The Financial Stability Board has released a report that calls for authorities to crack down on crypto conglomerates as part of nine draft policy recommendations for regulating the market. This recommendation says, “Authorities should ensure that crypto-asset service providers that combine multiple functions and activities, for example crypto-asset trading platforms, are subject to regulation, supervision and oversight that comprehensively address the risks associated with individual functions as well as the risks arising from the combination of functions, including requirements to separate certain functions and activities, as appropriate.” The FSB also updated its recommendations for oversight of stablecoins.

The Office of the Comptroller of the Currency released its bank supervision operating plan for the coming fiscal year. In it, third-party relationships, liquidity management, and climate risk are listed as areas of heightened focus. This partly aligns with previous concerns shared by Acting Comptroller Michael Hsu about the increasing complexity of bank-fintech partnerships related to digital banking. The plan says for partnerships with fintechs, OCC examiners should assess whether there is proper oversight of these relationships “commensurate with the risks posed.”

Last week Sens. Marsha Blackburn (R-TN) and Cynthia Lummis (R-WY) introduced S. 4985, a bill to amend the Cybersecurity Information Sharing Act of 2015 to include voluntary information sharing of cyber threat indicators among cryptocurrency companies. The bill was referred to the Senate Banking Committee. Separately, Sen. Bill Hagerty (R-TN), a member of the Senate Banking Committee, introduced a bill called the Digital Trading Clarity Act (S. 5030). It aims to provide regulatory clarity around the classification of digital assets and related liabilities in existing securities laws.

President Biden’s executive order on crypto gave Attorney General Merrick Garland until October 5 to produce a legislative proposal, if deemed necessary, that would enable the U.S. to issue a central bank digital currency. When the day passed without a report being released, Republican leaders on the House Financial Services Committee sent a letter to Garland saying, “Committee Republicans emphasized in our CBDC principles that the Federal Reserve does not have the legal authority to issue a CBDC absent action from Congress.” They asked DOJ to provide text of its assessment regarding whether or not legislative changes would be necessary to issue a CBDC by October 15.

Senate Banking Committee Ranking Member Pat Toomey (R-PA) introduced a bill, S. 4973, on September 29 that would allow sponsors of 401(k) plans to let their workers put retirement savings into alternative assets like private equity, real estate, and cryptocurrency. He said that while this is not prohibited by the Department of Labor currently, existing standards have a chilling effect on doing so. Cosponsors include Sens. Tim Scott (R-SC) and Cynthia Lummis (R-WY). Rep. Peter Meijer (R-MI) also supports the bill in the House.

Seven Republican lawmakers on the Senate Banking Committee and House Financial Services Committee submitted an amicus brief weighing in on cryptocurrency-focused bank Custodia’s lawsuit against the Federal Reserve for refusing to act on Custodia’s application for a master account. The lawmakers said the court should deny motions to dismiss filed by the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of Kansas City.

The cryptocurrency bill being negotiated by House Financial Services Committee Chairwoman Maxine Waters (D-CA) and Ranking Member Patrick McHenry (R-NC) is facing bipartisan resistance, thus making it unlikely that a vote will be held on the bill this week despite Waters indicating that she hoped to make progress on the bill this week. Members including Rep. Warren Davidson (R-OH) have voiced concerns about the draft text released last week, and he said he is “hopeful that the Financial Services Committee can resolve differences and settle on good legislation in either Q4 2022 or Q1 2023.”

On September 26 regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington, and Vermont sued cryptocurrency lending company Nexo for illegally offering unregistered securities to investors. The group alleges that Nexo’s Earn Interest Product, which provided investors a chance to receive annual interest rates of up to 36 percent on crypto asset deposits, constitutes an investment contract that the company was not properly registered to offer.

Sens. Chris Van Hollen (D-MD) and Elizabeth Warren (D-MA) and Reps. Ayanna Pressley (D-MA) and Jesús “Chuy” García (D-IL) have reintroduced a bill that would compel financial institutions to recognize funds in real time, paving the way for the Federal Reserve’s new faster payments service, FedNow.