Digital asset interest accounts, often known as “crypto interest accounts” or “crypto savings accounts,” constitute a rapidly growing segment of the market for digital assets products despite significant regulatory uncertainty.  Investors in digital asset interest accounts lend their digital assets to a borrower company in exchange for the company’s promise to provide a variable monthly interest payment.  These accounts typically…

On April 28, 2022, the New York State Department of Financial Services (“NYDFS”) issued its Guidance on Use of Blockchain Analytics (the “Blockchain Guidance”) to virtual currency business entities licensed or chartered in New York (“VC Entities”).  The guidance largely focuses on compliance with state and federal anti-money laundering (“AML”) requirements and with sanctions imposed by the U.S. Department of…

On April 28, 2022, a bipartisan group of legislators in the House of Representatives re-introduced and updated a bill regarding proposed regulatory oversight by the CFTC of crypto exchanges on which digital commodities are traded (the “Bill”).  The Bill was introduced by Republican Representatives Glenn Thompson of Pennsylvania and Tom Emmer of Minnesota and by Democratic Representatives Darren Soto of…

The Consumer Financial Protection Bureau announced on Monday it is planning to use a dormant statutory authority, section 1024(a)(1)(C) of the Consumer Financial Protection Act (CFPA), to conduct examinations of nonbank covered persons where the Bureau “has reasonable cause to determine, by order, after notice to the covered person to respond, … that such covered person is engaging, or has…

On April 4, 2022, Securities and Exchange Commission (“SEC”) Chair Gary Gensler spoke on the crypto markets at his alma mater, the University of Pennsylvania, for the Penn Law Capital Markets Association Annual Conference. While the speech did not break much new ground, it served as a reminder of the SEC’s priorities in the crypto space. During his speech, Gensler…

On March 16, 2022, the Consumer Financial Protection Bureau (“CFPB”) announced that it would combat perceived discrimination in the consumer financial marketplace by expanding its authority to target unfair, deceptive or abusive acts or practices (“UDAAPs”). Specifically, the CFPB directed examiners to scrutinize whether potentially discriminatory conduct may be unfair. The CFPB simultaneously published an updated exam manual for UDAAPs…

On March 17, 2022, Sen. Elizabeth Warren (D-MA) and other Democrats introduced the Digital Asset Sanctions Compliance Enhancement Act of 2022.  Also that day, the U.S. Senate Committee on Banking, Housing and Urban Affairs (“Senate Banking Committee”) hosted a hearing entitled “Understanding the Role of Digital Assets in Illicit Finance.” I. Digital Asset Sanctions Compliance Enhancement Act of 2022 Sens.…

On March 8, 2022, the Federal Reserve Board (“FRB”) issued for public comment proposed supplemental guidelines (“Supplemental Proposed Guidelines”) for Federal Reserve Banks (“Reserve Banks”) to use in evaluating requests for master accounts and access to Reserve Bank financial services (“Fed Accounts and Services”).[1] The Supplemental Proposed Guidelines would build on the proposed guidelines the FRB issued for public comment…

On March 15, 2022, the Federal Trade Commission (“FTC”) announced a proposed consent order in resolution of an administrative complaint filed against payment processor Electronic Payment Systems (“EPS”) and its individual owners, John Dorsey and Thomas McCann, alleging violations of the Federal Trade Commission Act’s prohibition against unfair and deceptive acts or practices and the Telemarketing Sales Rule. According to…

Yesterday, President Biden signed an Executive Order (the “Order”) outlining, as described in the accompanying Fact Sheet, a “whole-of-government approach” to harness the benefits, and address the potential risks, of digital assets, including risks to consumers, financial stability, national security and the climate. The Order acknowledges the explosive growth in non-state issued digital assets and the rapid development of central…