Regulatory Developments
OCC Acting Comptroller Issues Statement on Standards for Stablecoins
On April 27, Acting Comptroller of the Currency Michael J. Hsu issued a statement regarding stablecoin standards after his appearance at the “Artificial Intelligence and the Economy: Charting a Path for Responsible and Inclusive AI” symposium, hosted by the U.S. Department of Commerce, National Institute of Standards and Technology, FinRegLab and the Stanford Institute for Human-Centered Artificial Intelligence.
Mr. Hsu emphasized that the Internet has foundations within its technology that provide for “an open, royalty-free network.” Those foundations emerged due to standard-setting bodies such as the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C). Mr. Hsu noted that stablecoins lack such shared standards and are “not interoperable.” In addition, he believes that in order to ensure that stablecoins are open and inclusive, “a standard setting initiative,” similar to those undertaken by the IETF and W3C, should be established. Mr. Hsu noted the willingness of the National Institute of Technology and Standards and the OCC to engage in such efforts.
“To ensure that stablecoins are open and inclusive, I believe a standard setting initiative similar to that undertaken by IETF and W3C needs to be established, with representatives not just from crypto/Web3 firms, but also including academics and government.”
- Acting Comptroller of the Currency Michael J. Hsu
FINRA Issues Cybersecurity Alert on Phishing
On April 25, FINRA issued a cybersecurity alert (the Alert) to members regarding a phishing attack using the domain name “@claims-finra.org.” The Alert provided a sample of the phishing email, which asks the recipient to provide a signed response to the request, view the request by clicking on a button and respond with the required information as instructed in the letter. The phishing email is signed with the name of a real FINRA staff member. The Alert specifies that if recipients click on the “view request” button as provided in the phishing email, an email will be generated addressed to an “@claims-finra.org” email address. FINRA is advising recipients to not click on the links and to delete all emails from the falsified domain. The Alert indicates that FINRA is working to shut down the “@claims-finra.org” domain.
CFPB Releases Supervisory Highlights, Issue 26, Spring 2022
On May 2, the CFPB issued its 26th edition of Supervisory Highlights, discussing violations identified in examinations completed between July and December 2021 in the areas of deposits, prepaid accounts, remittances, credit cards, mortgage origination, student loan servicing, auto servicing, consumer reporting and debt collection. In addition, the CFPB highlighted certain supervisory program developments, including the CFPB invoking dormant authority to examine nonbanks, targeting unfair discrimination in consumer finance, moving to thwart illegal auto repossessions, enhancing scrutiny of student loan servicers’ representations to borrowers about Public Service Loan Forgiveness, and issuing a bulletin to prevent unlawful medical debt collection and credit reporting. The CFPB also highlighted certain public enforcement actions undertaken in the period.
SEC’s Division of Examinations Issues Risk Alert Regarding MNPI and Code of Ethics Compliance
On April 26, the SEC’s Division of Examinations issued a risk alert concerning deficiencies related to Section 204A of the Investment Advisers Act of 1940 regarding: 1) the protection of material non-public information related to the use of alternative data, value-add investors, and expert networks; and 2) compliance with Rule 204A-1, which requires, among other things, the adoption of standard(s) of business conduct expected from the adviser’s “supervised persons” (e.g., employees, officers, partners, directors and other persons who provide advice on behalf of the adviser and are subject to the adviser’s supervision and control).
Read the client alert to learn more.
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