Monthly Fintech 5 Newsletter - March 2025
1) Jonathan McKernan Nomination Advances
On March 6, the Senate Banking Committee approved Jonathan McKernan’s nomination to become CFPB Director. Advancement of the nomination was supported along party lines. McKernan will replace current Acting Director Russell Vought. On February 11, the President nominated McKernan for this role, one day after he resigned from his role on the FDIC board. Previously, McKernan has held roles at the FDIC, the Federal Housing Finance Agency, Treasury Department, and roles on the banking committee. McKernan has historically positioned himself as a champion of technology and has suggested in the past that the FDIC should become a promoter of responsible and compliant financial services innovation and avoid regulation that further entrenches large incumbents, particularly in the payments space.
2) OCC Clarifies Bank Authority to Engage in Certain Cryptocurrency Activities
On March 7, the OCC announced Interpretive Letter 11983, which reaffirms past guidance permitting banks to engage in a range of cryptocurrency-related activities. Specifically, the interpretive letter confirms that past guidance allowing national banks and federal savings agencies to engage in crypto-asset custody and certain stablecoin activities, as well as participate in independent node verification networks such as distributed ledgers, remains in effect. At the same time, the OCC withdrew its participation in previous joint agency statements on crypto-asset risks and associated liquidity risks to banks related to crypto-asset volatility that stated banks engaging in crypto-related activities would be subject to enhanced scrutiny. The OCC also ended its policy of requiring OCC-supervised banks to obtain the agency’s non-objection before engaging in crypto activities. Concurrently, the FDIC on February 5 released previously non-public documents relating to past supervisory interactions with banks that discouraged those banks from engaging in, or expanding, crypto activities and the use of blockchain. The release was in response to a FOIA request and purportedly went further than the request required in an effort to promote transparency. The release was coupled with forward-looking statements by Acting Chairman Travis Hill promising to reevaluate the agency’s approach to crypto and blockchain. These actions by the OCC and FDIC evidence a new, more accommodating view of these assets and technologies within the banking sector.
3) CFPB Drops Zelle Lawsuit and Other Pending Litigation
On February 28, the CFPB dropped its lawsuit against Zelle, along with five other suits. The other suits included a case against Capital One concerning $2 billion in deposit-account interest payments the Bureau alleged were unfairly withheld from consumers; a case against the Pennsylvania Higher Education Assistance Agency for allegedly collecting on discharged student loans in violation of law; a case against Vanderbilt Mortgage and Finance for purportedly steering borrowers towards unaffordable mortgages; a case against Rocket Homes for RESPA violations related to impermissible “kickbacks”; and a case against Heights Finance for fee practices related to installment loans.
4) Withdrawal of Proposed Brokered Deposit Rule Changes
On March 3, the FDIC withdrew its proposed changes to the brokered deposit rule. This proposal would have significantly narrowed or eliminated the exceptions to the brokered deposits rule to specifically target deposits generated through bank and fintech partnerships for enhanced scrutiny and would have had the effect of making such relationships less attractive to banks. Specifically, the rule would have eliminated the “exclusive deposit placement arrangement” many BaaS programs and direct bank partnerships used to avoid brokered deposit designation and reinterpreted the “primary purpose” exception that many payments and transactional account programs relied upon. This is consistent with Acting Chairman Hill’s previously stated policy agenda for the agency. He has also suggested the FDIC would revisit its proposed rule on custodial account recordkeeping (also known as the “Synapse” rule), but the agency has not yet announced any action on that rulemaking.
5) California Data Broke Rules Move Forward
On March 7, the California Privacy Protection Agency voted to begin rulemaking to establish a centralized system to allow California residents to request deletion of personal data held by data brokers. Called the “Delete Request and Opt-Out Platform” (DROP), the system is akin to the federal “Do-Not-Call” registry related to telemarketing and will allow residents to demand deletion of all personal information held by all data brokers registered within California. Data brokers will be required to access the DROP system every 45 days to obtain updated lists of consumers requesting deletion unless there is an already codified deletion exemption applicable to the data broker under the California Consumer Privacy Act. These actions are part of the broader Delete Act, which requires data brokers to register with California in the name of promoting transparency. Specifically, any business that “knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship” is considered a data broker under the act. Fintechs will need to follow the rulemaking process to see if the rules apply to them, evaluate relationships with their clients to see if they are considered direct or not, and begin preparing to comply. The act additionally requires businesses which knowingly collect and sell a resident’s personal information to register as a data broker unless there is a direct relationship. All regulations are expected to be approved by early 2026 in order to have DROP accessible to consumers.
This article is for general information purposes and is not intended to be and should not be taken as legal advice.
Download a PDF copy of our monthly Fintech 5 Newsletter here.
Questions?
If you’d like to discuss any of these issues or have any questions, please reach out to Partner and head of the Fintech group, Chris Napier.
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