Cryptocurrency in 401(k): A Balanced Approach Returns

Takeaway

The 2025 CAR does not alter ERISA’s substantive fiduciary standards and considerations but eases the DOL’s previously hostile enforcement stance toward cryptocurrency and similar digital assets in 401(k) plans, restoring a “neutral” DOL enforcement approach. 401(k) plan fiduciaries must still consider all relevant ERISA factors and apply the necessary care, skill, prudence, and diligence required by ERISA in managing their 401(k) plan fund lineup. They can now feel more assured that a decision to include cryptocurrency in their 401(k) plan will not be subjected to increased scrutiny by the DOL; however, they must remain vigilant regarding the risk of potential participant claims and class actions.

Related Links

Compliance Assistance Release No. 2025-01
Compliance Assistance Release No. 2022-01

Article
On May 28, 2025, the DOL released Compliance Assistance Release No. 2025-01. The 2025 CAR rescinds the DOL’s previous Compliance Assistance Release No. 2022-01 (2022 CAR), issued in 2022, which indicated an unfavorable DOL enforcement stance on including cryptocurrency and similar digital assets in 401(k) plan fund lineups.
In rescinding the prior guidance, the DOL states that the 2022 CAR articulated a standard of care that was inconsistent with ERISA’s fiduciary principles, and that the 2025 CAR “restores the [DOL’s] historical approach by neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.”
The DOL further reminds plan fiduciaries that, “[w]hen evaluating any particular investment type, a plan fiduciary’s decision should consider all relevant facts and circumstances and will “necessarily be context specific”, and that fiduciaries must “curate a plan’s investment menu ‘with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims’ for the ‘exclusive purpose’ of maximizing risk-adjusted financial returns to the plan’s participants and beneficiaries.”

SEC Staff Issues Statement on Protocol Staking Activities

On May 29, 2025, staff in the SEC’s Division of Corporation Finance issued a statement on “Certain Protocol Staking Activities.” For certain “staking” activities on blockchain networks that use proof-of-stake (“PoS”) as a consensus mechanism (“PoS Networks”), the SEC staff is of the view that such activities do not involve the offer and sale of securities under the SEC’s Howey test.
The SEC staff’s views apply only to the following Protocol Staking activities and transactions (each a “Protocol Staking Activity”):

staking Covered Crypto Assets on a PoS Network;
the activities undertaken by third parties involved in the Protocol Staking process—including, but not limited to, third-party Node Operators, Validators, Custodians, Delegates and Nominators (“Service Providers”)—including their roles in connection with the earning and distribution of rewards; and
providing certain ancillary services that are administrative or ministerial in nature.

Additionally, the SEC staff’s views are limited only to Protocol Staking Activities undertaken in connection with the following types of Protocol Staking:

Self (or Solo) Staking, which involves a Node Operator staking Covered Crypto Assets it owns and controls using its own resources. The Node Operator may include one or more persons acting together to operate a node and stake their Covered Crypto Assets.
Self-Custodial Staking Directly With a Third Party, which involves a Node Operator, under the terms of the protocol, being granted the validation rights of owner(s) of Covered Crypto Assets. Reward payments may flow from the PoS Network directly to the Covered Crypto Asset owners or indirectly to them through the Node Operator.
Custodial Arrangements, which involve a Custodian staking on behalf of the owners of the Covered Crypto Assets that the Custodian holds on their behalf. For example, a crypto asset trading platform holding deposited Covered Crypto Assets for its customers may stake such Covered Crypto Assets on behalf of such customers on a PoS Network that permits delegation on behalf of and with the consent of customers. The Custodian will stake the deposited Covered Crypto Assets using its own node or select a third-party Node Operator. In the latter case, this selection is the Custodian’s only decision in the staking process.

Commissioner Peirce issued a statement on this topic, as did Commissioner Crenshaw.

Turbo-Zertifikate im Visier – BaFin plant neue Produktintervention

Die Bundesanstalt für Finanzdienstleistungsaufsicht hat bekannt gegeben, dass sie den Handel mit sog. „Turbo-Zertifikaten“, also MiFID-Schuldverschreibungen, die die Wertentwicklung eines Basiswerts gehebelt abbilden und bei Erreichen einer festgelegten Knock-Out-Schwelle unmittelbar verfallen, im Wege einer Produktintervention einschränken möchte.
Hintergrund dessen ist der Verbraucherschutz, für den die BaFin im vorliegenden Fall gleich „erhebliche Bedenken“ ausgemacht hat. Dabei stützt sie sich auf eine von ihr selbst erstellte Untersuchung (der aufsichtsrechtlichen Pflichtmeldungen) des zugehörigen Markts für den Zeitraum 2019 bis 2023. Demnach würden ca. 75 Prozent der Kleinanleger beim Erwerb von Turbo-Zertifikaten Verluste erleiden, die sich durchschnittlich auf ca. EUR 6.300,- pro Anleger verteilten und für den beobachteten Zeitraum insgesamt ca. EUR 3,4 Mrd. betragen hätten. Die Wertpapieraufsicht der BaFin sieht den Handel mit Turbo-Zertifikaten allein dadurch bereits „näher am Glücksspiel als an langfristiger Vermögensanlage“ (Thorsten Pötzsch, BaFin).
Um dem entgegenzutreten, hat die BaFin drei konkrete Maßnahmen im Entwurf einer Allgemeinverfügung vorgesehen:

Standardisierte Risikowarnung

Jede Mitteilung zu Vermarktung/Vertrieb/Verkauf von Turbo-Zertifikaten soll zukünftig eine standardisierte Risikowarnung enthalten, die explizit darauf hinweist, dass sieben von zehn Kleinanlegern bei einer Anlage in Turbo-Zertifikate Verluste erleiden.

Keine Vorteile

Es sollen zukünftig weder monetäre noch nicht-monetäre Vorteile (insbesondere keine Reduzierung von Gebühren, kein Neukundenbonus, keine Geschenke) als Anreiz für eine Anlage in Turbo-Zertifikaten angeboten werden.

Erweiterte Angemessenheitsprüfung

Kleinanleger, die Turbo-Zertifikate erwerben möchten, sollen zukünftig eine erweiterte Angemessenheitsprüfung durchführen müssen, die ihnen einerseits wesentliche Eigenschaften der Turbo-Zertifikate vermittelt und andererseits mindestens sechs zutreffend zu beantwortende Fragen zu Turbo-Zertifikaten vorsieht. Dieser Test soll alle sechs Monate wiederholt werden müssen.
Die BaFin will damit insgesamt ein angemessenes und einheitliches Schutzniveau für alle Kleinanleger herstellen.
Es ist erfreulich, dass man hier nicht gleich zum Äußersten greift und (noch) kein Verbot des Erwerbs von Turbo-Zertifikaten durch Kleinanleger erlassen hat bzw. dies beabsichtigt. Überraschend ist, dass die BaFin diese Produkte grundsätzlich in die Nähe von „Glücksspiel“ stellt. Dass Turbo-Zertifikate zur kontrollierten Absicherung eines Gesamtdepots tatsächlich der langfristigen Vermögensanlage nützen können, findet im Entwurf keine angemessene Berücksichtigung. Je nach Marktlage lassen sich durch verhältnismäßig günstige Turbo-Zertifikate auch sorgsam aufgebaute Altersvorsorge-Depots gezielt und risikobewusst absichern. Die BaFin kommt hingegen in ihrer eigenen Untersuchung zu dem Schluss, dass es keine Hinweise auf eine Nutzung von Turbo-Zertifikaten als Absicherungsinstrument von Kleinanlegern geben würde. Dies scheint vor allem darauf zu fußen, dass mehr long- als short-Positionen identifiziert wurden.
Der Erfolg der beabsichtigten Maßnahmen ist noch unklar. Nachdem die BaFin früher bereits (und dort noch invasiver) in Bezug auf etwa Contracts-For-Difference (CFDs) vorgegangen ist, wäre eine Untersuchung dahingehend, inwiefern die dort bereits ergriffenen Maßnahmen einen verbraucherschützenden Effekt erzielt haben, wünschenswert. Daraus ließen sich besonders Rückschlüsse auf die Erfolgsaussichten der neuen Produktintervention betreffend Turbo-Zertifikate ziehen.
Wer wirklich Turbo-Zertifikate erwerben möchte, wird sich weder von Hinweisen auf Verlustrisiken noch vom neu geschaffenen, zusätzlichen bürokratischen Aufwand abbringen lassen. Dann wären die
Maßnahmen letztlich eine unnötige Belastung – insbesondere der adressierten Intermediäre, Emittenten und Anbieter, aber eben auch der Kleinanleger.
Die Anhörung der BaFin zur Produktintervention ist hier auf der Website der BaFin zugänglich.
Die BaFin-Studie zum Vertrieb von Turbo-Zertifikaten an deutsche Kleinanlegerinnen und Kleinanleger ist hier auf der Website der BaFin abrufbar.

SEC Staff Green Lights Various Staking Activities

The Securities and Exchange Commission’s (SEC) Division of Corporation Finance released a statement articulating its position that certain cryptocurrency staking activities fall outside the federal securities laws.[1] This development coincides with the House of Representatives introducing the Digital Asset Market Clarity Act, a comprehensive market structure bill for digital assets, signaling continued momentum toward regulatory clarity in the digital assets sector.
Covered Activities: Division’s Position on Three Staking Models
The Division expressed the view that three specific staking models do not constitute securities offerings under the Howey test. Self (or solo) staking is addressed most directly, where node operators stake their own crypto assets using their own validator infrastructure. The Division characterized this as purely administrative activity that generates protocol-determined rewards rather than profits from entrepreneurial efforts.
Self-custodial staking directly with third parties is also addressed favorably in the statement. Under this model, crypto asset owners retain custody of their assets while granting validation rights to third-party node operators. The statement noted that the node operator’s role remains ministerial rather than managerial, as they cannot guarantee or fix reward amounts beyond their service fees.
Custodial arrangements represent the most commercially relevant area covered by the statement. According to the Division, custodians may stake client assets provided certain conditions are met: customers retain ownership, custodians cannot use deposited assets for trading or leverage, and the custodian’s role remains limited to selecting validators rather than making discretionary investment decisions.
The statement also expressed the Division’s view that several “ancillary services” commonly offered by staking providers do not alter the legal analysis, including slashing coverage (indemnification against protocol penalties that forfeit staked assets for validator misconduct), early unbonding (allowing withdrawal of staked assets before the protocol’s required lock-up period ends), custom reward schedules, and asset aggregation to meet protocol minimums. The Division indicated these services maintain their non-securities character provided they remain administrative rather than managerial in nature.
What Remains Outside the Statement’s Scope
The Division’s statement contains important limitations on its applicability. It excludes staking services where providers guarantee, fix, or boost rewards beyond what the underlying protocol provides. Additionally, the Division’s position does not extend to arrangements where service providers decide “whether, when, or how much” to stake on a customer’s behalf, suggesting these retain potential securities law implications. The statement also does not cover arrangements where users transfer ownership of their crypto assets to service providers, or where custodians engage in trading, leverage, or other discretionary activities with deposited assets.
Further, the Division’s statement does not address liquid staking, restaking, or liquid restaking activities. This omission leaves questions unanswered for liquid staking and restaking protocols that issue transferable tokens representing staked or restaked positions.
For entities currently offering staking services, the statement provides welcome clarity for basic staking models but requires careful analysis of specific operational features. Companies should evaluate whether their services include excluded elements such as reward guarantees or discretionary asset management that could trigger securities registration requirements.
The statement may also have implications for spot Ether exchange-traded funds (ETFs), which currently operate under SEC restrictions that prohibit the staking of their underlying ether holdings. The Division’s characterization of certain staking activities as administrative rather than investment-oriented could signal potential receptiveness to allowing ETF staking, though any such development would require separate regulatory determinations.
Commissioner Crenshaw’s Dissent
Commissioner Caroline Crenshaw issued a dissenting statement, arguing that the guidance contradicts established court precedents, particularly recent federal court decisions in SEC enforcement actions that found staking services could constitute investment contracts. Crenshaw emphasized that courts have recognized entrepreneurial efforts in staking services, including asset pooling that increases validation likelihood, technical infrastructure deployment that enhances returns, and sophisticated software systems that enable retail participation. She argued these elements satisfy Howey’s “efforts of others” requirement, contrary to the Division’s characterization of staking as purely ministerial.
The Commissioner also criticized the guidance’s use of securities law terminology like “custodian” and “custody” for services that lack corresponding investor protections. She warned that the statement creates false impressions of regulatory oversight while leaving investors exposed to risks including protocol slashing, technical failures, and potential insolvency of service providers.

[1]See Katten’s Quick Reads coverage of recent SEC staff statements regarding the classification of memecoins, proof-of-work mining, stablecoins here and here.

SEC Staff Declares Certain Protocol Staking Not a Security Transaction

On May 29, 2025, the U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a statement clarifying its view that certain types of protocol staking—a process used in proof-of-stake (PoS) blockchain networks—do not involve the offer and sale of securities under federal law. The statement, which applies to staking activities involving “Covered Crypto Assets,” concludes that these activities are administrative or ministerial in nature and therefore fall outside the scope of the Howey test for investment contracts.
The Division’s position covers three common staking models: self-staking, self-custodial staking with a third party, and custodial staking through a service provider. In each case, the Division emphasized that the rewards earned are not derived from the entrepreneurial or managerial efforts of others, but rather from the protocol’s rules and the participant’s own actions.
To support its conclusion, the Division applied the Howey test, which asks whether there is an investment of money in a common enterprise with an expectation of profits from the efforts of others. According to the statement, protocol staking fails this test because participants retain ownership of their assets, rewards are earned by complying with protocol rules, not third-party management, and services like slashing protection or early unbonding are considered “ancillary” and not indicative of managerial effort.
The statement also notes that it does not address more complex staking models like liquid staking or restaking, nor does it carry legal force.
SEC Commissioner Caroline A. Crenshaw issued a dissent, arguing that the staff’s analysis misrepresents both the law and the facts. She pointed to recent court decisions that upheld the SEC’s enforcement actions against staking-as-a-service providers, where courts found that such services involved entrepreneurial efforts—including asset pooling, technical infrastructure, and liquidity enhancements—that satisfied the Howey test. Crenshaw criticized the staff’s framing of these features as “ancillary,” noting that courts have previously found similar features to be hallmarks of investment contracts. She also raised concerns about the use of terms like “custodian,” which may imply regulatory protections that do not exist in the crypto space. Crenshaw warned that the SEC’s current approach, which relies on staff statements and enforcement dismissals, sows confusion and undermines investor protection. As the crypto industry awaits a more comprehensive regulatory framework, stakeholders should remain cautious. The legal status of staking services may still depend on how they are structured and marketed, and whether courts continue to view them as investment contracts under existing law.

Congress Unveils Highly Anticipated Cryptocurrency Market Structure Legislation

On 29 May 2025 the House Financial Services Committee (HFSC) and the House Agriculture Committee (Ag) unveiled their highly anticipated cryptocurrency market structure legislation.
The committees introduced the Digital Asset Market Clarity (CLARITY) Act to establish “clear, functional requirements for digital asset market participants, prioritizing consumer protection while fostering innovation.” The bill divides oversight over the digital assets market between the Securities and Exchange Commission (EC) and the Commodity Futures Trading Commission (CFTC).
HFSC Chair French Hill (R-AR) reportedly aims to have the Committee vote on this bill during its 10 June 2025 markup and to pass the legislation, along with stablecoin legislation, before Congress departs for its August recess.
The Committee introduced a discussion draft of the legislation earlier this month. They also held a roundtable discussion on the draft, which several Democratic lawmakers walked out of in protest, led by HFSC Ranking Member Maxine Waters (D-CA). The CLARITY Act, however, has garnered some bipartisan support, with three Democratic original co-sponsors, including Ag Committee Ranking Member Angie Craig (D-MN), as well as Reps. Ritchie Torres (D-NY) and Don Davis (D-NC).
Please see here for the bill text, and here for a section-by-section summary. We will continue to monitor and provide updates on the CLARITY Act.

Stay on Alert: CFTC Staff Reminds Registered Exchanges and Clearinghouses to Evaluate and Calibrate Their Volatility Control Mechanisms

The Commodity Futures Training Commission’s (“CFTC”) Division of Market Oversight and Division of Clearing and Risk issued an advisory (the “Staff Advisory”) reminding designated contract markets (“DCMs”) and derivatives clearing organizations (“DCOs”) of their regulatory obligations under the Commodity Exchange Act (“CEA”) and CFTC regulations to implement and consistently evaluate the efficacy of their controls designed to address market volatility. These controls—referred to as volatility control mechanisms (“VCMs”) by the Committee on Payments and Market Infrastructure and the International Organization of Securities Commissions—are especially important in today’s environment, where global events such as pandemics, wars, sanctions, political instability, and abrupt policy changes can drive extreme volatility. 
The May 22 Staff Advisory reflects the most recent development in the industry related to VCMs. In September 2023, the Futures Industry Association (“FIA”) published a paper supporting VCMs, noting their effectiveness in preserving market integrity by mitigating disruptions from sudden price swings, erroneous orders, and feedback loops under stress (“FIA Best Practices”). FIA also advocated for a principles-based approach to VCM design to ensure adaptability across asset classes and changing market conditions.
The FIA Best Practices recommended that DCMs implement robust, flexible controls such as circuit breakers, price bands, and pre-trade risk checks that are tailored to their specific markets and trading conditions. For DCOs, the Staff Advisory underscores the potential impact of VCMs on clearing functions, particularly around variation margin and settlement pricing during volatile periods. DCOs must exercise discretion in ensuring settlement prices reflect market reality when normal pricing methods are disrupted, and should transparently communicate such deviations to clearing members and end-users. 
In November 2023, the CFTC’s Global Markets Advisory Committee (“GMAC”), chaired by Acting Chairman Caroline Pham, played a pivotal role in advancing these best practices. Composed of a broad cross-section of market infrastructures, participants, end-users, and regulators, GMAC recommended that the CFTC leverage the FIA Best Practices to deepen its understanding of exchange-level risk controls and as a foundation for engagement with global regulators and international standard setters. 
In line with this recommendation, the Staff Advisory reinforces that DCMs and DCOs are expected to fulfill their existing responsibilities and incorporate best practices to maintain fair, orderly, and resilient markets during times of elevated volatility.
The Staff Advisory is available here. FIA’s Best Practices is available here. 

The Angel is in the Details: Grant Agreements that Matter

Philanthropy is designed to make the world a better place, but the angel is in the details. 
The relationship between donors and organizations, whether it’s a major medical institution or a small local nonprofit, are never adversarial …until they are. One of the best ways to ensure satisfaction is to clarify expectations and build a tight and clearly written agreement around a grant. 
There’s no central data-base tracking litigation between grant makers and grant receivers, but common knowledge is that lawsuits are few and far between. Even so, consequences for poorly-thought-through grant agreements can be pernicious and include family or community infighting, reputational disparagement, and disillusionment with the art and science of giving. 
Many donors and tax advisors focus on minimum annual distributions and look to move money fast but there are multiple ways to meet distribution requirements. Structured agreements are a blueprint for the future that help both donors and grantees navigate expectations. 
Using a corporate contract template for grants can be both off-putting and insufficient. But, yes, there needs to be a set of standard clauses like terms, termination, arbitration, and indemnification (which is typically mutual) but there’s much more needed. 
Here are three scenarios (there are many more) about what can go wrong: 

A donor family funds a lab at a university that costs $1 million. It’s a meaningful donation for the family and they visit it periodically and talk about it with pride. The director who led the lab retires and a new director comes in with different needs and purposes. Within five years of the gift the lab is gone, and the family name has been removed – and they found out when they brought their granddaughter to see it. No one ever called them. 
A couple funded a new engineering center at a day school their daughter attended. They wanted to give back to the school that supported their child and made a $3 million dollar donation on the recommendation of the Head of School. After five years there isn’t a plan or budget, and the center isn’t built. Funding paid in full has been generating interest that is not designated to the project. 
Through their foundation, a family funds a new program at a cost of $500 thousand dollars, designed to educate at-risk youth over a ten-year period in the community where they built their business. After three years the organization moves the program to another site because it was not sustainable where it was. The family wants their money back. 

Engaging clients in building a detailed outline that includes: 

The client’s understanding and goals for the near- and long-term expectations
The organization’s goals and capacity to carry out the grant
Terms that describe the triggers for distribution meaning time and accomplishments in advance of future payments 
Metrics for evaluating the grant
Details about communications expectations both internally and publicly 
Contingency specifications, especially in the case of capital projects, that might include right of first refusal 

Consider developing a plain language template for private foundation clients that can be adjusted to meet the criteria and expectations, in terms of time, funding distributions, and short- and long-term expectations of the investment, and to support your clients in finding their better angels. 

Texas Supreme Court Clarifies Usury Law: Maximum Interest Must Be Calculated Using the Actuarial Method Resulting in Lower Interest Charges as Principal Balance Declines

Commercial lenders in Texas should be made aware of the Texas Supreme Court’s new decision in American Pearl Group, LLC v. National Payment Systems, LLC, No. 24-0758. In that case, the Court clarified the “actuarial method” for calculating maximum chargeable interest under state usury law, with the endorsed methodology notably imposing a lower maximum interest ceiling than previously allowed. In short, the Court confirmed that Section 306.004 of the Texas Finance Code no longer permits lenders to calculate interest by “spreading the interest over the term of the loan in equal parts.” Lenders must instead adjust their interest calculations based on the declining principal balance during each payment period. The statutory penalties for lenders’ non-compliance with this law are significant—namely treble damages and potentially a forfeiture of the entire loan amount. 
Case History
In the underlying lawsuit, a commercial borrower sought a declaration that it had been charged usurious interest on a $375,100.85 loan. The loan was to be repaid over 42 months with total payments amounting to $684,966.76, or $309,865.91 in interest. The borrower argued that the contracted interest payments exceeded Texas’s usury cap of 28% per annum under Section 303.009(c) of the Texas Finance Code. 
In resolving the claim at the motion to dismiss stage, the district court applied a traditional “equal parts” “spreading” analysis from decades’ old usury cases, by which it multiplied the total principal on the loan by the maximum lawful interest rate and the loan term. Under this formula, the district court concluded that state usury law permitted the lender to charge up to $367,598.83 in total interest. Because the lender only charged $309,865.91 in interest over the loan term, the district court held that state usury law was not violated and dismissed the borrower’s claim.
The borrower appealed to the Fifth Circuit, asserting that the district court failed to correctly apply the “actuarial method” set forth in the Finance Code by not considering the loan’s declining principal balance during each payment period in calculating the usury cap. However, the Fifth Circuit—noting an ambiguity in the statute given that the Finance Code does not define the term “actuarial method”—declined to rule and certified the following question to the Texas Supreme Court for resolution:
Section 306.004(a) of the Texas Finance Code provides: “To determine whether a commercial loan is usurious, the interest rate is computed by amortizing or spreading, using the actuarial method during the stated term of the loan, all interest at any time contracted for, charged, or received in connection with the loan.” If the loan in question provides for periodic principal payments during the loan term, does computing the maximum allowable interest rate “by amortizing or spreading, using the actuarial method” require the court to base its interest calculations on the declining principal balance for each payment period, rather than the total principal amount of the loan proceeds?
Texas Supreme Court Determines Proper Application of “Actuarial Method” for State Usury Calculation
The Texas Supreme Court answered the Fifth Circuit affirmatively, holding that the “actuarial method” is a “a term with a well-established meaning in financial and legal contexts” that requires “courts to calculate the maximum permissible interest based on the declining principal balance for each payment period.” 
Persuasive to the Court’s decision, it relied on Black’s Law Dictionary’s definition of the “actuarial method” as being a “means of determining the amount of interest on a loan by using the loan’s annual percentage rate to separately calculate the finance charge for each payment period, after crediting each payment, which is credited first to interest and then to principal.” The Court also considered similar definitions of the “actuarial method” from the Texas Administrative Code and the federal Truth in Lending Act in reaching the same conclusion as to how the actuarial method applies.
In layman’s terms, a simplified expression of how interest during a payment period may be calculated under the actuarial method is as follows:
Interest for each payment period = (APR / payment periods per year) × outstanding principal balance at the start of the period
This calculation notably contrasts with the simplified “equal parts” spreading methodology, which does not account for declining principal balances over time. The difference in the two methodologies is particularly significant in its impact when applied under a state usury law analysis. For example, in the American Pearl Group case, the district court found that the “equal parts” spreading methodology resulted in a maximum interest calculation of $367,598.83, while the “actuarial method” would have resulted in a maximum interest threshold of $207,277.80. It is not difficult to see how lenders who are unaware of the differences between each methodology can easily overcharge a borrower in violation of usury prohibitions.
Implications for Lenders
The Texas Supreme Court’s decision sets a clear precedent for how commercial lenders must assess compliance with state usury law moving forward. They may no longer rely on the simplified “equal parts” interest-calculation method that some courts employed in years past. These lenders must instead apply the actuarial method, which affects the total interest that lenders may charge on a loan. In light of the new law, some lenders may now need to audit their existing portfolios for compliance, to avoid exposing themselves to usury claim risks and potential regulatory scrutiny.

A Gap in the Market for Corruption Enforcement

This article will examine the evolving attitudes of the United Kingdom (“UK”), European Union (“EU”) and United States (“US”) toward corruption enforcement and will assess whether the UK and EU will be able to plug the potential enforcement gap created by President Trump’s recent Executive Order.
The United States
On February 10, 2025, President Trump issued an Executive Order titled, ‘Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security’ (the “EO”). As discussed in our previous article, this directs the US Department of Justice (“DOJ”) to pause enforcement of the Foreign Corrupt Practices Act (“FCPA”) for 180 days, while the Attorney General reviews the guidelines and policies governing FCPA investigations and enforcement actions.
The EO does not remove all bribery and corruption risks because, among other things and notwithstanding the temporary pause, it does not apply to civil actions brought by the US Securities and Exchange Commission, it does not repeal the FCPA, and the FCPA’s statute of limitations remains five years, which could run longer that the current enforcement pause. However, the EO, in addition to numerous other Executive Orders (which can be found here), highlights a shift in enforcement priorities under the Trump administration, the full effects of which are yet to be seen.
European Union
While the US has signalled that it is scaling back on enforcement that “actively harms American economic competitiveness,”[1] the EU is demonstrating an increased commitment to robust bribery and corruption enforcement.
On May 3, 2023, the European Commission put forward an anti-corruption package, which included a proposal for a directive focused on tackling corruption. The proposal’s explanatory memorandum described corruption as an “impediment to sustainable economic growth, diverting resources from productive outcomes”. The Council of the EU approved the general approach for the directive on June 14, 2024, and noted that the EU’s current instruments are “not sufficiently comprehensive, and the current criminalisation of corruption varies across Member States hampering a coherent and effective response across the Union.” The Council of the EU said the directive will establish “minimum rules concerning the definition of criminal offences and criminal and non-criminal penalties in the area of corruption, as well as measures to better prevent and fight corruption.”
In addition to potential legislative changes, on March 20, 2025, the creation of the International Anti-Corruption Prosecutorial Taskforce (the “Taskforce”) was announced. The Taskforce, which includes the UK’s Serious Fraud Office (“SFO”), the Office of the Attorney General of Switzerland and France’s Parquet National Financier, issued a Founding Statement, recognizing “the significant threat of bribery and corruption and the severe harm it causes.”[2] The Taskforce seeks to deliver a Leaders’ Group for exchanging insight and strategy, a Working Group for devising proposals for co-operation, increased best practice sharing, and a strengthened foundation to seize opportunities for operational collaboration.
United Kingdom
The UK has also taken positive action to ameliorate its corruption detection and enforcement strategy.
First, the Economic Crime and Corporate Transparency Act 2023, introduced the failure to prevent fraud offence (“FTPFO”), which means that large organizations, wherever located, can be held criminally liable if a fraud offence is committed by an “associated person” for, or on behalf of, the organisation with the intention of benefitting the organization or its clients. The SFO’s Business Plan 2025-26, emphasized that the “deployment of the failure to prevent fraud offence in September will be a landmark moment which will widen the reach and breadth of prosecutions.”[3]
Also included in the SFO Business Plan was an intention to “progress whistleblower incentivisation reform.” Whistleblower incentivization increases the likelihood of reports being made which first reduces corruption by acting as a deterrent but also aids enforcement as an information gathering tool. The Financial Conduct Authority and Prudential Regulatory Authority have previously cautioned against providing financial incentives for whistleblowers, due to concerns over entrapment, malicious reporting, the quality of reports, and the cost-effectiveness of such schemes.[4] This position is at odds with that adopted by the US where, for example, the US Department of the Treasury’s Financial Crimes Enforcement Network has implemented a whistleblower program that incentivizes individuals to report anti-money laundering or sanctions violations. A report by RUSI highlights that US incentivization schemes are so effective, “that US regulators are consistently benefiting from information provided by Canadian and UK citizens.”[5] At his first public speech as director of the SFO, Nick Ephgrave QPM attributed the UK’s change of direction to his intention to concentrate efforts on evidence gathering routes that would lead straight to the evidence and find “smoking guns.” Mr Ephgrave’s intention to adopt a US-style approach suggests the UK may be well-placed to plug any potential enforcement gap left by the US.
On April 24, 2025, the SFO published Guidance on Corporate Co-Operation and Enforcement in relation to Corporate Criminal Offending. This guidance outlines the SFO’s key considerations under the public interest stage of the Full Code Test for Crown Prosecutors when deciding whether to charge a corporate or invite it to enter negotiations for a deferred prosecution agreement. The guidance will make it simpler for corporates to report suspected wrongdoing by a direct route to the SFO’s Intelligence Division via a secure reporting portal. 
Finally, on December 12, 2024, the UK Security Minister, Dan Jarvis MP MBE, announced the introduction of a pilot Domestic Corruption Unit (the “Unit”), set up by the City of London Police and the Home Office. The Unit will “bring together the different pieces of the system, such as national agencies, local forces [and] devolved policing bodies” and “lead proactive investigations, providing much needed capacity and a dedicated response in areas where previously this has been lacking”. [6]
Conclusion
The fate of bribery and corruption enforcement in the US is unclear. Instead of spearheading prosecution sand compliance efforts globally, the US appears, at least for the time being, to have taken a step back. However, since before President Trump took office, the EU and UK have been sharpening their enforcement capabilities. Therefore, while Nick Ephgrave QPM has been clear that the Taskforce was not in response to the EO, companies cannot rely on a period of relaxed enforcement on either side of the Atlantic.

[1] The White House, Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security – The White House ((February 10, 2025)
[2] International Anti-Corruption Prosecutorial Taskforce, International_Anti-Corruption_Prosecutorial_Taskforce.pdf (March 20, 2025)
[3] Serious Fraud Office, SFO_2025-26__Business_Plan.pdf (April 3, 2025)
[4] Financial Conduct Authority, Prudential Regulation Authority, Financial Incentives for Whistleblowers (July, 2014)
[5] Royal United Services Institute, The Inside Track: The Role of Financial Rewards for Whistleblowers in the Fight Against Economic Crime (December, 2024)
[6] Home Office, Working with partners to defeat economic crime – GOV.UK (December 12, 2024)

Will There Be Light? FinCEN’s New Reporting Rule Faces Legal Challenge

The U.S. real estate market has long been a cornerstone of the American dream—a path to stability, investment, and generational wealth. But at the margins, that same market has also provided an opportunity for illicit actors who exploit all-cash deals to quietly launder dirty money into legitimate assets. Recognizing this vulnerability, in August 2024, the Financial Crimes Enforcement Network (FinCEN) introduced a new rule aimed at shedding light on all-cash real estate transactions and closing a loophole in the fight against money laundering.
FinCEN’s Residential Real Estate Rule (the RRE Rule) requires certain industry professionals to report information to FinCEN about non-financed transfers of residential real estate to a legal entity or trust. Title companies and settlement agents are now on the frontlines of the federal government’s fight against real estate money laundering. The industry has argued that the rule will impose an undue burden on businesses and that its costs outweigh its benefits. On May 21, one of the industry’s biggest players—Fidelity National Financial (FNF)— filed a lawsuit in the Middle District of Florida to block the rule. Fidelity National Finance, Inc. et al. v. Treasury, et al., 3:25-cv-00554 (M.D.Fla. May 20, 2025). United States District Judge Wendy Berger, a Trump appointee, will now consider whether FinCEN has exceeded its statutory authority.
It is too early to predict the outcome of the FNF suit, but the issue illustrates the tension between two Trump administration priorities. On the one hand, the administration has generally advocated for a deregulatory, pro-industry agenda. On the other hand, the administration remains focused on anti-money laundering and financial crime, particularly as it relates to foreign adversaries and drug cartels who are most likely to exploit the residential real estate market to launder illicit gains. Affected businesses should be preparing to comply with the RRE Rule scheduled to take effect in December to ensure they are not caught off guard should legal challenges fail.
How Did We Get Here? (The Abridged Version)
The RRE Rule is the latest development in a 55-year evolution of anti-money laundering (AML) laws and regulations in the United States. In 1970, Congress passed the Bank Secrecy Act (BSA), which provided the Treasury Department with broad authority to require financial institutions to keep records and file reports to help detect and prevent money laundering. The BSA sat dormant for 15 years until First National Bank of Boston pleaded guilty to willfully failing to comply with the BSA by not reporting more than $1 billion in reportable cash transactions in 1985.
In 1986, Congress passed the Money Laundering Control Act, which established money laundering as a financial crime and established the notion of a BSA/AML “program” by directing banks to maintain policies and procedures to monitor BSA compliance. FinCEN was created in 1990, shortly after which Congress passed the Annunzio-Wylie Anti-Money Laundering Act of 1992, which required banks to file Suspicious Activity Reports (SARs).
The terrorist attacks of September 11, 2001, prompted Congress to enact the USA PATRIOT Act, which dramatically expanded the scope and rigor of U.S. AML laws. Specifically, Title III of the Act, the International Money Laundering Abatement and Financial Anti-Terrorism Act, criminalized terrorism financing, strengthened customer identification procedures (CIP), prohibited financial institutions from dealing with foreign shell banks, and required enhanced due diligence for certain accounts. The most significant overhaul of the U.S. AML regime since the PATRIOT Act came with the Anti-Money Laundering Act of 2020 (AMLA 2020). AMLA 2020’s central theme was security through transparency. It introduced the Corporate Transparency Act (CTA), requiring corporations, limited liability companies, and similar entities to report beneficial ownership information to FinCEN. While the CTA’s implementation has been subject to delays and litigation, its intent is clear: to pierce the veil of anonymity that shields illicit actors in the financial system.
The statutory history is important context, but the RRE Rule’s true origin rests in the history of FinCEN’s geographic targeting orders (GTO). GTOs are temporary orders that impose additional reporting requirements on financial institutions. They usually last 180 days and are subject to renewal. FinCEN issued its first GTO in 1996, subjecting money remitter agents in New York City to report remittances of cash to Colombia of $750 or more. This was a significant expansion of BSA enforcement to the non-bank financial sector and set a precedent for real estate GTOs.
In January 2016, FinCEN began using GTOs to target all-cash luxury real estate purchases in New York and Miami. The GTO followed a multi-series expose by the New York Times entitled the “Towers of Secrecy,” which documented how criminals, kleptocrats, and corrupt officials were buying millions in U.S. real estate anonymously. FinCEN has repeatedly renewed and expanded real estate GTOs to include certain counties and major metropolitan areas across 14 states and a purchase price threshold of $300,000. FinCEN most recently renewed the GTO on April 14, 2025, effective through October 9, 2025.
The RRE Rule at a Glance
The RRE Rule seeks to increase transparency in all-cash real estate transactions by requiring certain professionals to report certain information, including the identities of beneficial owners behind purchases, in the hopes of preventing money laundering through anonymous property deals.
The RRE Rule applies to all non-financed (i.e., all-cash) transfers of residential real property to legal entities (e.g., LLCs, corporations) or trusts, subject to certain exceptions. The rule requires that the “reporting person” (typically the settlement or closing agent, but determined by a cascading hierarchy) file a “Real Estate Report” with FinCEN, disclosing, among other information, (1) the identities and details of the transferor and transferee, (2) beneficial ownership information for the transferee, (3) information on individuals signing on behalf of the transferee, (4) property details, and (5) transaction details, such as the purchase price, payment method, and account information.
The rule carves out several categories of low-risk or routine transactions, including: (1) grants, transfers, or revocations of easements, (2) transfers resulting from death or divorce, and (3) transfers to bankruptcy estates. The default reporting person in the cascading hierarchy may shift the responsibility to another (e.g., the deed filer), subject to a designation agreement. In effect, parties can contract to shift the filing requirements. Notably, FinCEN has not yet published the Real Estate Report to be filed.
Reporting persons may reasonably rely on information provided by others, absent knowledge of facts that would call its reliability into question. For beneficial ownership, a written certification from the transferee or its representative is required. Reporting persons must retain copies of beneficial ownership certifications and designation agreements for five years. Reports must be filed electronically with FinCEN by the later of the last day of the month following the closing date or 30 days after the closing date. Penalties for noncompliance include civil and criminal sanctions under the BSA.
FNF’s Legal Challenge to the RRE Rule
In its suit, FNF contends the RRE Rule should be vacated pursuant to the Administrative Procedure Act because it exceeds FinCEN’s statutory authority under the BSA, which limits reporting obligations to “suspicious transactions relevant to a possible violation of law or regulation.” FNF argues that the rule’s blanket requirement for reporting all non-financed transfers to legal entities and trusts, without specific indicia of suspicious activity, violates this statutory limitation. Plaintiff notes that FinCEN has never claimed that all, or even most, of the estimated 850,000 transactions that will be reported annually are likely connected with illegal activity, and that the rule will result in millions of lawful transactions being “swept into FinCEN’s dragnet.”
While plaintiff’s anchor argument focuses on FinCEN’s lack of statutory authority, they also raise constitutional concerns, including that: (1) the rule violates the Fourth Amendment’s prohibition of unreasonable searches by mandating the collection of private information without articulable suspicion or connection to illegal activity; (2) the rule infringes on the First Amendment’s prohibition on compelled speech by requiring the disclosure of extensive personal and financial information for all covered transactions, regardless of any criminal nexus; and (3) Congress did not delegate authority to the Treasury Department to regulate such transactions under the Commerce Clause or other Article I powers.
Of course, FNF leans heavily on arguments connected to the industry’s financial and compliance burden. Using FinCEN’s own compliance cost estimates of between $428.4 million and $690.4 million in the first year, FNF argues the rule is arbitrary and capricious due to FinCEN’s failure to conduct a proper cost-benefit analysis. Plaintiff argues that in the face of staggering costs, FinCEN has made no serious effort to estimate the economic benefits or estimate the anticipated reduction in illicit activity.
What Industry Professionals Must Do to Prepare
The evolution of FinCEN’s regulation of residential real estate transactions—from the BSA through the GTOs and now to a comprehensive nationwide reporting rule—reflects a growing recognition of the sector’s vulnerability to money laundering and the need for greater transparency. The new rule represents a paradigm shift for real estate professionals, who must now play a central role in the fight against illicit finance.
With the new rule set to take effect on December 1, 2025, industry professionals—including settlement agents, title insurers, attorneys, and others involved in real estate closings—must prepare for significant changes in compliance obligations. Waiting and hoping Judge Berger strikes down the rule is not the prudent course of action. So, what can companies and professionals do to prepare?

Assess Applicability and Identify Covered Transactions. Businesses need to determine if they are involved in non-financed transactions of residential real estate to entities or trusts and familiarize themselves with the exceptions to avoid unnecessary reporting.
Establish Internal Policies and Procedures. Organizations should assign responsibility for compliance and document processes for identifying reportable transactions, collecting required information, and filing reports.
Securely Collect and Verify Information. Businesses need to develop protocols for obtaining and retaining beneficial ownership information, including ensuring secure IT systems are in place to retain and transmit the required transaction, payment, and personal information.
Leverage Designation Agreements. Where appropriate, organizations should use written designation agreements to assign and clarify reporting duties, particularly in complex transactions.
Prepare for Regulatory Scrutiny. Businesses need maintain thorough records of compliance activities, including training and internal audits, as well as maintaining copies of all designation agreements and beneficial ownership certifications for at least five years. Noncompliance with the RRE Rule can result in significant civil and criminal penalties.

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Fourth Circuit Expands FCRA Liability: Legal Inaccuracies Now Actionable

On March 14, the U.S. Court of Appeals for the Fourth Circuit vacated the dismissal of a lawsuit alleging a failure to reasonably investigate a disputed debt.
The lawsuit concerned a consumer who disputed a debt that she claimed was fabricated by her housing provider in retaliation for asserting her rights under her lease. After she refused to pay an invoice for alleged damages, the housing provider assigned the debt to a collection agency. The debt collector then reported the disputed amount to credit reporting agencies, prompting the consumer to file a dispute. Upon receiving notice of the dispute, the credit reporting agencies requested that the debt collector conduct a reasonable investigation, as required under Section 1681s-2(b)(1) of the Fair Credit Reporting Act (“FCRA”). Instead of performing the required investigation, the debt collector relied solely on the creditor’s recertification of the debt. 
The consumer filed suit. The district court dismissed the case, reasoning that the consumer’s challenge involved a legal dispute and therefore did not require further investigation under FCRA. The Fourth Circuit reversed, holding that inaccuracies — whether legal, factual or a mix of both — are actionable under Section 1681s-2(b) if the plaintiff pleads an objectively and readily verifiable inaccuracy. 
The court clarified that disputes involving complex fact-gathering or in-depth legal analysis such as those courts would typically perform are not “objectively and readily verifiable,” nor are disputes involving unsettled questions of law or credibility determinations, which therefore fall outside the scope of actionable inaccuracies under the FCRA. However, the court also emphasized that a “reasonable investigation” may require more than just confirming basic details like the debt amount or the debtor’s name.
With this decision, the Fourth Circuit joins the Second and Eleventh Circuits in rejecting a bright-line rule that excludes legal inaccuracies. This approach contrasts with rulings from the First and Tenth Circuits, which maintain that only factual inaccuracies are actionable under FCRA.
Putting It Into Practice: The ruling clarifies what constitutes an “actionable inaccuracy” under the FCRA. Specifically, the ruling expands potential liability for furnishers under the FCRA by expanding the subset of factual inaccuracies that are actionable. The Fourth Circuit’s decision aligns with a broader trend of heightened scrutiny and reforms to the FCRA over the past year (previously discussed here). Furnishers and credit reporting agencies should prepare to evaluate a broader range of consumer disputes and stay tuned for further FCRA-related regulatory developments, which will likely include an appeal to the Supreme Court at some point to resolve the conflict among the Circuit Courts.