In a Bloomberg article originally published October 12, 2022, Courtney M. Dankworth, Jehan Patterson and Zila R. Acosta-Grimes caution financial technology companies that recent actions by the Consumer Financial Protection Bureau signal it intends to take an expansive view of its jurisdiction. They offer several steps fintechs can take to prepare for this extra scrutiny. The article, “Why Fintechs Should…
On October 3, 2022, the Financial Stability Oversight Council (“FSOC”) released a report and accompanying Fact Sheet on Digital Asset Financial Stability Risks and Regulation (the “Report”). The Report comes in response to Executive Order 14067, which outlined a “whole-of-government” approach to crypto-asset policy and directed FSOC “to produce a report outlining the specific financial stability risks and regulatory gaps…
In the wake of the industry’s recent significant bankruptcy filings, crypto watchers are focusing for the first time on which crypto-entities are eligible for chapter 11 relief[1] under the U.S. Bankruptcy Code (the “Bankruptcy Code”)[2] and, if so, whether and under what circumstances, crypto-assets held by the debtor may become property of the debtor’s “estate.”[3] As previously posted, if a…
On September 28, 2022, several industry groups representing banks and other entities subject to regulation by the Consumer Financial Protection Bureau, including the United States Chamber of Commerce, filed suit against the CFPB over the agency’s controversial updates last spring to its supervision manual. Those updates indicated the CFPB’s intent to examine financial institutions for potential discrimination under its authority…
The Federal Reserve Board (“FRB”) has approved final guidelines (“Final 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 Final Guidelines reflect the comments to and development of two prior proposed guidelines: (i) the initial proposed guidelines, issued on May 11, 2021;…
On June 7, 2022, Wyoming Senator Cynthia Lummis and New York Senator Kirsten Gillibrand introduced the Lummis-Gillibrand Responsible Financial Innovation Act, the first comprehensive bill introduced to govern digital assets (see our post summarizing the key provisions in the bill here). In the Debevoise Fintech Blog’s first official webcast, our banking and fintech experts, Alison Hashmall and Gary Murphy, discuss…
On July 21, 2022, the Department of Justice (“DOJ”) and the Securities Exchange Commission (“SEC” or the “Commission”) announced parallel actions against a former Coinbase product manager, his brother, and his friend for orchestrating a year-long insider trading scheme.[1] According to the agencies’ respective charging documents, Defendant Ishan Wahi used inside information gleaned from his employment at Coinbase to tip…
In light of recent volatility in crypto markets and news of several crypto entities filing for bankruptcy,[1] market participants are increasingly scrutinizing the credit of crypto intermediaries and considering whether there will be an influx of additional filings. In thinking through credit risk, one critical preliminary set of questions that market participants should ask is which bankruptcy regime is likely…
Originally Published: July 13, 2022 Updated: July 14, 2022 One of the key unresolved questions surrounding crypto-custodian bankruptcy proceedings under the U.S. Bankruptcy Code is whether or not digital assets that are held by a crypto exchange on behalf of platform users could be viewed as the exchange’s corporate assets in the proceeding, which in turn could be used to satisfy…
Introduction On June 7, U.S. Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) (together, the “Senators”) introduced the Responsible Financial Innovation Act, a bipartisan bill that seeks to create a comprehensive regulatory framework for digital assets. The Senators have stated that the purpose of the proposed legislation is to balance innovation with customer protection. Coverage of the bill has been…