Legal and Regulatory Developments

SPOTLIGHT: CFPB’s Future Hangs in the Balance After a Wild Weekend
Banking Dive – February 10, 2025

A tombstone emoji was only the beginning. When Tesla CEO and Trump adviser Elon Musk on Friday posted “CFPB RIP” on X, the social media platform he owns, it was, to many, the first clue that the Department of Government Efficiency had infiltrated the agency.

By the end of that day, the CFPB would have a new acting director, its X profile would be deleted, and the central art on its webpage would be replaced by “404 error” text and a rudimentary illustration of an unplugged socket.

On his first full day leading the CFPB, Russ Vought wrote the Federal Reserve to indicate that the consumer protection bureau would not take any unappropriated funding for the fiscal quarter starting in April. . . .

Witnesses Fault ‘Regulation by Enforcement’ of Digital Assets at Congressional Hearing
PYMNTS – February 11, 2025

At a subcommittee hearing on the current state and future potential of digital assets, lawmakers and witnesses from the crypto and payments spheres — including PayPal — cautioned against a policy of what was repeatedly referred to as regulation by enforcement.

And, they said, for the right safeguards to be put in place, along with proper guardrails, regulatory clarity is needed.

The remarks, made before the U.S. House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee on a Tuesday (Feb. 11) hearing, underscored the challenges of regulating the nascent space in a bid to realize, per the hearing’s title, “A Golden Age of Digital Assets: Charting a Path Forward.”. . .

Senators Reintroduce Bill to Bar CBDC
Payments Dive – February 10, 2025

Republican Sen. Mike Lee reintroduced a bill to block the creation of a digital currency by the Federal Reserve, with GOP colleagues Sens. Ted Cruz and Tim Scott co-sponsoring the legislation.

In a Feb. 6 press release, Lee said he was reviving the bill, which he also introduced in the last Congress, “to prevent the Federal Reserve from reshaping the U.S. financial sector and having the ability to monitor consumer transactions through a Central Bank Digital Currency.”

The move by the Republicans is a bid to enshrine as law President Donald Trump’s efforts to do the same. Lee’s release notes that Trump issued an executive order last month banning federal agencies from pursuing the creation of a central bank digital currency. . . .

Treasury Union Files Suit to Combat CFPB Shutdown
PYMNTS – February 10, 2025

The CFPB’s sudden weekend shutdown is now the subject of a federal lawsuit. A union representing employees of the Consumer Financial Protection Bureau (CFPB) filed suit Sunday (Feb. 9) against Russell Vought, acting head of the agency. This came after Vought essentially halted all of the bureau’s enforcement efforts.

“CFPB employees have been placed in questionable status as they have been directed not to work but they have also not been formally placed on any authorized type of leave,” says the filing from the National Treasury Employees Union, which represents the CFPB workers.

“It is substantially likely that these initial directives are a precursor to a purge of CFPB’s workforce, which is now prohibited from fulfilling the agency’s statutory mission.”. . .

Trump Says He Has Directed US Treasury to Stop Minting New Pennies, Citing Rising Cost
Associated Press – February 10, 2025 

President Donald Trump says he has directed the Treasury Department to stop minting new pennies, citing the rising cost of producing the one-cent coin.

“For far too long the United States has minted pennies which literally cost us more than 2 cents. This is so wasteful!” Trump wrote in a post Sunday night on his Truth Social site. “I have instructed my Secretary of the US Treasury to stop producing new pennies.”

The move by Trump is the latest in what has been a rapid-fire effort by his new administration to enact sweeping change through executive order and proclamation on issues ranging from immigration, to gender and diversity, to the name of the Gulf of Mexico. . . .

Washington, Maryland Lawmakers Propose Banning Credit Card Swipe Fees on Sales Taxes
The Center Square – February 6, 2025

State lawmakers in Washington and Maryland are following the lead of Illinois in proposing legislation to ban credit card swipe fees on sales taxes that cost retailers significant money.

Maryland’s House Bill 29, introduced in January, would prohibit credit card networks from charging “swipe fees” on sales tax, which cost merchants in Maryland $156.9 million in 2023 alone.

In Washington state, Senate Bill 5070 would also prohibit swipe fees from being charged on sales tax, which cost Washington’s businesses $384 million in fees on sales tax in 2023. It additionally would prohibit employers from deducting the cost of credit card processing fees, up to 4% of their earnings, from their employees’ tips. . . .

Industry Developments

SPOTLIGHT: Almost a Third of Central Banks Delaying Digital Currency Plans, Report Shows
Reuters – February 11, 2025

Nearly a third of central banks have pushed back launching digital versions of their currencies, a new survey shows, although a desire to protect their money-minting powers mean most still intend to go ahead.

Central Bank Digital Currencies (CBDCs) are back in the spotlight after U.S. President Donald Trump banned work on a digital dollar in one of his first moves after regaining power last month.

The survey rounds published on Tuesday were completed before that announcement, but the central banks that took part had been asked whether they were now cooling on CBDCs, given the issues around such assets. . . .

Klarna, JPMorgan to Offer BNPL to Business Clients
Payments Dive – February 11, 2025

The banking giant JPMorgan Chase will offer business customers of its payments division a buy now, pay later option with the help of the Swedish BNPL company Klarna, according to a Tuesday press release.

A BNPL option will be available to businesses that use JPMorgan Chase’s payments commerce software platform for payment processing, the release from Klarna said.

The New York-based bank will make no-interest options available through the service as well as other loan offers, Klarna said. A JPMorgan spokesperson said those offers include short-term installment loans. . . .

Affirm Plans to Bring Buy Now, Pay Later Debit Cards to More Users Through Deal With FIS
CNBC – February 11, 2025

Affirm , the online lender founded by Max Levchin, expanded beyond credit and entered the debit market four years ago with a card that let users pay over time. Now the company is making it possible for banks to offer that service to their customers.

Affirm, which pioneered the buy now, pay later business (BNPL), has partnered with FIS in a deal that will allow the fintech company to offer the pay-over-time service to its banking clients and their millions of individual customers.

Any bank that partners with FIS will be able to provide its own version of the Affirm Card, which launched in 2021, without asking customers to adopt a new piece of plastic. Consumers can access Affirm’s biweekly and monthly installment plans and have the money automatically deducted from their checking account. . . .

Read Payments News Update – February 14, 2025 at constantinecannon.com