February 8, 2023

The Government Update

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​is issued by the Innovative Payments Association twenty times a year as a service to members.
Editors: Brian Tate, President and CEO, IPA; Ben Jackson, COO, IPA;  Eli Rosenberg, Partner, Baird Holm LLP; and Gray Derrick, Partner, Baird Holm LLP. Please address comments and suggestions to: [email protected].

2023 Innovative Payments Conference
​The 2023 Innovative Payments Conference will be held on May 7-9th. The IPA’s IPC is the must-attend annual event for the payments community attracting the attention and support of the industry’s most influential players. Benefit from two days of cutting-edge content, discussions and enhanced networking as you engage directly with those leading the way in payments compliance, legislation, regulation and innovation.

U.S. Court of Appeals for the D.C. Circuit Releases PayPal v. CFPB Decision
The U.S. Court of Appeals for the D.C. Circuit released its highly anticipated decision in PayPal v. CFPB. The court overturned PayPal’s victory the in lawsuit challenging the CFPB’s model disclosures that companies could use to comply with the agency’s prepaid card regulation.
 
According to the ruling, The CFPB’s prepaid card regulation didn’t mandate specific fee disclosures for digital wallet products offered by companies like PayPal. The three- judge panel ruled unanimously that the agency only provided a model that companies could use while giving them the option to develop their own, similar disclosures, bringing the regulation in line with the requirements in the Electronic Fund Transfer Act.
The Court concluded at the end of its decision that “[o]n remand, the district court may consider PayPal’s other challenges to the Rule, including the APA and constitutional claims, which remain to be addressed.”
 
Virginia Legislature Passes HB1921 and SB1217
The Virginia State Senate passed SB1917 unanimously, while the Virginia State House passed a HB1921, a companion bill, by a vote of 53-46. The House bill would create a regulatory framework for earned wage access providers in the state, while the Senate bill replaced the regulatory framework with a proposed study on earned wage access. The bills must now be reconciled before being sent back to each chamber for a final vote. The reconciled bill could include only the study, only the regulatory framework, or some type of combination of the two.  
 
CFPB Seeks Public Input on Consumer Credit Card Market
The CFPB issued a request for information seeking public input on the consumer credit card market as part of a biennial review mandated by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). Specifically, the request is seeking information on: 

• Terms of credit card agreements and the practices of credit card issuers
• Effectiveness of disclosure of terms, fees, and other expenses of credit card plans
• Adequacy of protections against unfair or deceptive acts or practices relating to credit card plans
• Cost and availability of consumer credit cards
• Safety and soundness of credit card issuers
• Use of risk-based pricing for consumer credit cards
• Consumer credit card product innovation

The comment period closes on April 24, 2023. 
 
White House Published RFI on Digital Asset Research
The White House Office of Science and Technology Policy (OSTP) published a request for information (RFI) seeking feedback on a proposed National Digital Assets Research and Development Agenda. Broadly speaking, they are seeking public comments to help identify priorities for research and development related to digital assets, including various underlying technologies such as blockchain, distributed ledgers, decentralized finances (DeFi), smart contracts, and related issues such as cybersecurity and privacy. Specifically, the RFI seeks feedback on six topics:

1. Goals, sectors, or applications that could be improved with digital assets and related technologies
2. Goals, sectors, or applications where digital assets introduces risks or harms
3. Federal research opportunities that could be introduced or modified to support efforts to mitigate risks from digital assets
4. R&D that should be prioritized for digital assets
5. Opportunities to advance responsible innovation in the broader digital assets ecosystem
6. Other information that should inform the R&D Agenda

 
Comments are due March 3, 2023.
 
Fed Promotes Level Playing Field Regardless of Deposit Insurance Status
The Federal Reserve Board issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement clarifies that uninsured and insured banks supervised by the Board will be subject to the same limitation on activities, including novel banking activities, such as crypto-asset-related activities. The statement also makes clear that uninsured and insured banks supervised by the Federal Reserve will be subject to the same limitations on certain activities imposed on national banks that are supervised by the OCC. Through this policy, the Federal Reserve aims to promote a level playing field and limit regulatory arbitrage.

White House Issues Statement on Cryptocurrency Risk
The White House released a statement describing the risks that cryptocurrencies pose to retail and institutional investors, and outlined the Administration’s roadmap to mitigating those risks while preventing harm to the broader financial system. The Administration laid out a framework for developing digital assets in a safe, responsible manner while addressing inherent risks, and encouraged federal agencies to use their authority to increase enforcement and issue guidance where needed. 
 
The statement also encouraged Congressional action to expand regulatory authority to protect customers’ assets, strengthen penalties for violating illicit finance rules, and address the risks of stablecoins. 
 
The statement closed by highlighting that the Administration supports responsible technological innovation, but that there must be safeguards to ensure they are secure and beneficial to all.
 
FDIC Announces Extension of Comment Period for Proposed Changes to its Regulation Regarding Misrepresentations of Deposit Insurance
The FDIC announced a 45-day extension of the comment period for the proposed changes to regulations relating to the FDIC’s official sign, advertising statement, misrepresentation of deposit insurance coverage, and misuse of the FDIC’s name or logo. The original due date for comments was February 21, 2023, but has now been extended to April 7, 2023. 
 
More information can be found in the original notice of proposed rulemaking.
 
IPA/EPC Joint Letter on North Dakota SB 2217
The IPA has signed a joint letter at the invitation of the Electronic Payments Coalition (including ABA, ICBA, CUNA, etc…) to oppose North Dakota State Senate bill SB.2217, which was recently passed by the ND Senate. If enacted, SB 2217 would prohibit the collection of interchange on the sales tax portion of electronic transactions. This bill is similar to other bills the IPA has opposed that have been introduced in several other states over the last couple of years.
 
Luetkemeyer Sends Letter to DOJ on BSA Reporting
Rep. Blaine Luetkemeyer (R-MO), Chairman of the National Security, Illicit Finance, and International Financial Institutions Subcommittee, sent a letter to Attorney General Merrick Garland regarding the Department of Justice’s fulfillment of Section 6201 of the 2021 National Defense Authorization Act (NDAA), which requires the DOJ to report metrics on its use of Bank Secrecy Act (BSA) data and on the use of data derived from financial institution reports. 
 
According to Chairman Luetkemeyer’s letter, the DOJ’s report did not include statistics required under the act, including statistics on the use and impact of BSA reports. Luetkemeyer criticizes the lack of transparency into the usefulness of BSA data, and asks if burdensome BSA reporting is even worthwhile. The letter includes several questions for response on the DOJ’s process for fulfilling the requirements laid out in Section 6201 of the NDAA.

New Federal Bills
None
 
Pending Federal Bills
None