U.S. Developments

Regulatory Developments

House Task Force Looks to Allow Alternative Data for Credit Scoring

A newly formed U.S. House of Representatives task force, the Financial Technology Task Force, held a hearing this week to discuss a proposed bill that would allow new types of data to appear on consumer credit reports, including items like rent and phone payments. Proponents of the bill argue that in an era of more people renting, a large population of consumers could have positive payment histories excluded from their credit reports under the existing regulations.

Consumer advocates at the hearing cautioned lawmakers that some lower-income consumers could be hurt by the inclusion of this alternative data, including tenants who withhold rent payments due to substandard living conditions.
Continue Reading Fintech Week in Review: Week of July 26, 2019

CFPB Proposes Changes to Debt Collector Rules

On May 7, 2019, the Consumer Financial Protection Bureau (“CFPB”) detailed a plan to update the Fair Debt Collection Practices Act. The proposed rule would reduce the number of phone calls collectors can make to debtors, while providing clarity as to how collectors can use other communication methods, like email and text messages. The rule would limit the number of calls a collector can make to collect a specific debt to seven per week. Additionally, if a collector engages in a telephonic conversation with the debtor, the collector must wait a week before calling the debtor again. The rule, however, would not limit the number of emails or text messages that a debt collector can send to try and collect on an outstanding debt. The plan would clarify that emails and text messages are governed by the same rules as phone calls, including a bar on contacting consumers before 8AM or after 9PM and contacting consumers at their workplaces in the majority of situations. The proposed rule would also provide sample templates for how collectors could provide required disclosures when making electronic communications. Debtors could opt-out of any of the communication methods under the proposed rule. The proposed rule applies to third-party collectors who are typically either sold the debt from the original creditor or hired by the original creditor to collect on their behalf. The CFPB is inviting public comments on the proposed rule before finalizing any changes to the existing rule.
Continue Reading Fintech Week in Review: Week of May 6–10, 2019

U.S. Developments

Regulatory Updates

OCC Seeks Comments on Proposed Innovation Pilot Program

The Office of the Comptroller of the Currency (“OCC”) is soliciting public comment on its proposed Innovation Pilot Program. Similar to state-level regulatory sandbox models, the proposed program would allow OCC-supervised financial institutions, including those working with third-party vendors, to apply to test pilots of potential products and services and receive early regulatory input from the OCC. Eligible entities may propose a pilot individually or collaborate with multiple banks in a consortium. The OCC will consider proposals at various stages of development, from proof of concept to live testing of pilots. To enter a pilot, an eligible entity will have a preliminary discussion with the OCC about the proposed pilot, and then after the discussion submit an expression of interest (an “EOI”) that addresses the description of the pilot, including a summary of proposed controls and safeguards and the desired OCC engagement. The OCC will then evaluate the pilot to determine if it is a fit for the program. OCC engagement in a pilot will last no less than three months and no greater than 24 months, with the duration subject to a case-by-case determination by the OCC. During the pilot, the entity will be required to submit periodic reports on its progress. The proposed program comes out of the OCC’s existing innovation office, but is separate from its new fintech national bank charter. The OCC’s Chief Innovation Officer, Beth Knickerbocker, has noted that blockchain technology could be an option for these pilot projects, and the OCC is going to consider how it supervises such activity by banks.
Continue Reading Fintech Week in Review: Week of April 29 – May 3, 2019

FinTech Issues Discussed at SEC Speaks Conference

At Practicing Law Institute’s annual SEC Speaks conference, SEC leadership and staff showcased the agency’s 2018 successes and outlined upcoming initiatives. Highlights in the cryptocurrency and FinTech industries included the SEC’s analytical framework for digital assets, published last week by the SEC’s Strategic Hub for Innovation and Financial

U.S. Developments

Regulatory Updates

New Rules for Prepaid Cards, Digital Wallets, and P2P Transfer Apps Become Effective

As reported in this blog last year, the U.S. Consumer Financial Protection Bureau (“CFPB”) created a final rule implementing the Electronic Fund Transfer Act (“Regulation E”) and the Truth in Lending Act (“Regulation Z”). Originally released in October 2016, with an effective date of October 1, 2017, the final rule was delayed several times and finally became effective on April 1. The rule means that consumer protection measures like those for unauthorized charges and errors that have applied to products such as debit cards in the past will now apply to prepaid cards, digital wallets (e.g., Google Wallet), and person-to-person payment applications (e.g., Venmo and PayPal). Notable exclusions to the new rule include gift cards and applications like Apple Pay that do not store any value. Many providers now covered by the law have already adjusted their product offerings and terms of service to prepare for the new rule. Frequent delays in the effective date and numerous opportunities to make changes to the final rule have resulted in these platforms being subject to an increasingly complex regulatory framework.
Continue Reading Fintech Week in Review: Week of April 1 – 5

U.S. Developments

Regulatory Updates

 FinCEN Issues Advisory on FATF’s Updated Recommendations

On October 31, FinCEN published an advisory on the international Financial Action Task Force’s (FATF’s) updated list of jurisdictions with serious regulatory deficiencies in anti-money laundering and combatting the financing of terrorism (AML/CFT). The advisory focused on North Korea (DPRK) and Iran, and FinCEN reminded financial institutions of their obligations when dealing with those jurisdictions.Continue Reading Fintech Week in Review: Week of October 29 – November 2

On February 6, 2018, the United States Senate Committee on Banking, Housing and Urban Affairs conducted a hearing entitled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission.” Hearing. The Chairman of the U.S. Securities and Exchange Commission (SEC), Jay Clayton, and the Chairman of the U.S. Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo, provided testimony.

The hearing comes at a time when both agencies are increasingly active in the virtual currency space. Most notably, the SEC has provided extensive guidance and taken enforcement action against certain “initial coin offerings” for violations of the U.S. securities laws. Similarly, the CFTC has taken enforcement actions against fraudulent schemes, as well as overseeing the launch of Bitcoin futures contracts. For further information on these actions, please consult virtualcurrencyreport.com. The testimony from both agencies follows on public statements by both Chairmen, including most recently a joint op-ed published in the Wall Street Journal.
Continue Reading Open Session of the U.S. Senate’s Committee on Banking, Housing and Urban Affairs Hears Joint Testimony from Heads of the SEC & CFTC

On January 18th, Perkins Coie LLP held a forum entitled Understanding Cryptocurrencies in Asset Management in its New York office.  This forum covered how cryptocurrencies and blockchain technology are affecting the asset management industry with specifics on:

  • Investing in Bitcoin futures and other crypto-derivatives
  • Emerging crypto indices
  • Overview of product development including Bitcoin

On December 15, 2017, the U.S. Commodity Futures Trading Commission (the “CFTC”) issued a proposed interpretation of the term “actual delivery” as used in the provision of the Commodity Exchange Act (the “CEA”) that grants the CFTC explicit authority to oversee the marketplace for “retail commodity transactions”. This is the first blog posting in a