Federal Reserve and FDIC Withdraw Crypto-Asset Guidance for Banks; OCC Issues Clarification for Banks
Go-To Guide:
The Board of Governors of the Federal Reserve System (Board) has withdrawn supervisory guidance for Board-supervised banks concerning crypto-asset and dollar token activities and Board expectations for these activities.
The Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) also withdrew joint supervisory statements on crypto-asset activities and exposures.
The OCC issued Interpretive Letter #1184 (IL 1184) reaffirming that OCC-supervised banks can provide and outsource crypto-asset custody services.
It is unclear whether the Board and the FDIC will issue additional guidance for integrating cryptocurrency in the U.S. banking system.
Until regulators issue specific and comprehensive crypto-asset guidance, banks should proceed with caution and adhere to existing safety and soundness expectations.
On April 24, 2025, the Board withdrew its supervisory guidance for Board-supervised banks relating to crypto-asset and dollar token activities.1The Board rescinded (1) its Aug. 16, 2022, supervisory letter that required state member banks engaging, or seeking to engage in, crypto-asset activities to provide the Board with advance notification; and (2) its Aug. 8, 2023, supervisory letter that imposed a non-objection process on state member banks issuing, holding, or transacting in dollar tokens2 to facilitate payments.
Furthermore, the Board and the FDIC joined the OCC in withdrawing from their joint statements regarding crypto-asset activities and exposures. The Board and the FDIC withdrew (1) their Jan. 3, 2023, joint statement that identified risks associated with the crypto-asset sector and expressed safety and soundness concerns with crypto-asset activities, and (2) their Feb. 23, 2023, joint statement on liquidity risks related to certain sources of funding from crypto-asset entities, which emphasized the importance of effective risk management practices.3
On May 7, 2025, the OCC issued IL 1184 clarifying that “banks may buy and sell assets held in custody at the custody customer’s direction and are permitted to outsource bank-permissible crypto-asset activities, including custody and execution services to third parties, subject to appropriate third-party risk management practices.” Related services include facilitating the customer’s cryptocurrency and fiat currency exchange transactions, transaction settlement, trade execution, recordkeeping, valuation, tax services, and reporting. The OCC noted that banks may provide crypto-asset custody services in a non-fiduciary or fiduciary capacity subject to 12 C.F.R. part 9 or 150, as applicable. While prior regulatory approval is not required, the OCC expects banks to conduct such activities “in a safe and sound manner and in compliance with applicable law.”
These developments are aligned with the broader objective of the Trump administration to position the United States as a leader in the cryptocurrency and financial technology space, as it noted during its first months after taking office.4
Potential Implications
These actions remove procedural regulatory hurdles for banks engaging in crypto-asset activities. Banks now have greater autonomy to explore permissible crypto-related activities without undergoing a prior supervisory review process. However, without explicit pre-approval, banks bear more responsibility for ensuring permissible crypto-asset activities are “consistent with safety and soundness and applicable laws and regulations.”5
The OCC’s issuance of IL 1184 reaffirms and expands upon previous guidance regarding national banks’ authority to engage in crypto-asset activities in that “[p]roviding crypto-asset custody services is a modern form of traditional bank custody activities.”6
The Board expressed that it “will instead monitor banks’ crypto-asset activities through the normal supervisory process.”7 It is unclear whether the withdrawal of guidance will ease legacy regulatory barriers for banks seeking to engage in crypto-related activities. The Board noted that it will work with the FDIC and the OCC to determine whether additional guidance is appropriate.8 The FDIC stated that it is working with the agencies to explore “issuing additional clarity with respect to banking organizations’ crypto-asset and related activities in the coming weeks and months.”9
Takeaways
While crypto is a newer asset class, federal regulators have made it clear that existing risk management expectations apply, regardless of the type of asset or technology involved. Regulators expect banks to treat crypto activities with the same level of rigor as any other line of business – if not more so, due to their volatility, legal ambiguity, and operational complexities.10 While the federal banking agencies indicated they are considering whether to issue additional guidance, banks are now operating with minimal guidance for crypto-asset specific activities. For now, banks should be prepared to learn of crypto-specific regulatory expectations during the examination process. The agencies’ statements regarding potential new guidance or clarity may serve as an opportunity to provide more tailored guidance in this space.
In the interim, banks currently engaged or considering engaging in digital-asset activity should continue to consider the prior guidance in maintaining or establishing controls for digital-asset activity, and at the same time, remain vigilant of any further guidance the regulatory agencies may provide. Key principles and practices from traditional bank risk guidance should be applied to crypto activities, including, but not limited to: KYC and CDD;11 AML and CFT;12Third-Party Risk Management;13 Operational Risk Management;14 and Governance and Risk Appetite Frameworks.15 While banks should consider engaging federal regulators proactively to seek informal feedback even though formal pre-approval is no longer required, state-chartered banks should also consider whether to engage their state regulators, as there may be divergent comfort levels between federal and state regulators regarding permissible crypto-asset activities.
1Federal Reserve Board, Federal Reserve Board announces the withdrawal of guidance for banks related to their crypto-asset and dollar token activities and related changes to its expectations for these activities, April 24, 2025 [hereinafter Federal Reserve Board announces the withdrawal of guidance for banks].
2 “Dollar tokens” are tokens denominated in national currencies and issued using distributed ledger technology or similar technologies to facilitate payments. Id.
3 Board, Federal Reserve Board announces the withdrawal of guidance for banks, supra note 1; see also FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, April 24, 2025.
4 White House, Fact Sheet: Executive Order to Establish United States Leadership in Digital Financial Technology, Jan. 23, 2025. White House, Fact Sheet: President Donald J. Trump Establishes the Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile, March 6, 2025.
5 FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, supra note 7.
6 OCC, Interpretive Letter 1184.
7 Board, Federal Reserve Board announces the withdrawal of guidance for banks, supra note 1.
8 Id.
9 FDIC, Agencies Withdraw Joint Statements on Crypto-Assets, supra note 7.
10 See, e.g., Fed. Deposit Ins. Corp., Risk Review § 7, May 24, 2024, at 3 (discussing novel and emerging risks associated with crypto-asset activities).
11FIN-2018-G001, Frequently Asked Questions Regarding Customer Due Diligence Requirements for Financial Institutions, April 3, 2018.
12 FinCEN, Anti-Money Laundering and Countering the Financing of Terrorism National Priorities, June 30, 2021.
13 Interagency Guidance on Third-Party Relationships: Risk Management, 88 Fed. Reg. 37920, June 9, 2023.
14 Board, FDIC and OCC, Sound Practices to Strengthen Operational Resilience, Oct. 30, 2020.
15 SR letter 21-3/CA letter 21-1, Supervisory Guidance for Boards of Directors of Domestic Bank and Savings and Loan Holding Companies with Total Consolidated Assets of $100 Billion or More (Excluding Intermediate Holding Companies of Foreign Banking Organizations Established Pursuant to the Federal Reserve’s Regulation YY) and Systemically Important Nonbank Financial Companies Designated by the Financial Stability Oversight Council for Supervision by the Federal Reserve.
SEC’s Division of Trading and Markets Issues New FAQ Guidance on Broker-Dealer Custody and Net Capital Treatment of Cryptoassets
The Securities and Exchange Commission (SEC) has taken a significant step toward permitting broker-dealers to custody digital assets and toward accounting for such proprietary digital assets in a broker-dealer’s net capital computation. On May 15, 2025, the SEC’s Division of Trading and Markets released a new FAQ titled “Frequently Asked Questions Relating to Crypto Asset Activities and Distributed Ledger Technology,” while simultaneously withdrawing its 2019 Joint Statement with the Financial Industry Regulatory Authority (FINRA) on the broker-dealer custody of digital asset securities. The new FAQ marks a notable shift from Division staff’s cautious approach in the 2019 Joint Statement, offering more practical pathways for broker-dealers to establish possession and control over “crypto assets that are securities”, in compliance with Rule 15c3-3 under the Securities Exchange Act of 1934, as amended (Customer Protection Rule). The update follows the SEC’s April roundtable on crypto custody challenges.
Previous SEC and FINRA Guidance on Custody of Cryptoasset Securities
The SEC’s 2019 Joint Statement with FINRA took a notably cautious stance on broker-dealer custody of “digital asset securities.” That statement expressed significant concerns about whether broker-dealers could comply with the Customer Protection Rule when custodying digital asset securities, emphasizing that digital assets create risks of fraud, theft and irreversible transfers.
This earlier guidance effectively steered broker-dealers away from direct custody by suggesting that “noncustodial activities involving digital asset securities do not raise the same level of concern.” The statement provided examples of permissible non-custodial models while explicitly stating that broker-dealers “may find it challenging to comply” with the Customer Protection Rule’s possession or control requirements when custodying digital asset securities directly. As indicated above, the SEC and FINRA withdrew this Joint Statement concurrently with the SEC’s issuance of the FAQ guidance.
The SEC followed the 2019 Joint Statement with the 2020 “Special Purpose Broker-Dealer” statement (SPBD Statement). This five-year position (set to expire in April 2026) outlined nine specific circumstances under which a broker-dealer would not face SEC enforcement action for deeming itself to have possession or control of customer digital asset securities. These conditions included requiring the broker-dealer to limit its business exclusively to digital asset securities, implement policies to assess distributed ledger technology, demonstrate exclusive control over private keys, establish procedures for responding to blockchain disruptions, and provide specific disclosures to customers about the risks of digital asset securities. The SPBD Statement remains in effect, but Commissioner Hester Peirce solicited comments during the Crypto Custody Roundtable on whether it should be withdrawn and, as discussed below, the new FAQ guidance ameliorates some of the impact of the rigid SPDB Statement.
New Pathway for Broker-Dealer Custody of Cryptoassets
The new FAQ represents a clear shift in approach. Most significantly, the Division clarified in Question 3 of the FAQ that the SEC’s 2020 SPBD Statement’s framework is not mandatory for broker-dealers seeking to custody customer cryptoassets that are securities. Instead, the FAQ states plainly that “a broker-dealer carrying crypto asset securities for a customer or PAB account may establish control under paragraph (c) of Rule 15c3-3.”
This guidance effectively opens standard “good control location” provisions to cryptoasset securities, even acknowledging in Question 2 that “the Staff will not object if such crypto asset securities are not in certificate form when held at an otherwise qualifying control location under paragraph (c) of Rule 15c3-3.” These clarifications remove significant barriers that previously limited broker-dealer participation in digital asset markets. Importantly, the FAQ also makes clear (see FAQ #1) that the possession and control requirements of the Customer Protection Rule do not apply to cryptoassets that are not securities.
Significantly, the new FAQ #4 clarifies that proprietary positions in bitcoin and ether are “readily marketable” and, therefore, may be used in the broker-dealer’s net capital computations, subject to the same haircut treatment as other commodities under Appendix B of SEC Rule 15c3-1. This is a substantial concession from the SEC’s previous requirement of a 100% haircut for these cryptoassets. The FAQ also provides helpful analysis on the application of SIPA and transfer agent requirements to crypto assets that are securities.
Terminology and Scoping Questions Remain
Despite providing guidance on custody of cryptoassets by broker-dealers and other regulatory requirements, the FAQ leaves for another day how one should determine whether a cryptoasset is or is not a security. (SEC Crypto Task Force Chair Hester Pierce, in her statement announcing the FAQs characterized them as an “incremental step along the journey”). The FAQ uses the phrase “crypto asset that is a security” throughout the document without definition, leaving market participants to decide for themselves which tokens might fall under this classification.
Determining whether a cryptoasset transaction constitutes an investment contract and thus a security requires a transaction-by-transaction analysis under the Howey test and its progeny. Courts have consistently held that digital assets themselves are not inherently securities, but rather certain offerings, sales, or transactions involving those assets may constitute investment contracts.[1] The FAQ’s terminology does not fully reflect this important distinction, and questions over the meaning of the term “crypto asset securities” continue to linger. The FAQ nevertheless provides important guidance for those cryptoassets clearly characterized one way or the other and sets up “plug-and-play” guidance as the SEC answers the ultimate question of cryptoasset security status.[2]
[1]See, e.g., SEC v. Ripple Labs, Inc., No. 20 Civ. 10832 (S.D.N.Y. July 13, 2023).
[2] See Katten’s Quick Reads coverage of recent SEC staff statements regarding the classification of memecoins, proof-of-work mining, stablecoins here and here.
United States: Y’all Street to Attract Business With “Pro-growth” Legislation
Growing corporate and financial industry interest in Texas as a viable alternative to Delaware for incorporation is creating a trend, which is being called “Dexit.”
Consistent with Texas’s Dexit goals, on 14 May 2025, Texas Governor Greg Abbott signed a series of bills aimed at enhancing the state’s corporate legal framework and reinforcing its reputation as a “business-friendly” jurisdiction. The newly enacted legislation includes Senate Bill 29, which significantly alters shareholder litigation standards by, among other things:
Codifying the business judgment rule by offering broader legal protections for corporate directors and officers; and
Authorizing corporations to establish a minimum ownership threshold for shareholders seeking to initiate derivative lawsuits, which may not exceed 3% of the corporation’s outstanding shares.
Senate Bill 1058 supports the operation of the Texas Stock Exchange, among other exchanges, by excluding from an exchange’s revenue, for tax purposes, rebate payments made to a broker-dealer as part of a securities transaction. Indeed, House Joint Resolution 4 (H.J.R. 4), if approved by voters in November, would establish a constitutional amendment to ban certain taxes on stock exchange transactions.
Texas House Speaker Dustin Burrows stated that these legislative developments “will make Texas the most competitive state for stock exchange[s].” Representatives of each of the Texas Stock Exchange, which is preparing to launch in 2026, the NYSE and Nasdaq were at the bill signing ceremony.
Brussels Regulatory Brief: April 2025
Antitrust and Competition
European and UK Antitrust Enforcers Impose Fines Over End-of-Life Vehicles Recycling Cartel
On 1 April 2024, both the European Commission (the Commission) and the UK Competition and Markets Authority (CMA) fined major car manufacturers and trade associations for participating in a 15-year long cartel concerning end-of-life vehicle recycling. The Commission’s and CMA’s decisions highlight the authorities’ interest in pursuing novel theories of harm that may have an adverse impact on the green transition.
Financial Affairs
EU Institutions Finalize Omnibus I; EFRAG adopts Work Plan to Simplify ESRS
The European Parliament and the Council of the European Union finalized the legislative procedure for Omnibus I, while the European Financial Reporting Advisory Group (EFRAG) adopted the work plan detailing next steps for European Sustainability Reporting Standards (ESRS) simplification.
Commission Presents Savings and Investments Union
The Commission presented its Savings and Investment Union, outlining future legislative and nonlegislative initiatives to strengthen EU capital markets.
Sanctions
European Court of Justice Confirmed that the Ban on the Export of EU Banknotes to Russia Also Applies when the Money Is Intended to Finance Medical Treatments
The European Court of Justice ruled that only amounts strictly necessary for travel and basic living expenses may be brought into Russia.
Antitrust and Competition
European and UK Antitrust Enforcers Impose Fines Over End-of-Life Vehicles Recycling Cartel
On 15 March 2022, the European Commission (Commission) and the UK Competition and Markets Authority (CMA) conducted parallel unannounced inspections (dawn raids) at the premises of companies and trade associations active in the automotive sector in several EU member states and in the United Kingdom. On 1 April 2025, the Commission fined 15 major car manufacturers and a trade association a total of approximately €458 million for participating in a 15-year-long cartel concerning the recycling of end-of-life vehicles (ELVs), i.e., cars that are no longer fit for use, either due to age, wear and tear, or damage. On the same day, the CMA imposed fines against 10 car manufacturers and two trade associations of approximately £77.7 million for breaching UK competition law for a similar conduct affecting the UK market.
Both the Commission and the CMA found that the parties infringed EU and UK competition law by colluding on two aspects:
Car manufacturers agreed not to pay car dismantlers for processing ELVs and shared commercially sensitive information on their individual agreements with car dismantlers. The car dismantlers were therefore unable to negotiate a price with the car manufacturers.
The parties also agreed not to advertise how ELVs could be recycled, recovered, and reused, and how much recycled materials are used in new cars. The Commission stated that the car companies’ objective was to prevent consumers from considering recycling information when choosing a car, which could lower the pressure on companies to improve their environmental efforts and go beyond legal requirements on recyclability.
The Commission’s and CMA’s investigations involved trade associations that were found to act as a facilitator of the cartel by arranging meetings and contacts between car manufacturers.
Both investigations were triggered by a leniency application submitted by one of the cartel participants. As this participant has revealed the cartel, it was not fined and received full immunity from penalties. In addition, all companies admitted their involvement in the cartel and agreed to settle the case, which reduced the fine by 10% in the Commission’s investigation and 20% in the CMA’s investigation.
Teresa Ribera, executive vice president for Clean, Just and Competitive Transition, commented:
We will not tolerate cartels of any kind, and that includes those that suppress customer awareness and demand for more environmental-friendly products. High quality recycling in key sectors such as automotive will be central to meeting our circular economy objectives, not only to cut waste and emissions, but also to reduce dependencies, lower production costs and create a more sustainable and competitive industrial model in Europe.
The Commission also stated that this investigation was the largest settlement case it has concluded so far. This shows that the Commission can use the settlement procedure in exceptionally large settlement cases. Also, this parallel investigation illustrates the Commission’s and the CMA’s close coordination in investigating novel theories of harm that may have an adverse impact on the green transition.
Financial Affairs
EU Institutions Finalize Omnibus I; EFRAG Adopts Work Plan to Simplify ESRS
On 3 April, the European Parliament approved the text of the first part of the Omnibus package (Omnibus I). Omnibus I postpones the application date of the reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) by two years for certain groups of companies, and it also postpones the transposition deadline as the first wave of application of the Corporate Sustainability Due Diligence Directive by one year. Members of the European Parliament (MEPs) largely supported the proposal: 531 voted in favor, 69 against, and 17 abstained. The pro-European political groups (the European People’s Party, the Socialists and Democrats, and Renew Europe) were able to reach an agreement to approve the content of the proposal a few hours before the votes. Further, the final text of Omnibus I was published in the Official Journal of the European Union on 17 April and is now in force at the EU level. The directive mandates member states to transpose it into national law by 31 December 2025.
In a related development, the European Financial Advisory Reporting Group (EFRAG) adopted its work plan on the simplification of European Sustainability Reporting Standards (ESRS) under CSRD. This review is part of EFRAG’s broader mandate to assess the entire ESRS framework, as set out in a mandate letter from Commissioner Maria Luís Albuquerque. EFRAG is expected to submit its technical advice to the Commission by 31 October 2025.
Now that the first part of the package is completed, MEPs and member states at the Council of the European Union are discussing internally their approach to the second part (Omnibus II), which introduces substantial simplification amendments to the obligations and requirements notably comprised in these two frameworks. Check this article for a summary of the proposed amendments by Omnibus II.
Commission Presents Savings and Investments Union
On 19 March, the Commission issued a Communication on the Savings and Investments Union, seeking to offer EU citizens broader access to capital markets and better financing opportunities for businesses. The strategy focuses on four key pillars: (i) citizens and savings, (ii) investments and financing, (iii) integration and scale, and (iv) efficient supervision in the single market. For each pillar, the Commission underlined both legislative and nonlegislative actions to be adopted throughout 2025 and 2026.
For citizens and savings, the Commission underlined that it would facilitate negotiations between the European Parliament and member states on the Retail Investment Strategy, but it will not hesitate to withdraw the proposal if the negotiations do not meet the objectives of the strategy. Key initiatives include a review of pension frameworks to bolster retail investor participation, a financial literacy strategy by Q3 2025, and a EU-wide framework for savings and investment accounts. For the investment and financing pillar, the Commission aims to facilitate equity investments by institutional investors, revise Solvency II criteria for long-term equity investments, and streamline securitization requirements by mid-2025, with additional reforms targeting private market liquidity due in 2026.
On integration and supervision, the Commission plans to reduce capital market fragmentation and enhance cross-border activity through emerging technologies such as artificial intelligence, simplifying rules for asset managers and potentially reviewing the Shareholders Rights Directive. In the context of capital markets integration, the Commission launched a public consultation to gather views on obstacles to financial markets integration across the European Union. On oversight, reforms to the European Supervisory Authorities could delegate supervisory powers to EU-level bodies, particularly for crypto services and large cross-border managers.
The Commission will conduct a midterm review of the strategy by mid-2027 to assess progress and refine initiatives.
Sanctions
European Court of Justice Confirmed that the Ban on the Export of EU Banknotes to Russia Also Applies when the Money Is Intended to Finance Medical Treatments
Under EU sanctions imposed on Russia, it is prohibited to sell, supply, transfer, or export banknotes denominated in any official currency of an EU member state to Russia or to any natural or legal person, entity, or body in Russia, including the Russian government and the Central Bank of the Russian Federation, or for use in Russia. Only three limited exemptions to this general ban exist: (i) export of banknotes for the personal use of natural persons traveling to Russia or members of their immediate families traveling with them, (ii) export of banknotes for the official purposes of diplomatic missions, or (iii) export necessary for civil society and media activities that directly promote democracy, human rights, or the rule of law in Russia.
In case C-246/24, Generalstaatsanwaltschaft Frankfurt am Main, delivered on 20 April 2025, the European Court of Justice addressed the situation where German customs officers discovered a passenger heading to Russia carrying nearly €15,000 in banknotes. The passenger stated the money was intended not only for travel costs but also for medical procedures in Russia, including dental work, hormone therapy for fertility, and follow-up care after breast surgery. Authorities confiscated most of the money, permitting the passenger to retain around €1,000 for travel-related needs.
The court ruled that carrying banknotes to Russia for medical treatment does not qualify as personal use under the exemption. The court reiterated that exceptions are to be interpreted strictly so that general rules are not negated. A broad interpretation of the exemption would result in a situation where it would be possible to transfer to Russia, without restriction, large sums of banknotes to make personal purchases of any kind there, and, moreover, it would be difficult to verify that such purchases are carried out.
The exemption in question is limited to covering costs directly related to the journey and stay—medical treatments do not fall within that scope, as the EU sanctions are ultimately intended to prevent the Russian economic system from gaining access to cash denominated in any currency of a EU member state to support Russia’s activities in the war in Ukraine.
Additional Authors: Petr Bartoš, Vittoriana Todisco, Kathleen Keating, Sara Rayon Gonzalez, Covadonga Corell Perez de Rada, Simas Gerdvila, Edoardo Crosetto, and Martina Pesci.
CFPB Update: Policy and Leadership Changes Further Belief the Consumer Protection Agency Has Lost (Most of) Its Bite
Changes regarding the future of the Consumer Financial Protection Bureau (CFPB), including both the agency’s leadership and its policy priorities, have been rapidly announced by the Trump administration.1 While the consumer finance industry had not predicted the leadership issue, the policy announcement reflects a consistent approach to “downsizing” the agency to focus on a limited range of policy objectives.
McKernan Is Out as the President’s Nominee to Lead the CFPB
Jonathan McKernan previously served as a director on the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) as a Republican participant nominated in 2023 by President Biden. Since his resignation from the FDIC Board on February 10, McKernan had been biding his time as the President’s pick to lead the CFPB. On Friday, May 9, however, US Treasury Secretary Scott Bessent announced that McKernan would shortly be nominated as President Trump’s nominee for undersecretary of domestic finance at the US Treasury. The announcement surprised the consumer finance industry, as confirmation hearings had been held in late February 2025 before the Senate Banking Committee, and Sen. Tim Scott (R-SC) had said as recently as April 8 that McKernan could be confirmed “sometime probably in May.”2
As of the date of this advisory’s publication, the Trump administration has not announced an official reason for the change in McKernan’s proposed administration position. Banking trade groups have reacted very positively to McKernan’s appointment to the US Treasury position.3 It appears likely that Acting Director Russell Vought, who concurrently serves as Trump’s Director of the Office of Management and Budget and acting director of the CFPB, will continue in his consumer protection agency role on an acting basis. Notably, having a “dual-hatted” employee who is responsible for ensuring compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act’s provisions related to consumer protection has a basis in the Trump 1.0 administration. Specifically, Mick Mulvaney served as Trump’s Director of the Office of Management and Budget while also serving as acting director of the CFPB from November 2017 to December 2018.
CFPB Policy Priorities
In addition to the personnel announcement noted above, the CFPB announced on Friday via publication in the Federal Register4 that certain previously issued guidance, interpretive rules, policy statements, and advisory opinions would no longer be “enforced or otherwise relied upon” in connection with the agency’s supervisory and enforcement powers while the agency continues a review mandated by Vought to determine “whether [such guidance or interpretive material] should ultimately be retained.”5 As the May Announcement describes, the agency’s “current policy [is] to avoid guidance except where necessary and where compliance burdens would be reduced rather than increased.”6 Moreover, the rescission of such materials is claimed to support “President Trump’s directives to deregulate and streamline bureaucracy.”7
With over 60 prior policies or guidance documents rescinded, the breadth of the rescissions touches every aspect of consumer finance. Included in the May Announcement are policy statements related to consumer complaint data (including narrative data), interpretive rules related to the authority of states to enforce consumer financial protections, advisory opinions on the collection of time-barred debt, and guidance related to whistleblower protections under the Consumer Financial Protection Act.
Finally, we note that the CFPB previously announced its de-prioritization of guidance related to Buy Now Pay Later products on May 6 although it was also included in the May Announcement.8
What This Means
Clearly, the compliance burdens imposed upon providers of consumer financial products and services have been mitigated, if not nearly wholly abandoned, at the federal level. While the May Announcement makes clear that the CFPB’s review of the rescinded materials is ongoing, the reinstatement of any of the rescinded agency materials seems highly doubtful. While the CFPB may no longer have “teeth” in connection with compliance obligations previously applicable to these consumer finance practice areas, it is widely expected that private plaintiffs as well as “blue state” attorneys general and banking regulators will largely seek to fill any perceived void. To that end, banks and consumer finance companies should be vigilant in their efforts to mitigate compliance and litigation risks as violations of federal law premised in unfair and deceptive practices, fraud and/or statutory requirements often provide a basis for private and regulatory action.9
1 See Katten’s prior advisory on the CFPB’s priorities at https://katten.com/cfpb-suggests-shift-in-supervision-and-enforcement-priorities.
2 American Banker, “Senate eyes May for CFPB nomination vote, Scott says,” April 8, 2025, available at https://www.americanbanker.com/news/senate-eyes-may-for-cfpb-nomination-vote-scott-says.
3 See, for example, a statement by the American Bankers Association President and CEO Rob Nichols: https://bankingjournal.aba.com/2025/05/trump-nominates-mckernan-for-treasury-department-role/.
4 90 Fed. Reg. 20,084 (May 12, 2025) (FR Doc. 2025-08286), available at https://public-inspection.federalregister.gov/2025-08286.pdf (May Announcement).
5 Id.
6 Id.
7 Id.
8 CFPB Announcement Regarding Enforcement Actions Related to Buy Now, Pay Later Loans, CFPB (May 6, 2025), available at https://www.consumerfinance.gov/about-us/newsroom/cfpb-announcement-regarding-enforcement-actions-related-to-buy-now-pay-later-loans/.
9 See, for example, the Truth in Lending Act’s private right of action set forth at 15 U.S.C. § 1640.
Europe: Ireland Agrees Mutual Recognition of Funds Framework With Hong Kong
The Central Bank of Ireland (CBI) and the Securities and Futures Commission of Hong Kong (SFC) entered into a Memorandum of Understanding on 14 May 2025 establishing a framework for the mutual recognition of funds (MRF) between the two jurisdictions.
SFC developed the MRF programme to streamline the distribution of partner country funds to the public in Hong Kong and of Hong Kong funds in partner countries. Ireland is the sixth European partner country to participate in the framework following Switzerland, France, the UK, Luxembourg and the Netherlands. As part of the programme, the SFC has launched a new Fund Authorisation Simple Track scheme, known as FASTrack, which allows for authorisation in Hong Kong of MRF eligible funds within 15 business days.
As part of its agreement with the CBI, the SFC has announced that the following Irish UCITS funds will meet its MRF eligibility requirements:
(a) General equity funds, bond funds, mixed funds and funds that invest in other schemes;(b) Feeder funds where the underlying funds fall within (a), (c), (d) or (e).(c) Unlisted index funds;(d) Passively managed index tracking ETFs; and(e) Listed active ETFs.
In addition, the UCITS must have a CBI authorised management company meeting certain capital requirements, appoint a Hong Kong based representative and comply with applicable Irish domestic laws and regulations relating to the sale, distribution and ongoing compliance of funds.
The inclusion of ETFs is notable and will amplify focus on accessing the ETF Connect programme between Hong Kong and Mainland China and further discussions as to whether there may be a future entry point for Irish ETFs.
Overall, this is a very welcome development for Irish UCITS funds and should increase Hong Kong’s attractiveness as a target country for distribution.
Global Trade in 2025: Outbound Investment Restrictions
Motivated by a rapidly evolving geopolitical climate, governments around the globe have increasingly scrutinized and intervened in transactions under foreign direct investment (FDI) screening regimes in recent years. Rising protectionism, concerns over cybersecurity threats, Covid-19 and the desire to protect critical domestic industries have driven the expansion of FDI regimes beyond purely national security or defense specific industries.
More than 100 jurisdictions now apply FDI screening in some form. The notification triggers and review processes vary significantly between these regimes, and their proliferation has significantly increased complexity for investors planning cross-border investments.
The New Frontier: Outbound Investment Screening
Having spent the last few years building and/or refining inward investment screening, governments are now turning to outbound investment screening, amidst concerns about economic dependence and technology leakage. Governments are increasingly concerned about offshoring of critical capabilities, which can facilitate the development of sensitive technologies in potentially hostile states and lead to over reliance on third countries, creating economic dependencies that can be exploited for geopolitical purposes.
The People’s Republic of China (PRC), Japan, South Korea and Taiwan already have outbound investment screening for domestic entities, primarily in sectors considered critical to national security and technological competitiveness. The US and Europe are now catching up, with US screening for outbound investments into certain sectors in “Countries of Concern” applicable from January 2025, and the EU launching an outbound investment monitoring exercise in similar categories of critical technology. While the EU and UK have not implemented formal outbound investment screening, each has signaled its concerns.
US: Outbound Investment Program (Executive Order 14105)
Regulatory expansions to maintain US technological leadership have included rules to monitor and restrict outbound investment – so-called “reverse CFIUS.” On August 9, 2023, President Biden issued Executive Order 14105 – “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern.” On October 28, 2024, the US Department of the Treasury issued final regulations implementing Executive Order 14105, which address investments by US persons in certain identified technologies in “Countries of Concern”, including PRC and the Special Administrative Regions of Hong Kong and Macau.
The regulations, which became effective January 2, 2025, prohibit certain transactions by US persons implicating highly strategic technologies, and create a post-closing notification requirement for certain other transactions. Under the regulations, the obligations on US persons will apply if such person has actual or constructive knowledge of relevant facts or circumstances relating to a transaction. A US person has such knowledge under the regulations if it possesses actual knowledge that a fact or circumstance exists or is substantially certain to occur; an awareness of a high probability of the existence or future occurrence of a fact or circumstance, or could have possessed such awareness through a reasonable and diligent inquiry.
The categories of covered transactions include the acquisition of an equity interest or a contingent equity interest, certain debt financing that grants certain rights to the lender, the conversion of a contingent equity interest, certain “greenfield” investments (building a new facility) or other corporate expansions, the entry into a joint venture, and certain investments as a limited partner or equivalent (LP) in a non-US person pooled investment fund. Excepted transactions include investments in publicly traded securities, certain LP investments with a threshold of $2,000,000, derivatives, buyouts of country of concern ownership, intracompany transactions, certain pre-final rule binding commitments, certain syndicated debt financings, and equity-based compensation.
The regulations apply to the conduct of US persons only and defines a US person as “any United States citizen, lawful permanent resident, entity organized under the laws of the United States or any jurisdiction within the United States, including any foreign branch of any such entity, or any person in the United States.” Under the America First Investment Policy issued in February 2025, the US administration is considering new or expanded restrictions on US outbound investment in the PRC in sectors such as semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy.
EU: Market Monitoring to Inform Future Policy on Outbound Investment Screening
On January 15, 2025, the European Commission published a Recommendation on reviewing outbound investments in technology areas critical for the economic security of the Union. The Recommendation asks EU Member States to review investments made between January 2021 and June 2026 by EU-based investors into third countries in three critical technologies for economic security: semiconductors, artificial intelligence and quantum technologies.
The EU Recommendation applies to acquisitions, mergers, “greenfield” investments, joint ventures, venture capital investments and the transfer of certain tangible and intangible assets, including IP or know-how. Non-controlling investments limited to seeking a return on invested capital are excluded. Member States are requested to gather information through mandatory or voluntary notification processes, and to perform a risk assessment of covered transactions with the European Commission.
The EU Recommendation covers the same three technologies as the US outbound regulations, although some of the definitions are narrower. The US outbound regulations also apply to non-controlling investments, although in other respects the EU Recommendation is wider because it covers all third countries as well as IP licensing.
This will be a significant information gathering exercise for transaction parties, Member States and the European Commission, with Member State progress reports due in July 2025 and final reports in July 2026. The review will inform a decision on whether further action is needed to regulate outbound investment at EU and/or national level.
In the meantime, Member States are continuing to expand FDI screening regimes for inward investment, with Ireland’s the latest to come into force in January, and Greece publishing its proposed screening framework in April. On May 8, 2025, the European Parliament endorsed revised rules for screening foreign investments into and within the EU. Under the proposed new rules, certain sectors such as critical raw materials and transport infrastructure will be subject to mandatory FDI screening by Member States. National procedures will be harmonized, and the Commission will have the power to intervene. Member States are now negotiating the text of the legislation, currently aiming to reach agreement in June.
UK: Position on Outbound Investment
In May 2024, the UK government published updated guidance on the National Security and Investment Act (NSIA), emphasizing that it can apply to “outward direct investment” from the UK. The NSIA may apply to the acquisition of an entity or asset outside the UK if the entity carries on activities in the UK or supplies goods or services to the UK, or the asset is used for these purposes.
This is not a change. It has been the position since the NSIA came into force in January 2022. However, it is noteworthy that the UK government chose to underline these powers and provide examples of when the NSIA would apply to acquisitions of a non-UK entity or asset.
The UK government has indicated that it is considering more substantive rules on outward investment screening, to complement the existing tools of export controls and inbound investment screening.
Strategies For Asset Managers to Mitigate Risks to Deal Certainty, Timelines and Costs
Conduct outbound investment reviews early in the deal process to assess exposure to “countries of concern” (e.g., China, Hong Kong, Macau).
Screen for sector sensitivity — artificial intelligence, quantum technology and semiconductors.
Include side-letter language addressing outbound investment screening compliance.
Diligence efforts should conform to the knowledge standard in the US outbound regulations and include:
inquiries to the relevant counterparty (e.g. the prospective portfolio company, fund manager or seller).
contractual representations or warranties that the target portfolio company does not engage in the in-scope technologies; or that the target fund is not a covered foreign person.
consideration of relevant public and non-public information, including the use of available public and commercial databases to verify information provided by the counterparty.
Monitor the evolving regulatory landscape and be prepared to adjust investment strategies and structures accordingly. Understanding the underlying policy drivers will enable investors to navigate regimes more effectively and reduce execution risk.
And finally…reconsider your government relations strategy: governments are trying to strike a balance between protecting national interests and encouraging investment, so they are continually seeking feedback and there are many opportunities to shape the policy debate.
Todd J. Ohlms, Robert Pommer, Seetha Ramachandran, Nathan Schuur, Jonathan M. Weiss, Mary Wilks, William D. Dalsen, Adam L. Deming, Adam Farbiarz, and Hena M. Vora contributed to this article
Private Equity in Australia: Upcoming Mandatory Merger Laws and Foreign Investment Changes
WHAT’S ON THE AUSTRALIAN REGULATORY HORIZON?
In this publication, we provide an overview of certain upcoming changes for private equity funds and their investors (both Australian and foreign) investing in Australia.
The key takeaways are set out below.
New Mandatory Merger Control Regime
A new mandatory merger control notification regime will be introduced effective from 1 January 2026, with transitional provisions starting from 1 July 2025.
Draft Guidelines by the Australian Competition and Consumer Commission (ACCC) and draft Determinations by the Australian Government have been released for consultation. However, there remains uncertainty about several matters, including how a “change of control” and calculation of monetary thresholds are intended to operate in a private equity context. Future government Determinations may clarify these issues. We are working with industry to make submissions to the government to clarify these issues in a manner that does not “chill” investment.
The government has also published draft notification forms under the draft Determination which require merger parties to specify whether their Sale and Purchase Agreement (SPA) contains any goodwill protection provisions (including noncompetes and restraints of trade). The ACCC will now have the power to declare that the existing “goodwill exemption” to the cartel conduct provisions under the Competition and Consumer Act 2010 (Cth) (CCA) does not apply if it considers that a particular noncompete, restraint of trade or other goodwill protection provision was not necessary for the protection of the purchaser in respect of the goodwill of the target business.
Foreign Investment Framework–Updates for Foreign Private Equity Funds and Foreign Investors
It is currently unclear how the new merger regime (and the ACCC) will interact with the foreign investment framework (and Foreign Investment Review Board (FIRB) processes), including the interaction between the FIRB and ACCC waiver regimes–detailed guidance is yet to be released.
The final stage of Treasury’s new Foreign Investment Portal (the Portal) is expected to launch by the end of May 2025, after which the entire FIRB application process (including communications with Treasury) will be facilitated electronically through the Portal.
Treasury recently released updated the Guidance Note 12–Tax Conditions, which interestingly removed the “standard tax conditions” but included more examples of tax conditions that may be imposed by the Australian Taxation Office (ATO) and Treasury on a case-by-case basis. In addition, it includes an updated tax checklist which the ATO now expects to be answered at the same time as lodging the FIRB application (rather than the current practice of seeking to defer this to after lodgement). Treasury has also updated Guidance Note 10–Fees to introduce a refund/credit scheme for filing fees in an unsuccessful competitive bid.
Next Steps
We will continue to update you on further developments in relation to the new merger control and foreign investment regime, including release of the subordinated merger legislation, which will, amongst other things, determine the final monetary thresholds by which merger notification will be required.
UPCOMING MANDATORY MERGER NOTIFICATION LAWS
In Australia, the merger control regime is underpinned by section 50 of the CCA, which prohibits mergers or acquisitions that would substantially lessen competition (SLC Rule) in any market in Australia.
While at present it is not compulsory for acquisitions to be notified to the ACCC, the Australian Government has passed the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024 (Cth) (the Act) such that as of 1 January 2026, a new mandatory and suspensory merger control regime will be introduced.
Under the new regime:
Any acquisitions of shares, assets, units and other defined interests involving a “change of control” that meet certain monetary thresholds (outlined further below) will be required to be notified to the ACCC and approved (i.e. determined that they do not breach the SLC Rule) prior to completing.
The SLC Rule has been broadened to encompass scenarios where a merger or acquisition results in the “creation, strengthening, or entrenchment of a substantial degree of market power”, not just a lessening.
Businesses can use the Clearance Procedure voluntarily from 1 July 2025, and it will be mandatory from 1 January 2026.
Thresholds–When Notification is Required
Set out on the next page is a flowchart which illustrates which transactions must be notified to the ACCC under the new regime:
Source: James Gray, K&L Gates LLP
As set out above, whether a transaction must be notified to the ACCC essentially depends on whether it results in a “change of control”, and if so, whether it meets certain monetary thresholds. Set out below is some additional detail on the change of control requirements and the monetary thresholds, noting that there remains uncertainty about how these are intended to operate in a private equity scenario.
Future government Determinations may clarify these issues. We are working with industry to make submissions to the government to clarify this issue in a manner that does not “chill” investment.
Control Threshold
A “change of control” is enlivened in respect of acquisitions of full or partial interests in shares, unit trusts and managed investment schemes. Acquisitions that do not result in a change in control are not required to be notified.
“Control” will be defined having regard to section 50AA of the Corporations Act 2001 (Cth) (Corporations Act)–i.e. as being the capacity to determine the outcome of decisions about an entity’s financial and operating policies.
We note that there is a degree of certainty regarding “control” issues. While the Act provides a “safe harbour” from the notification requirements for acquisitions of interests of less than 20%, the government has also foreshadowed that it intends to use its designation powers to require transaction parties to notify the ACCC of acquisitions of less than 20% of the voting rights in private/unlisted companies, where one of the parties to the transaction has an Australian turnover of more than AU$200 million.
This issue was not addressed in the Consultation Draft of the Determination published by the government on 28 March 2025, which otherwise provided considerable detail about the Mandatory Regime, including the information and documentary requirements that will be required to be provided to the ACCC. For more detail about the Determination, click here. Future government Determinations may clarify this issue.
Acquirer Turnover Thresholds
More generally, there is uncertainty as to how the acquirer “turnover thresholds” will be assessed for the economy-wide, large acquirer and serial acquirer thresholds for private equity investments, particularly in relation to:
Taking into account the turnover of “connected entities” (being associated entities for the purposes of section 50AAA of the Corporations Act and entities controlled by a principal party for the purposes of section 50AA of the Corporations Act) to calculate acquirer turnover in a private equity fund context given these Corporations Act concepts do not necessarily fit neatly with private equity fund structures, which may also include cross-shareholdings and cross-directorships.
The creation of a “new” fund for the purposes of industry or deal-specific investments.
Certain changes to the limited partners of a private equity fund (including secondaries) after a primary portfolio acquisition.
Where the fund is seeking to acquire interests/minority interests in entities.
Again, future government Determinations may clarify this issue (e.g. to have regard to the turnover of the specific portfolio company or specific fund only).
For exits which meet the notification thresholds, private equity funds and investors should anticipate longer approval timelines and increased regulatory oversight and cost, potentially influencing deal structuring and exit strategies.
Private equity funds and their portfolio companies must also consider the cumulative competitive impact of their acquisitions in the immediately preceding three-year period, as the ACCC can now assess these transactions together, even if they were not individually reported. This will be particularly relevant to private equity funds and their portfolio companies engaged in “bolt-on” and “roll-up” acquisitions to existing portfolio companies to enhance value. To stay compliant, portfolio entities should track target sales generated at the time of acquisition and in the following years to determine if future deals fall within the relevant monetary thresholds and therefore require notification.
Process Changes–Clearance Timelines and Notification Fees
The new merger regime imposes statutory timelines for the ACCC’s consideration of transactions. We will provide further detail on these timelines in a forthcoming Insight on the ACCC’s draft Merger Process Guidelines.
Treasury has also indicated that it expects notification fees to be around AU$50,000 to AU$100,000 for most notifiable transactions. However, an exemption from fees will be available for some small businesses so that the fees are not a disproportionate burden.
These ACCC fees are in addition to any FIRB notification fees that may apply to foreign private equity funds and investors.
Transitional Arrangements
To assist businesses during this transition, the ACCC has released guidance detailing how to navigate the period leading up to the mandatory implementation. Key points include:
Current informal review and merger authorisation processes: Businesses can continue to use the existing voluntary notification regime throughout 2025. Early engagement with the ACCC is advised to ensure sufficient time for assessment before the new regime takes effect.
Voluntary Notification (1 July 2025–31 December 2025): From 1 July 2025, businesses have the option to voluntarily notify the ACCC under the new regime. This provides greater certainty regarding timeframes and ensures that transactions are aligned with the forthcoming mandatory requirements.
Noncompetes, Restraints and Goodwill Protection
Under current laws, noncompetes and restraints of trade included in an SPA are generally exempt from the per se cartel prohibitions to the extent its purpose is solely to protect the goodwill acquired by the purchaser (Goodwill Exemption).
The government has published a draft Determination which provides detail about the forthcoming mandatory merger regime. The draft Determination includes draft notification forms which merger parties will be required to adopt when notifying the ACCC. Notably, merger parties will be required to specify whether their SPA contains any goodwill protection provisions and to specify why they are necessary for the protection of the purchaser in respect of the goodwill of the business.
The ACCC will have the power to declare that the Goodwill Exemption does not apply to any goodwill protection provisions which it considers are “not necessary” for the protection of the purchaser in respect of the goodwill of the target business. A goodwill protection provision (e.g. a noncompete clause) is likely to be deemed as such if the ACCC considers that the duration or geographic scope of the provision is unnecessarily broad. Merger parties should therefore carefully consider the scope of any goodwill protection provisions that they propose to include in any SPA–and ensure that they do not go beyond what is necessary for the sole purpose of protecting the goodwill of the business.
Unnecessarily broad goodwill protection provisions which fall outside the scope of the Goodwill Exemption will expose merger parties to potential liability for engaging in cartel conduct–which is both a criminal and civil offence under the CCA. Merger parties should be aware that even if the ACCC does not object to the goodwill protection provision upon being notified of the transaction, this does not preclude the ACCC from commencing action under the anti-competitive conduct provisions of the CCA in relation to this provision at a later stage.
Interaction with FIRB Regime
FIRB and the Treasury have traditionally consulted with the ACCC about transactions notified to FIRB because competition is a factor relevant to the national interest test in Australia’s foreign investment framework under the Foreign Acquisitions and Takeovers Act 1975 (Cth) and related Foreign Investment Policy and guidance notes.
It is currently unclear how the new merger regime and the ACCC will interact with the foreign investment framework and FIRB processes, including:
How the FIRB waiver regime will operate with the ACCC waiver regime.
How existing FIRB waivers granted by FIRB (after consulting with the ACCC) will operate under the new merger regime.
Whether Treasury may refer to a foreign acquisition to the ACCC for review even if that acquisition does not meet the merger thresholds.
The ACCC has noted in the ACCC’s draft Merger Process Guidelines that it is currently working with the Treasury on the interaction between the foreign investment framework and ACCC’s merger regime and that they will provide further guidance on how the two regimes operate together in due course.
It is expected that an applicant will be able to decide whether to submit a FIRB or an ACCC application first (i.e. there will not be a legal requirement to notify simultaneously, though it may still make sense to do so).
FOREIGN INVESTMENT CHANGES
Recap on Australia’s Foreign Investment Framework and FIRB
Background
Under Australia’s foreign investment framework, foreign persons may be required or encouraged to apply for foreign investment approval prior to taking certain actions. The approval is provided by the Australian Treasurer and confirms that the Commonwealth of Australia does not object to a particular action. It is commonly referred to as “FIRB Approval”, as the Treasurer receives advice from FIRB when deciding whether to approve an action.
Broadly, the framework is comprised of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Foreign Acquisitions and Takeovers Regulations 2015 (Cth). Additionally, Australia’s Foreign Investment Policy and guidance notes provide further commentary and guidance.
Get Legal Advice Early
Australia’s foreign investment framework is complex, factually specific and continually changes. For foreign private equity investors (including sponsors, funds and their portfolio companies), Australia’s foreign investment framework and rules present a threshold issue that needs to be considered across all stages of the private equity investment life cycle against Australia’s foreign investment policy settings. Foreign private equity investors should seek legal advice for each and every investment into Australia to avoid breaching the foreign investment rules.
Other FIRB Updates for Foreign Private Equity Funds and Foreign Investors–Timelines, Lodgement, Tax Conditions and Fees
FIRB has made welcome headway in shortening its response times for straightforward decisions over the last year. Treasury’s new Portal is now live for compliance reporting. The final stage of the Portal is expected to launch by the end of May 2025, after which the entire FIRB application process (including communications with Treasury) will be facilitated electronically through the Portal.
On 14 March 2025, Treasury released updated Guidance Note 12–Tax Conditions. These changes reflect the tax risks and tax conditions that the ATO has been focused on and has imposed when reviewing recent foreign investment applications. Of note:
Interestingly, the guidance note no longer sets out “standard tax conditions” but does include more examples of tax conditions that may be imposed by the ATO and Treasury on a case-by-case basis.
Also included is an updated tax checklist which applicants are usually requested to answer post-lodgement of a FIRB application. However, the ATO now expects that information to be included in the FIRB application itself (rather than submitted during the FIRB review process or, sometimes, within three months of completion if relevant tax information is not available). If that tax information is not included in the initial application, the applicant must disclose why and when the information will be submitted. As noted above, these recent updates to FIRB’s tax guidance and the new Portal are likely to require front-loading of the provision of tax information by applicants.
Treasury has also updated Guidance Note 10–Feesto introduce a refund/credit scheme for filing fees in an unsuccessful competitive bid. This is a positive development; however, care needs to be taken to ensure that relevant eligibility criteria are met by unsuccessful bidders and credits or refunds can be applied in practice. Unsuccessful bidders can elect to take a refund equal to the lesser of 75% of the fee paid or the amount of the fee minus the minimum fee amount, currently AU$4,300 (which must be requested within six months of the unsuccessful bid) or a 100% credit for a subsequent FIRB application made within 24 months of the failed bid. Decisions regarding fee refunds or credits will still be made on a case-by-case basis following application and justification of the refund/credit request by applicants. It will be interesting to see if the new merger regime takes a similar approach to fees for unsuccessful competitive bids.
Overall, these changes are welcome and should assist to further support a shortening of average FIRB approval times but will require more upfront planning and disclosure by foreign applicants.
Departments Press Pause on Final Mental Health Parity Regulations
Yesterday, the Departments of Labor, Treasury, and Health and Human Services announced a non-enforcement policy with respect to final regulations issued under the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) in September 2024. The Departments recently indicated that this policy was imminent when they requested that litigation challenging the final regulations be paused while they considered rescission or modification of the regulations.
The 2024 final regulations, which we blogged about here, included sweeping changes that would have impacted virtually all group health plans that cover mental health and substance use disorder (MH/SUD) benefits.
What the non-enforcement policy does and does not do
The non-enforcement policy states that the Departments will not enforce the final regulations issued in 2024. However, this applies only to the portions of the 2024 final regulations that were “new” in relation to the 2013 final regulations.
What remains in effect: Thus, plan sponsors should keep in mind that MHPAEA and the final regulations issued in 2013 (including subsequent sub-regulatory guidance, such as agency FAQs) remain in place and should continue to be relied upon for guidance. Additionally, the statutory obligation for a plan to maintain non-quantitative treatment limitation (NQTL) comparative analyses for MH/SUD benefits and provide them to the Departments upon request remains in effect. (This statutory obligation was added as part of the Consolidated Appropriations Act, 2021.)
What is paused: The significant changes in the 2024 final rule that were new compared to the 2013 final rule—including the fiduciary certification requirement, the “meaningful benefits” standard, and revised standards for evaluating NQTLs—are all paused for the time being while the Departments reconsider their mental health parity compliance and rulemaking approach.
It bears noting that the Departments stated not only that they intend to reconsider the final rule, but also that they are conducting a “broader reexamination of each department’s respective enforcement approach.” This, and other language in the non-enforcement policy, suggests that the Departments will be looking at whether changes are necessary to balance the important goals of MHPAEA and the burdens that the current enforcement has imposed on plan sponsors.
How long does the non-enforcement policy last?
The Departments will not enforce the 2024 final rule or pursue enforcement actions based on a failure to comply that occurs prior to the final decision in the litigation, plus an additional 18 months. Plan sponsors should monitor subsequent updates from the Departments to confirm compliance.
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Takeaways for group health plan sponsors: Given the challenges plan sponsors have faced in connection with the implementation of the current regulatory and enforcement scheme, the non-enforcement policy is likely welcome news. However, plan sponsors should remain mindful that the 2013 final rule and MHPAEA statutory obligations are still in place and not impacted by the non-enforcement policy. For now, while plan sponsors can pause compliance efforts related to the 2024 final rule, plans may want to consider pressing ahead with any current compliance projects related to the 2013 final rules and statutory obligations related to NQTL comparative analyses.
Feeling the Heat: Renewable Energy Under the Microscope
This article is based on a May 5th Womble Bond Dickinson webinar featuring Kristina Moore and Veronica Renzi.
The temperature is rising for the Renewable Energy Sector as well as related funding sources, such as green banks. The heat is coming from several sources, including:
An expansive fight over obligated federal funding.
Congressional investigations into companies receiving federal financial support.
The potential elimination of tax incentives augmented under the Inflation Reduction Act (IRA).
Rising tariffs.
All these issues are significant factors impacting the renewable energy sector. The IRA, passed under the Biden Administration, remains a particular target for Republican lawmakers, who seek to reclaim as much funding as they can.
Congressional Investigations Ramping Up the Temperature
Comparing it to “Gold bars sliding off the side of the Titanic,” Congressional Republicans have voiced strong objections to the rapid pace that IRA renewable energy funds were allocated.
On Jan. 27, the White House ordered the EPA to halt the spending of IRA obligated funds. Then, a little over a month later, the EPA formally referred the alleged financial mismanagement, conflicts of interests, and oversight failures regarding the Greenhouse Gas Reduction Funds to the Office of Inspector General.
In response, several IRA funding recipients have sued the EPA, seeking the release of already allocated funds. A federal judge issued a temporary restraining order barring the EPA from freezing Greenhouse Gas Reduction Fund allocations, at least until a court can consider the dispute.
However, the D.C. Court of Appeals reversed that decision, restoring the freeze to $20 billion in Greenhouse Gas Reduction Fund allocations. Arguments will be heard May 19 about the future of these funds.
On March 20, the House Oversight Committee sent a letter to the EPA indicating its intention to investigation the policies and IRA funding allocation during the Biden Administration. The letter requested a briefing with committee staff.
Various grant recipients have also received letters from Congressional committees requestion answers to questions about the Greenhouse Gas Reduction Fund.
Many have compared the current Congressional oversight climate to the Solyndra investigations in 2011. The Solyndra investigation focused on a $535 million loan guarantee issued by the U.S. Department of Energy to Solyndra, Inc. Led by the House Oversight and Energy and Commerce Committees, the inquiry sought to assess whether the government’s decision to approve the loan was warranted and to investigate whether Solyndra’s executives had misrepresented the company’s financial stability. No one wants to be that next household name because of a Congressional investigation.
Budget Reconciliation Could Change IRA Support for Sustainable Energy
Based on a budget resolution passed by both houses of Congress, Budget Reconciliation is a process by which lawmakers can avoid a Senate filibuster and pass spending measures with just 51 votes—a key tactic in this closely divided Congress.
Such a bill would include President Trump’s top priorities. These include extending the Tax Cuts and Jobs Act, which passed during his first administration and is set to expire this year.
For Congress to move forward with tax cuts, they also must find cost savings. Such offsets could target IRA sustainable energy-related production tax credit (45Y and 48E) and manufacturing tax credits (45X).
However, industries in that sector are pushing back, making their case for keeping these incentives to bolster domestic energy production to meet the rapidly growing needs of AI data centers. They also point to the need for a predictable investment climate. Companies brought jobs and investments to the U.S. based in part on these IRA tax incentives.
Even if these tax credits survive, they are likely to be modified by Congress moving forward. In terms of timeline, President Trump has requested that the Budget Reconciliation bill be on his desk by July 4. That would require the House to finish their work around Memorial Day and for the Senate to complete its steps by the end of June.
What’s Next: Challenges and Opportunities
In light of these developments, the future of renewable energy funding and the associated legislative landscape remains uncertain. The intense scrutiny from Congressional investigations, coupled with potential policy changes through budget reconciliation, has created a precarious environment for green energy stakeholders.
What happens in the coming months could determine the trajectory of renewable energy in the United States for years to come.
Chairman Atkins Outlines SEC’s New Roadmap for Crypto Reform
In a May 12, 2025 Keynote Address before the U.S. Securities and Exchange Commission (“SEC”) Crypto Task Force’s fourth industry roundtable on digital assets, newly-minted Chair Paul Atkins laid out a sweeping vision for modernizing the U.S. securities framework to accommodate blockchain-based assets. His remarks reflect a sharp departure from his predecessor’s enforcement-heavy stance and outline a more rules-based, innovation-oriented approach.
Atkins likened the move from traditional securities to tokenized instruments to the digitization of music, suggesting that blockchain technology will unlock novel and improved ways to issue, own, and trade assets.
As outlined in the Chair’s address, the SEC’s crypto policy agenda will center around three pillars of issuance, custody, and trading:
Issuance: Atkins criticized the SEC’s failure to adapt Form S-1 and other disclosures to tokenized assets, noting that only four issuers have registered crypto offerings to date. He committed to establishing clear and sensible guidelines for crypto assets that are securities or subject to an investment contract and exploring new exemptions and safe harbors to registration requirements, emphasizing that staff guidance is not a substitute for Commission action.
Custody: Atkins referenced the SEC’s recent rescission of Staff Accounting Bulletin 121—which required custodians to record crypto assets as liabilities and assets on their own balance sheets despite not owning them—calling the guidance an overreach that discouraged lawful custodial services. He pledged clarity on qualified custodian standards and suggested reforms to allow investment advisers and funds to self-custody under certain circumstances. Atkins also raised the possibility of repealing and replacing the “special purpose broker-dealer” framework, which placed strict conditions on custodians of digital asset securities.
Trading: Atkins supported enabling broker-dealers to offer trading in both securities and non-securities, including crypto asset “pairs trading” through which a security is traded against a crypto asset, such as a stablecoin. Atkins directed staff to explore updates to the framework for Alternative Trading Systems—non-exchange trading platforms that facilitate the matching and execution of securities trades—and consider conditional registration exemption relief where appropriate. In addition, Atkins announced that he has directed SEC staff to explore whether further guidance or rulemaking may be helpful to enable the listing and trading of crypto assets on national securities exchanges.
In sum, Chair Atkins’ remarks confirm that the SEC is shifting toward a more transparent, rules-based regime for crypto markets. Firms weighing decisions relating to token issuance, custodial services, or trading platforms should closely monitor coming developments to ensure they are equipped to hit the ground running once new pathways to compliance are formalized.
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CFPB Withdraws Guidance and Proposed Rules on Data Broker, Video Game Payments, and Contract Clauses
On May 15, the CFPB withdrew three Biden-era rulemaking proposals, including a December 2024 proposal to regulate data brokers as consumer reporting agencies under the Fair Credit Reporting Act (FCRA), a January proposal to extend Regulation E to emerging payment systems such as those used in video games and esports betting, and a proposed interpretive rule targeting restrictive and potentially unlawful terms in consumer contracts.
According to the CFPB, the withdrawals stemmed in part from legal concerns raised during the public comment process, including challenges to the statutory basis for the data broker rule under the FCRA. The now-rescinded proposals included the following:
Data broker classification under the FCRA. The data broker classification rule (previously discussed here) would have amended Regulation V to clarify that data brokers selling consumer data such as credit history, income, payment behavior, or personal identifiers, are subject to the FCRA when that data is used for eligibility decisions. The rule aimed to treat certain data sales as “consumer reports,” impose FCRA duties on data brokers operating as consumer reporting agencies, and limit the sale of credit header data to only those with a permissible purpose. It also sought to curb re-identification of de-identified information and restrict use of consumer data for marketing absent clear authorization.
Regulation E protections to emerging payment systems. The proposal (previously discussed here) would have extended Regulation E protections to users of emerging payment tools, such as those used in video gaming system, esports betting and certain virtual currency accounts. The Bureau argued that digital assets like stablecoins fall within the definition of “funds” under the Electronic Fund Transfer Act, and that platforms offering wallet-like services may qualify as “financial institutions.” The rule would have required covered institutions to provide extensive disclosures and imposed liability for unauthorized transfers involving digital assets.
Prohibition of restrictive terms in consumer contracts. The rule (previously discussed here) sought to ban contract clauses that waive consumers’ substantive legal rights, including those that allow unilateral changes to key terms, and those that restrict lawful free expression, such as limitations on public reviews or complaints. The rule would have also codified long-standing provisions of the FTC’s Credit Practices Rule.
Putting It Into Practice: The latest move continues the CFPB’s efforts to pull back from the regulatory priorities of the previous administration (previously discussed here, here, and here). The Bureau has steadily rescinded proposals and guidance issued under the previous administration, signaling a shift toward a narrower, less aggressive regulatory approach (discussed here). As the CFPB scales back, financial institutions can expect other federal agencies and state regulators to continue to pick up their enforcement priorities (previously discussed here, here, and here).
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