The Government Updateis 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].  The RGCA and Best Buy are hosting a valuable education event, focused on digital and emerging technology for consumer brands. This one-day event is FREE and offers a unique opportunity to hear valuable insights from over a dozen experts, connect with peers, exchange ideas, and get ahead of the tech trends that will shape your role sooner than you might expect. Then, we'll close out the day with an award-winning physicist and the author of "AI: The Silent Singularity." Whether you're looking for fresh perspectives or practical insights you can bring back to your organization, this forum delivers. This event is FREE to IPA Members. Space is limited. Register Today! Wednesday, June 10, Session: 8 am - 5 pm Best Buy Headquarters - 7601 Penn Ave S, Richfield, MN 55423  Exclusive IPA Legislative & Regulatory Briefing Join The Bancorp and the IPA for a policy briefing covering the latest developments in regulation, legislation, and legal cases, and what they mean for your business. From Capitol Hill to the courts, we will break down the forces driving change in today's payments landscape and help you navigate what's next. Following the briefing, The Bancorp will host Members for cocktails, light hors d'oeuvres, and networking. Event Details: 📅 Date: July 9th 🕒 Time: 3:00 PM – 6:00 PM 📍 Location: The Bancorp Building, 345 N Reid Place, Sioux Falls, SD 57103 Space is limited! Secure your place today to stay informed and connect with fellow IPA Members.  The Compliance Boot Camp is Back! From stablecoins and EWA to AI, open banking, and federal regulation, IPC delivered the sessions that matter most to payments professionals. Now it's time to go even deeper. The IPA Compliance Boot Camp is back! This full-day, in-person event takes place at Discover's headquarters in Riverwoods, Illinois and is built specifically for payments professionals who want to turn compliance expertise into a competitive advantage.  OCC, FDIC, and NCUA Proposal to Amend BSA Compliance Today, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation, and the National Credit Union Administration (collectively, the agencies), issued a joint notice of proposed rulemaking that would amend the Bank Secrecy Act (BSA) compliance program requirements that each agency has issued for its supervised banks. The amended regulatory requirements, which will be referred to moving forward as anti-money laundering and countering the financing of terrorism (AML/CFT) programs, align with changes that are being concurrently proposed by the Financial Crimes Enforcement Network (FinCEN) as a result of the Anti-Money Laundering Act of 2020 (AML Act). Below is a brief summary of the proposed rule. Comments are due to the agencies 60 days after the proposal is published in the Federal Register. The IPA will continue to review the proposal, if you have any questions, please contact Brian Tate ([email protected]). OCC Proposal Implementing the GENIUS Act In February, the OCC released a notice of proposed rulemaking to implement the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act regarding the issuance of payment stablecoins and certain related activities by entities subject to the OCC's jurisdiction. The OCC has given the public 60 days to respond to their proposal once it’s published in the Federal Register. The proposed rule would apply to national banks and their subsidiaries, Federal savings associations and their subsidiaries, Federal branches and their subsidiaries, foreign payment stablecoin issuers, nonbank entities that seek to be or are approved as Federal qualified payment stablecoin issuers, and State qualified payment stablecoin issuers for whom the OCC has regulatory or enforcement authority pursuant to the GENIUS Act. The proposed rule addresses all of the regulations the OCC is required to promulgate under the GENIUS Act other than those related to the Bank Secrecy Act, anti-money laundering, and Office of Foreign Assets Control sanctions, which will be addressed in a separate rulemaking in coordination with the Department of the Treasury. The majority of the GENIUS Act OCC rules will be addressed in a new 12 CFR 15, which will include standards and requirements related to the following:
In response to the OCC’s proposal, the IPA’s filed a comment responding to the OCC’s specifically addressing the OCC’s proposed definition of the term “digital wallet,” by highlighting that the agency’s proposed definition is a concept that can be found in other consumer financial regulations, specifically the CFPB’s Prepaid Account Final Rule. Accordingly, we urge the OCC to work with other regulators like the CFPB to determine how, and to what extent existing consumer protection regulations may apply to stablecoin activities. Comments were to the OCC on May 1st. FDIC Genius Act Proposal (Deposit Insurance) The Federal Deposit Insurance Corporation Board approved a notice of proposed rulemaking that would implement certain requirements and standards under the GENIUS Act. The proposed rule would establish a prudential framework for FDIC-supervised permitted payment stablecoins issuers, including requirements related to reserve assets, redemption, capital, and risk management standards. The proposed rule would also establish requirements for FDIC-supervised permitted payment stablecoin issuers and insured depository institutions that provide certain payment stablecoin related custodial and safekeeping services. In addition, the proposed rule would address the applicability of pass-through insurance to deposits held as reserves backing payment stablecoins and would clarify that tokenized deposits that satisfy the statutory definition of “deposit” would be treated no differently under the Federal Deposit Insurance Act than any other types of deposits. Comments on the proposed rule will be accepted 60 days after publication in the Federal Register. The Federal Reserve NPR on Intermediaries Accessing FedNow The Federal Reserve Board has released a proposed rule that would allow U.S. banks and credit unions to use intermediaries to transfer funds through the FedNow Service. The Fed believes that this additional flexibility would support new private sector use cases for the FedNow Service. For example, it would allow U.S. banks to use FedNow to transact with correspondent banks to facilitate the international portion of a cross-border payment. Currently, a transfer of funds sent through the FedNow Service can include only two U.S. banks. You can find the Fed’s Staff Memo here: Board memo: Proposed Amendments to Regulation J. The Fed set a 60-day comment period once the proposal is published in the Federal Register. Prepaid Excluded from IRS Proposal on 1% Remittance Tax In April, the Internal Revenue Service issued a proposed rule to implement the remittance tax provisions included in the One Big Beautiful Bill Act signed into law last summer. In brief, the OBBBA includes language applying a 1% tax on remittance transfers that occur after December 31, 2025. The Act also included language which excluded transactions instigated by a debit or credit card from the tax. The IPA supported the exclusion for debit. After OBBBA was passed, there was concern by some members that the IRS may not include “prepaid card” within the definition of debit, and as such, the 1% remittance tax may apply to remittances paid for by a prepaid card. Accordingly, the proposed rule (see page 5) states that the term “debit card” does include a general-use prepaid card, as that term is defined in section 915(a)(2)(A) of the EFTA). Further, on page 10, the IRS details that use of a prepaid card “would not trigger the remittance transfer tax.” Lastly, the proposal includes a chart entitled, “Non-taxable payment instruments,” which specifically lists “[a]ll other instruments not included by statute or regulations, such as: Debit cards and credit cards issued outside the U.S.; ACH transfers; Personal or business checks used as payment; and General-use prepaid debit cards. The proposed rule had a 60-day comment period. FinCEN Consolidates and Updates Customer Due Diligence FAQs to Align with Exceptive Relief Order The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is re-issuing frequently asked questions (FAQs) regarding customer due diligence (CDD) requirements for covered financial institutions to update certain FAQs to align with the exceptive relief order that FinCEN issued on February 13, 2026, and to consolidate three sets of previously issued FAQs into one document. These FAQs were separately published in 2016, 2018, and 2020 to assist covered financial institutions in understanding the scope of the final rule, Customer Due Diligence Requirements for Financial Institutions. OCC Publishes Interim Final Rule and Interim Final Order Regarding IFPA On April 24th, the OCC released and Interim Final Rule and Interim Final Order regarding the Illinois Interchange Fee Prohibition Act (IFPA). If finalized, the OCC’s actions would clarify that national banks have broad authority under the National Bank Act to assess non-interest charges and fees, including interchange fees from credit and debit card transactions, even when these fees are not set by individual financial institutions. In addition, the OCC’s efforts would also conclude that the National Bank Actpreempts both the interchange fee prohibition and its data use limitations under Illinois Interchange Fee Prohibition Act. Comments are due to the OCC by May 29th. At the time of this writing, the IPA is preparing a response to the OCC. In short, the IPA’s draft details our support for the OCC’s Interim Final Rule and Interim Final Order. Further, we express that if the OCC did not release their proposals, the IFPA could expose the payment card system to immeasurable liability, cause confusion in the marketplace, and likely lead to a patchwork of state laws and regulations that directly contradict federal law. Merkley EWA Resolution Defeated in Senate by Voice Vote The evening of May 13th U.S. Senator Jeff Merkley (D-OR) made a procedural motion on the Senate floor requesting the full Senate move to voting on the substance of Senate Joint Resolution 156 (S.J.Res 156). Sen. Merkley’s motion failed to be approved by the U.S. Senate by Voice Vote, which is similar to the sixteen other Congressional Review Act disapproval resolutions that were considered by the U.S. Senate. For greater context, the three resolutions that were formally voted by the U.S. Senate were not approved. If passed by the House and Senate and signed into law. S.J.Res 156 would have reinstated the CFPB’s January 15, 2025, Advisory Opinion issued by former CFPB Director Rohit Chopra before he left the CFPB. The IPA opposed the motion and thanks our members who reached out to Senate offices this week to share their views. Senate Banking Approves Clarity Act On May 14th the Senate Banking Committee approved the Clarity Act with bipartisan support. If enacted, Clarity would create a broad regulatory regime for digital assets/crypto currency. A key hurdle was overcome in Committee with respect to reward payments similar to interest when consumers use digital assets, but prohibits them on idle deposits. The Clarity Act must now go before the full Senate and get over the 60 vote threshold. If approved by the Senate, the Senate version must be reconciled with the House companion bill and signed into law by the President. House Financial Services Subcommittee Holds Fintech Hearing On May 20th the House Financial Services Committee, Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence, held a hearing entitled, “Partnering for Innovation: How Bank Fintech Collaborations Enhance Financial Infrastructure,” which focused on innovation in the fintech sphere. IPA member, Alex Barrage (MOFO) testified on behalf of the financial services industry. The IPA applauds and thanks Alex for the outstanding job she did representing herself, her firm, and industry as she advocated for balance between innovation and consumer protections. The hearing featured the following panelist:
A follow-up hearing has been announced by the full Committee on June 24th. Additional details regarding the hearing will be provided as developments occur. White House Issues Financial Institution EO and Fintech Fact Sheet The afternoon of May 19th President Trump released a Fact Sheet: President Donald J. Trump Integrates Financial Technology Innovation into Regulatory Frameworks and an Executive Order: Restoring Integrity to America’s Financial System. The Fact Sheet details include:
o Legal authorities of the Federal Reserve to extend access to Federal Reserve payment accounts and payment services by uninsured depositories and non-bank fintechs; o Options for expanding such access, subject to appropriate risk management requirements; o Legal impediments that preclude direct access, along with legislative or regulatory options that could enable such access while mitigating risks; Executive Order (Summary):
The Federal Reserve Issues Long Awaited Proposal on “Skinny” Master Accounts One day after the President’s Executive Order, the Federal Reserve today released a formal proposal to create “payment accounts” – also known as “skinny” master accounts – for payment services. In brief, the Fed is proposing to create a payment account category that certain financial institutions could use for the limited purpose of clearing and settling payments. Accordingly, payment account holders would not have access to intraday credit or the discount window, now would they earn interest on balances held at a Reserve Bank, and would only have access to payment services with automated controls to prevent overdrafts. They would also be required to provide information to demonstrate compliance with Bank Secrecy Act and anti-money laundering rules. Further, the Fed board is also encouraging Reserve Banks to temporarily pause decisions on access requests from institutions that fall within Tier 3 of its Account Access Guidelines until a decision is made on the proposal. Fed Governor Michael Barr is on record as stating he would not support the proposal “because it does not provide sufficiently specific and robust safeguards to protect against the accounts being used for money laundering and terrorist financing by institutions we do not supervise.” IL Legislature Extends IFPA Deadline In the early hours of June 1st the Illinois Legislature (House/Senate) passed SB 3645. SB 3645 addresses a number of different issues, including “The Interchange Fee Prohibition Act” (see Section 70). If enacted SB 3645 would extend the effective date of the IFPA by one year, from July 1, 2026, to July 1, 2027. At this time, it is likely Illinois Governor JB Pritzker may sign the bill into law. The IPA supports extending the effective date of the IFPA. As a reminder, last week the IPA filed our comment with the OCC in support of the agency’s Interim Final Rule and Interim Final Order regarding the Illinois Interchange Fee Prohibition Act. House Financial Services Schedule for June 2026
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