in Detecting, Investigating, and Prosecuting Criminal Activity Related to Digital Asset,” announcing its formation of the Digital Assets Coordinators Network whose core function will provide the DOJ technical expertise as it continues to grapple novel challenges presented by the digital asset environment. For more information, click here.

• On September 15, the Consumer Financial Protection Bureau (CFPB) published a report — “Buy Now, Pay Later: Market trends and consumer impacts” — offering key insights on the buy now, pay later industry. The report finds that the industry grew rapidly during the pandemic, but borrowers may receive uneven disclosures and protections. The five firms surveyed in the report originated 180 million loans, totaling over $24 billion in 2021 — a near ten-fold increase from 2019. For more information, click here.

• On September 15, the Federal Trade Commission (FTC) released a report, showing how companies increasingly use sophisticated design practices known as “dark patterns” that can trick or manipulate consumers into buying products or services or giving up their privacy. The dark pattern tactics detailed in the report include disguising ads to look like independent content, making it difficult for consumers to cancel subscriptions or charges, burying key terms or junk fees, and tricking consumers into sharing their data. The report highlighted the FTC’s efforts to combat the use of dark patterns in the marketplace and reiterated the agency’s commitment to take action against tactics designed to trick and trap consumers. For more information, click here.

• On September 15, while testifying before the Senate Banking Committee, Securities and Exchange Commissioner Gary Gensler stated that although the vast majority of cryptocurrencies on the market are securities, he recognized that it may be appropriate to be flexible in applying existing disclosure requirements to cryptocurrencies that register as securities. For more information, click here.

• On September 14, the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 10 individuals and two entities for their roles in conducting malicious cyberattacks, including ransomware activity. OFAC’s action continues a recent series of OFAC designations intended to protect U.S. citizens from “ransomware activity, facilitators of ransomware activity, and other cybercrime.” OFAC actions taken included the addition of seven crypto public keys, which were added to the SDN List. For more information, click here.

• On September 13, a consortium of broker-dealers and venture capital firms announced the launch of EDX Markets, a first-of-its-kind crypto exchange that would enable investors to buy and sell digital assets through their existing broker dealer, rather than directly through a crypto-native exchange. For more information, click here.

• On September 15, OFAC issued a press release, indicating it had designated 22 individuals and two entities as entities that “have furthered the Government of the Russian Federation’s (GoR) objectives in Ukraine” in an effort to target Russian efforts to find new ways to process payments and conduct transactions. OFAC also published frequently asked questions to provide additional guidance on the heightened risk of facilitating Russia’s efforts to evade sanctions through the expanded use of the National Payment Card System or the Mir National Payment System, given the broad sanctions imposed on Russia’s financial system this year. According to Secretary of the Treasury Janet Yellen, the designations will “further degrade Russia’s ability to rebuild its military, hold perpetrators of violence accountable, and further financially isolate Putin.” For more information, click here.

• On September 14, the Securities and Exchange Commission (SEC) charged an unregistered crypto assets broker, its owner, and two salespeople with fraud and with conducting an unregistered offering. According to the press release, the charged entities “acted as unregistered broker-dealers and conducted an unregistered offering of BXY tokens, illegally raising at least $1.5 million in proceeds from approximately 100 individuals, many of whom had no experience investing in crypto assets.” The SEC alleged “investors never received their BXY tokens, and all those who invested paid an undisclosed markup on their BXY tokens.” For more information, click here.

• On September 13, the U.S. Department of Treasury’s OFAC issued additional guidance, addressing the questions of persons affected by its recent sanctioning of crypto mixer, Tornado Cash. Among other things, OFAC asserted that investors who began “mixing” transactions on Tornado Cash, without completing such transactions prior to the effective date of the OFAC blacklist (August 8, 2022), may request and obtain a specific license from OFAC to withdraw or engage in other transactions involving the cryptocurrency that the person deposited on Tornado Cash. For more information, click here.

State Activities:

• On September 13, Massachusetts Attorney General Maura Healey applauded the FTC for its new proposed rule on consumer protections in car sales. Healey co-led the drafting of a multistate letter by 18 attorneys general, urging the FTC to improve its proposed Motor Vehicle Dealers Trade Regulation Rule to encourage more transparency in vehicle sales, financing, and leasing. Complaints on auto issues continue to rank among the highest in Healey’s office, and this action attempts to curtail some of those complaints. For more information, click here.

• On September 12, the New York State Bar Association announced the launch of its Emerging Digital Finance and Currency Task Force, geared toward researching how digital assets should be regulated within New York, as well as the legal issues digital assets may present to attorneys during their representation of clients. For more information, click here.