Troutman Pepper Consumer Financial Services Weekly Bulletin – September 2022 #3 | Troutman pepper

To help you keep abreast of relevant activities, below is a breakdown of some of the biggest federal and state level events impacting the consumer financial services industry in the past week:

Federal activities

State activities

Federal activities:

  • On September 16, the White House released a statement, addressing the nine digital asset reports it received from federal agencies pursuant to President Biden’s Executive Order (EO) on “Ensuring Responsible Development of Digital Assets”, as well as how these reports advance certain EO priorities: consumer and investor protection; promote financial stability; fight against illicit financing; US leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. For more information, click here.
  • On September 16, U.S. Treasury Secretary Janet Yellen released a statement after the Treasury Department issued three reports under Sections 4, 5, and 7 of President Biden’s Executive Order 14067 on “Ensuring the Responsible Development of digital assets”. The reports address the future of monetary and payment systems, consumer and investor protection, and illicit financial risks. For more information, click here.
  • On September 16, the US Department of Justice (DOJ) released its report as part of President Biden’s March 9 EO on “Ensuring Responsible Development of Digital Assets: The Role of Law Enforcement in detection, investigation, and prosecution of criminal activity related to digital assets,” announcing the creation of the Digital Asset Coordinators Network whose primary function will provide technical expertise to the DOJ as it continues to address new challenges presented by the digital asset environment. For more information, click here.
  • On September 15, the Consumer Financial Protection Bureau (CFPB) released a report titled “Buy Now, Pay Later: Market Trends and Consumer Impacts” — offering key insights into the shopping industry. now, pay later. The report finds that the industry has grown rapidly during the pandemic, but borrowers may receive uneven information and protections. The five companies surveyed in the report originated 180 million loans, totaling more than $24 billion in 2021, nearly ten times more than in 2019. For more information, click here.
  • On September 15, the Federal Trade Commission (FTC) released a report, showing how companies are increasingly using sophisticated design practices called “dark models” that can trick or manipulate consumers into buying products or services or waive their privacy. Dark scheme tactics detailed in the report include disguising advertisements to look like indie content, making it difficult for consumers to cancel subscriptions or charges, bury key terms or unwanted charges and encourage consumers to share 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 taking action against tactics designed to mislead and entrap consumers. For more information, click here.
  • On Sept. 15, in testimony before the Senate Banking Committee, Securities and Exchange Commissioner Gary Gensler said that while the vast majority of cryptocurrencies on the market are securities, he acknowledged 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 US Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned 10 individuals and two entities for their role in conducting malicious cyberattacks, including ransomware activity. The OFAC action continues a recent series of OFAC designations intended to protect U.S. citizens from “ransomware activity, facilitators of ransomware activity, and other cybercrimes.” The actions taken by OFAC included the addition of seven cryptographic public keys, which were added to the SDN list. For more information, click here.
  • On September 13, a consortium of brokers and venture capitalists announced the launch of EDX Markets, a first-of-its-kind crypto exchange that would allow investors to buy and sell digital assets through their existing broker, rather than directly. through a crypto-native exchange. For more information, click here.
  • On September 15, OFAC issued a press release, stating that it had designated 22 individuals and two entities as entities that “advanced the objectives of the Government of the Russian Federation (GoR) in Ukraine” in the purpose of targeting Russian efforts to find new ways to process payments and conduct transactions. OFAC has also released Frequently Asked Questions to provide further guidance on the increased risk of facilitating Russia’s efforts to evade sanctions through the expanded use of the national payment card system or the national payment system Mir, given the broad sanctions imposed on the financial system Russian this year. According to Treasury Secretary Janet Yellen, the designations “will further degrade Russia’s ability to rebuild its military, hold perpetrators of violence accountable, and further isolate Putin financially.” For more information, click here.
  • On September 14, the Securities and Exchange Commission (SEC) charged an unregistered crypto asset broker, its owner, and two sellers with fraud and conducting an unregistered offering. According to the press release, the indicted entities “acted as unregistered brokers and conducted an unregistered offering of BXY tokens, illegally raising at least $1.5 million in proceeds from approximately 100 individuals, including many had no experience investing in crypto assets.” The SEC alleged that “investors never received their BXY tokens, and everyone who invested paid an undisclosed markup on their BXY tokens.” For more information, click here.
  • On September 13, the US Treasury Department’s OFAC issued additional guidance, answering questions from those affected by its recent sanctioning of crypto mixer, Tornado Cash. Among other things, OFAC claimed that investors who began “mixing” trades on Tornado Cash, without completing those trades by the OFAC blacklist effective date (August 8, 2022 ), may apply for and obtain a specific license from OFAC to withdraw or engage in other transactions involving the cryptocurrency the individual has deposited in Tornado Cash. For more information, click here.

State activities:

  • On September 13, Massachusetts Attorney General Maura Healey applauded the FTC for its new proposed consumer protection rule 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 dealership regulation rule to encourage greater transparency in sales, financing and vehicle rental. Complaints about automotive issues continue to rank among the highest in the Healey office, and this action attempts to reduce 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, focused on researching how digital assets should be regulated in New York, as well as as on the legal issues that digital assets can present to lawyers during their representation of clients. For more information, click here.

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