Federal Reserve Rescinds Bank Guidance, and the Federal Reserve, FDIC and OCC Withdraw 2023 Joint Statements, Regarding Crypto-Asset and Dollar Token Activities

On April 24, the Board of Governors of the Federal Reserve System (Federal Reserve) announced the rescission of its 2022 supervisory letter regarding crypto-asset activities and its 2023 supervisory letter regarding dollar token activities for member banks. Member banks will no longer need to provide notification of such activities to the Federal Reserve. Instead, these activities will be monitored through the normal supervisory process. In addition, the Federal Reserve, together with the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), withdrew joint statements (January 3, 2023, February 23, 2023) regarding these activities and exposures with the intent to review whether further guidance to support innovation is warranted.

On April 17, the Federal Reserve requested comments on a proposal to reduce the volatility of the capital requirements stemming from the Federal Reserve’s annual stress test results, which determine, in part, the calibration of the stress capital buffer that large banks must hold to absorb losses. The proposal: (1) addresses the volatility arising from the changing, hypothetical nature of the test by averaging stress test results over two consecutive years to reduce the year-over-year changes in capital requirements resulting from the test; (2) delays the annual effective date of the stress capital buffer requirement from October 1 to January 1 of the following year, providing banks additional time to adjust to new capital requirements; and (3) makes targeted changes to streamline the Federal Reserve’s stress test-related data collection. The proposed changes are not designed to materially affect overall capital requirements. Comments on the proposal are due 60 days after publication in the Federal Register. Later this year, the Federal Reserve intends to propose additional changes to improve the transparency of the stress test, including disclosing and seeking public comment on models that determine the hypothetical losses and revenue of banks under stress, and ensuring that the public has the opportunity to comment on hypothetical scenarios used for the test before they are finalized.

On April 16, the OCC announced changes to its organizational structure, effective June 2. These changes include combining the Midsize and Community Bank Supervision and Large Bank Supervision functions to create the Bank Supervision and Examination line of business to enhance the sharing of expertise and resources, address bank-specific issues and novel needs, and provide carer development opportunities for the examination workforce. Greg Coleman, Senior Deputy Comptroller for Large Bank Supervision, will lead the new Bank Supervision and Examination office.

In addition, to ensure a seamless approach to knowledge sharing and supervision, the OCC will reinstate the Chief National Bank Examiner office, which will include the divisions of Bank Supervision Policy and Supervision Risk and Analysis. Jay Gallagher, the Senior Deputy Comptroller for Supervision Risk and Analysis, will lead the Chief National Bank Examiner Office.

The OCC will also elevate its Information Technology and Security (ITS) function, which will be led by a new Senior Deputy Comptroller for ITS who will serve as a member of the Executive Committee.

On April 30, the Consumer Financial Protection Bureau announced that it will not prioritize supervision or enforcement of the small business lending rule (12 CFR 1002.101, et seq.) both for entities covered by, and those outside, the stay imposed under Texas Bankers Association v. CFPB, No. 24-40705 (CA5). Instead, the CFPB reiterated its continued focus on pressing threats to consumers, particularly servicemen and veterans.