FinReg Currents - Week 11

Each week of the first 100 days of the new Trump administration, we will publish updates on key federal financial services regulatory and related developments.

This week, we review the following developments as of Wednesday:

• House Financial Services Committee Requests for CFPB Rescissions
• House Financial Services Committee Markup
• Consumer Financial Protection Bureau (CFPB) Regulatory Relief for Small-Dollar Loan Providers
• CFPB Restructuring Litigation Update
• Federal Deposit Insurance Corporation (FDIC) Updates to Bank-Crypto Restrictions
• Acting Comptroller of the Currency on Innovation
• Securities and Exchange Commission (SEC) Roundtable on AI in the Financial Industry
• Commodity Futures Trading Commission (CFTC) Withdrawal of Advisory on Virtual Currency Derivative Product Listings

House Financial Services Committee Requests for CFPB Rescissions

On April 1, 2025, the House Financial Services Committee issued a press release regarding a number of Committee requests to various federal agencies for rescission, modification, or re-proposal of specific Biden Administration financial services-related actions. With regard to the CFPB, the Committee has sent two letters to Acting Director Russell Vought. In the first letter, members of the Committee asked that several final rules be significantly modified or rescinded, including:

• The final rule prohibiting consumer reporting agencies from including medical debt on credit reports and prohibiting lenders from considering this information in making lending decisions;
• The final rule restricting the fees that large financial institutions may charge for overdraft services;
• The payment provisions of the small-dollar loan final rule;
• The final rule capping credit card late fees; and
• The final rule on small business lending data.

In addition, the first letter requested CFPB withdrawal of three proposed rules that were issued after the November 2024 election despite Committee requests that rulemaking be halted:

• The proposed rule to prohibit certain contractual terms in agreements for consumer financial products and services;
• The advance notice of proposed rulemaking on expanding the definitions of “identity theft” and “identity theft report” in Regulation V; and
• The proposed rule on data broker practices.

Finally, the first letter said that “[a]ll guidance, circulars, interpretive rules, and advisory opinions that were not issued pursuant to [Administrative Procedure Act] notice and comment rulemaking should be rescinded in their entirety.”

In the second letter to CFPB Acting Director Vought, members of the Committee requested that the agency rescind, modify, or re-propose:

• The final rule on defining larger participants of a market for general-use digital consumer payment applications;
• The interpretive rule on the use of digital user accounts to access buy now, pay later loans;
• The small-dollar loan final rule, to exempt buy now, pay later loans;
• The registry of nonbank covered persons subject to certain agency and court orders;
• The final rule to update how the agency designates nonbanks for CFPB supervision;
• The proposed rule to extend Regulation E protections to emerging payments technologies;
• The proposed rule on data broker practices;
• The proposed rule on earned wage access products;
• The advisory opinion on earned wage access products; and
• The policy statements on no-action letters and compliance assistance sandboxes.

House Financial Services Committee Markup

On April 2, 2025, the House Financial Services Committee held a markup of several financial services bills. Specifically, the Committee was scheduled to mark up substitute versions of H.R. 2392, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act; H.R. 2384, the Financial Technology Protection Act; H.R. 976, the 1071 Repeal to Protect Small Business Lending Act; H.R. 1919, the Anti-CBDC Surveillance State Act; and H.R. 478, the Promoting New Bank Formation Act. In his opening statement, Committee Chairman French Hill (R-Ark.) said the bills are designed to “promote financial innovation and expand access to financial services.”

CFPB Regulatory Relief for Small-Dollar Loan Providers

On March 28, 2025, the CFPB announced that it will not prioritize enforcement or supervision actions with regard to the payment provisions of its small-dollar loan final rule after the March 30, 2025 effective date. Specifically, the CFPB said it will not prioritize any penalties or fines associated with the payment withdrawal provisions and the payment disclosure provisions of the final rule. The CFPB also said the agency is “further contemplating issuing a notice of proposed rulemaking to narrow the scope of the rule.” The final rule’s ability-to-pay requirements were previously rescinded.

CFPB Restructuring Litigation Update

On March 28, 2025, a judge in the U.S. District Court for the District of Columbia granted a preliminary injunction barring the destruction of CFPB records and data, the firing of employees without cause, the enforcement of the stop-work order, and the cancellation of contracts. The order also calls for the CFPB to ensure that employees can work, whether in an office or remotely, and the agency’s Office of Consumer Response will remain operational to collect consumer complaints. Finally, the order requires a certification of compliance by April 4, 2025.

On March 29, 2025, the CFPB filed a notice of appeal of preliminary injunction.

FDIC Updates to Bank-Crypto Restrictions

On March 28, 2025, the FDIC issued a Financial Institution Letter (FIL) outlining expectations for supervised institutions relating to digital assets and rescinding FIL 16-2022, which required that institutions notify the FDIC prior to engaging in crypto activities. The new FIL states that FDIC-supervised institutions may engage in crypto-related activities without prior notification, although the FDIC clarifies that it expects institutions to review risks relating to cybersecurity, anti-money laundering, and consumer protection, among other things. In the press release, the FDIC states that it will work with the President’s Working Group on Digital Asset Markets and other banking agencies to clarify bank interactions with crypto assets and replace existing interagency guidance.

Acting Comptroller of the Currency on Innovation

In remarks on March 27, 2025, Acting Comptroller of the Currency Rodney Hood discussed the restructuring of the Roundtable for Economic Access and Change (“Project REACh”) and the role of innovation in promoting financial inclusion. He announced a program developed by financial institutions in Project REACh meetings to use data from alternative sources, mostly from consumer deposits and bill payments, to offer consumers more affordable lines of credit. Hood also said that Project REACh will have a Technology Workstream, which will investigate “expanding financial inclusion through new technologies or novel uses of existing technologies” and educate consumers about digital assets.

SEC Roundtable on AI in the Financial Industry

On March 27, 2025, the SEC held a roundtable event to discuss the use of AI in the finance industry, covering topics such as the cost and benefits of AI, fraud and cybersecurity, and risk management. In remarks at the event, SEC Acting Chairman Mark Uyeda advocated for a “technology-neutral approach to regulation” in the face of “some recent Commission efforts that might effectively place unnecessary barriers on the use of new technology.” In their remarks at the event, Commissioners Caroline Crenshaw and Hester Peirce both asked questions focused on understanding the practical risks and rewards of AI in finance, and how to regulate a field that changes rapidly.

CFTC Withdrawal of Advisory on Virtual Currency Derivative Product Listings

On March 28, 2025, the CFTC staff announced the withdrawal of CFTC Staff Advisory 18-14 and CFTC Staff Advisory 23-07. These advisories had set out various additional matters to be considered by exchanges and clearing houses when listing and clearing derivatives referencing bitcoin and other virtual currencies. The withdrawal of these advisories is a further spotlight on the CFTC staff’s efforts to remove regulatory disparities between digital assets and more traditional derivative instruments, in an effort to address industry concerns that digital asset derivatives are subject to inconsistent regulatory oversight.

For more information on the withdrawal of CFTC Staff Advisory 18-14, read our recent client alert.

For more details on any of these developments, or to discuss how these changes may impact your business, please reach out to our team. Stay tuned for next week’s update, where we will continue to bring you the latest in federal financial services regulatory and related developments.

You may use the following links to access our prior issues:

• FinReg Currents - Week 10 | Morrison Foerster
• FinReg Currents – Week 9 | Morrison Foerster
• FinReg Currents – Week 8 | Morrison Foerster
• FinReg Currents – Week 7 | Morrison Foerster
• FinReg Currents – Week 6 | Morrison Foerster
• FinReg Currents – Week 5 | Morrison Foerster
• FinReg Currents – Week 4 | Morrison Foerster
• FinReg Currents – Week 3 | Morrison Foerster
• FinReg Currents – Week 2 | Morrison Foerster
• FinReg Currents – Week 1 | Morrison Foerster