This Week in Policy (3/7)

This Week in Policy (3/7)

Hi all,

The political world turned completely toward Ukraine, with massive economic sanctions against the Russian economy. This version will cover both the impact of those sanctions on fintech and news that proceeded elsewhere:

  • No progress on Federal Reserve Nominees: A Senate Banking hearing at which Chair Jerome Powell reiterated plans to raise interest rates also saw questions about the four outstanding Board Governor nominations. Senate Republicans published concerns about Nominee Sarah Bloom Raskin’s association with Reserve Trust, a fintech company. Financial Technology Association’s Penny Lee wrote an op-ed calling for the Fed to see the moment as impetus to expand access to payment rails.
  • Fed framework evaluates fintech access to payment rails: Direct access to payment rails isn’t a new issue for fintech - it’s behind the OCC fintech charter, bank lobbies dislike it, even Google published a white paper. Last week, a year after publishing guidance to Reserve Branches, the Fed proposed a “tiered” framework for evaluating direct access applications, which would set higher risk tiers for fintech firms than insured banks.
  • SEC’s Gensler says crypto exchanges should register: In a Yahoo News interview Chair Gensler articulated his clear position on crypto exchanges: “It's a question of whether they're registered or they're operating outside of the law and I'll leave it at that.” The SEC’s chief enforcement officer said that crypto providers who self-report securities laws violations will not be granted amnesty. All told, the SEC seems to be reinforcing its position that it already has sufficient crypto oversight powers. Interestingly, Brazil seems to be taking the opposite approach.
  • Fintech & crypto impacted by sanctions: Axios had a great write-up of the actions certain fintech companies have needed to take in response to Western sanctions against Russia. Fed Chair Powell pointed to the need for strong regulation when asked about the role crypto could play in sanctions evasion. Ripple’s CEO cited OFAC and KYC controls as mechanisms ensuring crypto won’t be used for such purposes.
  • Fraud under focus in US and UK: In the US, a New York Times article highlighted challenges facing instant payment fraud victims seeking recompense from their banks. This despite the CFPB’s recent updates to Regulation E intended to cover just these scenarios.  In the UK, the Financial Conduct Authority is investigating a list of crypto-related complaints.