March 19, 2025

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].

The IPA Drafts a Comment Letter on the Proposed Interpretive Rule on Reg. E – Comments Due 3/31 
 
The IPA has prepared a comment letter on the Consumer Financial Protection Bureau’s (CFPB) proposed Interpretive Rule on Regulation E.
 
Key aspects of the rule include:

• Clarifying the scope of Regulation E to include digital assets like stablecoins and nonbank payment providers.
• Ensuring consistent consumer protections, such as safeguards against unauthorized transactions and error resolution rights, across both traditional and emerging payment systems.

 
IPA is asking for the rule to be withdrawn because it is overly broad and does not take into account different aspects of the products it seeks to cover. The rule was proposed on Jan. 10, before the inauguration, so it may end up withdrawn by the new administration. 
 
The IPA is Preparing for its Annual Innovative Payments Conference
Make plans to join us in Washington DC from April 29 through May 1 for the Innovative Payments Conference to hear from legislators, regulators, and industry experts about the forces shaping your business. 
Sessions will include discussions about fraud prevention with Visa, the future of federal payments, and a fireside chat with former FDIC Director Jelena McWilliams, and Avy Malik, General Counsel, the California of Financial Protection and Innovation. 

Learn more and register here: Innovative Payments Conference
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The Senate Approves the Larger Participant Congressional Review Act Resolution
A Congressional Review Act (CRA) resolution aimed at overturning the Larger Participant rule from  the CFPB was introduced in the Senate by Senator Pete Ricketts (R-NE) and in the House by Rep. Mike Flood (R-NE-01) on Feb. 27. 
 
This rule, which took effect in January 2025, expanded the CFPB's authority to supervise nonbank consumer payments fintechs. These "larger participants" include companies like payment apps and digital wallets that handle at least 50 million consumer payment transactions annually.
 
The Senate's approval of this CRA resolution moves the rule one step closer to nullification. The resolution also must pass in the House of Representatives and be signed into law by the President. Proponents of the resolution argue that the CFPB's rule imposes unnecessary regulatory burdens on an already well-regulated industry, potentially stifling innovation and increasing costs for consumers. Critics, however, believe that the rule provides essential oversight to protect consumers from fraud and other risks associated with digital payment services.
 
The next steps involve the House of Representatives voting on the resolution. If it passes there, it will go to the President for approval or veto. If signed into law, the CFPB's rule will be overturned, and the agency will be restricted from issuing a substantially similar rule in the future without new legislation.
 
You can find an overview of the Congressional Review Act Process here: The Congressional Review Act (CRA): A Brief Overview | Congress.gov | Library of Congress.
 
House Financial Services Committee Approves Overdraft CRA Resolution
On Feb. 13, House Financial Services Chair, French Hill (R-AR-02) introduced a resolution to disapprove and nullify the "Overdraft Lending: Very Large Financial Institutions" rule issued by the CFPB. The rule aimed to cap overdraft fees charged by large financial institutions.
On March 5, 2025, the committee voted to report the resolution to the full House for further consideration.
Supporters of the resolution argue that the CFPB's rule imposes unnecessary price controls, which would limit financial institutions' ability to offer overdraft services. Critics of the resolution believe that the CFPB's rule is necessary to protect consumers from excessive fees and promote fairness in financial services.
The resolution would still need to pass the Senate and be signed by the president. 

McKernan Nomination for CFPB Director Advances to Full Senate
Jonathan McKernan's nomination to be the director of the Consumer Financial Protection Bureau (CFPB) passed the Senate Banking Committee on March 6, in a 13-11 party-line vote.
Currently, the CFPB is led by Treasury Secretary Scott Bessent, who was appointed as Acting Director on Feb. 3, following the dismissal of Rohit Chopra.

Michelle Bowman Nominated to be Next Fed Vice Chair of Supervision
Michelle Bowman has been nominated by President Trump to fill the Vice Chair for Supervision role which has been vacant since Fed Gov. Michael Barr stepped down from the post Feb. 28. Bowman had been seen as a front-runner to replace Barr since Trump was elected in November. 
Bowman must go through the typical nomination process: a hearing in front of the Senate Banking Committee, whose members will then vote on whether to advance the nomination to the full Senate, which then must confirm her.
Sen. Tim Scott, R-SC, the Senate Banking Committee’s chair, called Bowman “an important voice on the Federal Reserve Board in pushing back on burdensome rules and regulations that stifle economic opportunity. 

The FDIC Withdraws Four Proposed Rules
On March 3, the Federal Deposit insurance Corp. (FDIC) announced that it was withdrawing three proposed rules: the brokered deposits restrictions, guidelines for corporate governance, and regulations implementing the Change in Bank Control Act.
The proposed brokered deposits rule would have overturned earlier changes won by the IPA that led to the primary purpose exemption from brokered deposits rules. 

The CFPB Ends its Lawsuit Against Zelle
In December, the CFPB sued Early Warning Services, which operates peer-to-peer payments service Zelle, along with three of its owner banks—Bank of America, JPMorgan Chase, and Wells Fargo, alleging that the companies did not investigate fraud and reimburse consumers for fraud and error. 
In March the CFPB said it was dropping its lawsuit “with prejudice,” according to CNBC. This was one of six suits that the Bureau has dropped since its previous director, Rohit Chopra was fired. 

OCC Oks Banks to Engage in Crypto Activities
 On March 7, the Office of the Comptroller of the Currency published Interpretive Letter 1183 to confirm that crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations. The letter also rescinds the requirement for OCC-supervised institutions to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.
“The OCC expects banks to have the same strong risk management controls in place to support novel bank activities as they do for traditional ones,” said Acting Comptroller of the Currency Rodney E. Hood. “Today’s action will reduce the burden on banks to engage in crypto-related activities and ensure that these bank activities are treated consistently by the OCC, regardless of the underlying technology. I will continue to work diligently to ensure regulations are effective and not excessive, while maintaining a strong federal banking system.”

Podcasts, Press, and Education

• IPA Book Club: Plato’s Republic
• IPA Pod: Gift Card as Stress Relievers
• IPA Blog: Regulatory Chessboard Reconfigured
• IPA Pod: Elon Musk’s Access to Federal Payments System
• IPA Pod: The First Regulatory Moves of the New Administration

 
​ Upcoming Events and Calls
o          Next IPA Weekly GRWG Call – March 24, 2025
o          Next IPA Monthly GRWG Call – March 20, 2025