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The Future of Stable (Bank) Coins?: President’s Working Group on Financial Markets Urges Legislation Limiting Stablecoins to Insured Banks
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California Imposes Additional Requirements on Money Transmitters
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Satoshi Goes to Washington : Senator Toomey Issues RFI to Inform Digital Asset Legislation
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Never Ending True Lender Uncertainty
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Taking Bitcoin to the Bank: FDIC Seeks Comments on Bank Services for Digital Assets
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New UK Insolvency Regime for Payment Institutions and Electronic Money Institutions
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Annual Consumer Financial Services Symposium to Focus on 5 Top Issues
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Cannabis Banking in the US – The Latest on the SAFE Act
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The NFT Explosion – What lawyers need to know
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First Cannabis-related Business SARs Penalty Against a Depository Institution

The Future of Stable (Bank) Coins?: President’s Working Group on Financial Markets Urges Legislation Limiting Stablecoins to Insured Banks

By Judith Rinearson, Jeremy M. McLaughlin, and Daniel S. Nuñez Cohen

On 1 November 2021, the President’s Working Group on Financial Markets (PWG), in conjunction with the Federal Deposit Insurance Corporation and the Comptroller of the Currency, issued a long-awaited joint “Report on Stablecoins” (Report). Per the press release (and a speech by Undersecretary of Treasury Nellie Liang), the Report is intended to “identify regulatory gaps related to “payment stablecoins” (defined as stablecoins that are designed to maintain a stable value and “therefore have potential to be used as widespread means of payment”), and to present recommendations for addressing those gaps.”

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California Imposes Additional Requirements on Money Transmitters

By Jeremy M. McLaughlin

Under a newly-enacted law, money transmitters licensed in California must comply with new customer service requirements starting on July 1, 2022. Under the requirements, a licensee must “prominently display on its internet website a toll-free telephone number through which a customer may contact the licensee for customer service issues and receive live customer assistance.” The line must be operative at least 10 hours a day, Monday through Friday. In addition, California law currently requires a money transmitter to provide a receipt for transactions. Under the new requirements, the receipt must also provide the telephone number through which the customer may contact the licensee for customer service issues.

Satoshi Goes to Washington : Senator Toomey Issues RFI to Inform Digital Asset Legislation

By Jeremy M. McLaughlin, Judith Rinearson, and Daniel S. Cohen

As we have noted in the past, federal regulation of the digital asset/cryptocurrency/DeFi community is evolving and there are many perspectives on what direction it should take. For instance, earlier this week, the House Democratic leadership and a group of moderate House Democrats agreed to a compromise that would prevent the House of Representatives from amending the Senate-passed “Infrastructure Investment and Jobs Act” (H.R. 3684), thereby preserving the bill’s provisions expanding the definition of “broker” under the Internal Revenue Code to apply to various digital asset market participants.

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Never Ending True Lender Uncertainty

By Jeremy McLaughlin and John Reveal

On June 24, 2021, the U.S. House of Representatives passed a resolution to overturn the Office of the Comptroller of the Currency’s (“OCC”) “true lender” regulation that had been finalized on October 30, 2020. This resolution revives the uncertainty regarding the enforceability of loan terms when a national bank or federal savings association assigns loans to third parties.   President Biden is expected to sign the resolution. 

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Taking Bitcoin to the Bank: FDIC Seeks Comments on Bank Services for Digital Assets

By: Judie Rinearson, Jeremy McLaughlin, and Daniel S. Cohen

The Federal Deposit Insurance Corporation (FDIC) has issued a “Request for Information and Comment on Digital Assets” (RFI) to learn more about the “novel and unique considerations related to digital assets….[g]iven that banks are increasingly exploring the emerging digital asset ecosystem.” A key theme of the RFI is the development of a framework to promote “responsible innovation.” Comments are due by July 16, 2021.

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New UK Insolvency Regime for Payment Institutions and Electronic Money Institutions

By Max Griffin, Jonathan Lawrence and Kai Zhang

A new special administration regime is being introduced in the UK for insolvent payment institutions (PIs) and electronic money institutions (EMIs).

The key purposes of the Regulations are to ensure that in the event of an institution’s insolvency (a) funds are returned to customers quickly and (b) shortfalls in the amounts returned are minimised. Since 2018, six PIs and EMIs have entered insolvency but only one has returned customer funds.

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Annual Consumer Financial Services Symposium to Focus on 5 Top Issues

K&L Gates is proud to host the 2021 Consumer Financial Services Symposium – Virtual Edition.  This symposium will consist of a series of webinars over the course of several weeks with the first panel focusing on FinTech Trends, Developments, and New Directions on Wednesday, April 21 at 1:00 – 2:00 p.m. EST. 

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Cannabis Banking in the US – The Latest on the SAFE Act

By: Brenden R. Chainey, Daniel S. Cohen, Daniel F. C. Crowley, Scott J. Gelbman, Barry M. Hartman, Kathleen L. Nicholas

In September 2019, the U.S. House of Representatives passed the “Secure and Fair Enforcement (SAFE) Banking Act of 2019”, the first stand-alone cannabis legislation to be approved by the House of Representatives. Earlier this month, revised versions of the bill were introduced in the House and Senate “to reform federal cannabis laws and reduce the public safety risk in communities across the country.”

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The NFT Explosion – What lawyers need to know

First there were CryptoKitties. Then came Digital art, CryptoPunks and NBA tokens. But when Beeple’s digital art piece sold at Christie’s for $69 million, the mania truly  began.  And as with any wave of media mania, also came the groundswell of negative media and hand-wringing about NFTs.   Of course, NFTs are not all evil nor are they a panacea for artists and musicians. If properly issued and positioned, they can provide a win-win for both artists and collectors.

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First Cannabis-related Business SARs Penalty Against a Depository Institution

By: Daniel Cohen, Judie Rinearson, Jeremy McLaughlin

On 21 February 2021, the National Credit Union Administration (NCUA) became the first prudential regulator to issue an administrative order against a depository institution primarily on the basis of noncompliance with the Financial Crimes Enforcement Network’s (FinCEN) “BSA Expectations Regarding Marijuana-related Businesses” (FIN-2014-GOO1) (MRB Guidance). NCUA and Live Life Federal Credit Union entered into a stipulation and a consent to a cease and desist order in which the credit union, without admitting any wrongdoing,  agreed to “implement an automated system to effectively monitor and identify all transaction for suspicious activity…includ[ing] functions to support [its] compliance with FinCEN requirements for Marijuana-Related Businesses (“MRB”).”

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