Financial Services RegPulse Newsletter July 26, 2021 – August 6, 2021 Recent developments › BIS published a white paper on principles for an emerging regulatory framework for the use of AI in financial services › The OCC appointed its first-ever Climate Change Risk Officer and joined the Network of Central Banks and Supervisors for Greening the Financial System › The Senate Banking Committee hosted a hearing on the oversight of selected financial regulators › SEC Chair Gary Gensler delivered separate remarks on digital assets and climate risks › The House and Senate both held hearings on the future of digital currencies in the US Regulatory Roundup | Deloitte Center for Regulatory Strategy, Americas 1 Introduction The Deloitte Center for Regulatory Strategy (DCRS) is a source of critical insight and advice, designed to help clients anticipate change and respond with confidence to the strategic and aggregate impact of national and international regulatory policy. The RegPulse Newsletter is a bi-weekly distribution that features the latest regulatory news and issues that are impacting the financial services and fintech industries. For a deeper analysis and discussion of regulatory developments, make sure to check out our RegPulse blog series, which are a collection of blogs that are contributed by our powerful team of former regulators, industry specialists, and trusted business advisors. US regulatory developments Congress Derivatives Banking & Capital Markets Investment Management Consumer Protection Insurance BSA/AML Fintech EMEA regulatory developments Key: Cross-sector The development covers multiple financial services sub-sectors or other industries. FBO The development pertains to or affects foreign banking organizations (FBOs). Blog/POV The development has been covered or is currently being analyzed by our team to be produced into either a RegPulse blog or broader point of view (POV). For more information, please refer to the featured DCRS content section. Regulatory Roundup | Deloitte Center for Regulatory Strategy, Americas 2 US regulatory developments Congress Senate Banking Subcommittee hosts hearing on Senate Banking Committee hosts hearing on protecting consumers from financial fraud cryptocurrencies On August 3, 2021, the Subcommittee on Financial On July 27, 2021, the Committee on Banking, Housing, Institutions and Consumer Protection hosted a hearing and Urban Affairs hosted an open session to conduct a entitled, “Protecting Consumers from Financial Fraud and hearing entitled, “Cryptocurrencies: What are they good Scams in the Pandemic Recovery Economy." for?”. Source: US Senate Committee on Banking, Housing, and Urban Affairs Source: US Senate Committee on Banking, Housing, and Urban Affairs Senate Banking Committee hosts hearing on House Financial Services Chair Maxine Waters oversight of selected financial regulators gives statement on central bank digital currencies On August 3, 2021, the Committee on Banking, Housing, On July 27, 2021, the Chair of the House Committee on and Urban Affairs hosted an open session to conduct a Financial Services gave a statement at subcommittee on hearing entitled, “Oversight of Regulators: Does our national security, international development and Financial System Work for Everyone?" monetary policy hearing entitled, “The Promises and Perils of Central Bank Digital Currencies.” She stated that Source: US Senate Committee on Banking, Housing, and Urban Affairs a central bank digital currency (CBDC) is a potential tool to achieve central bank's mandate. Sen. Pat Toomey questions the cryptocurrency tax in the infrastructure package Source: US House Committee on Financial Services On August 2, 2021, US Senate Banking Committee Subcommittee on National Security, International Ranking Member Pat Toomey (R-Pa.) stated that the Development and Monetary Policy hosts a hearing provision in the bipartisan infrastructure package to tax on central bank digital currencies cryptocurrency transactions is unworkable. He stated that by including an overly broad definition of broker, the On July 27, 2021, Subcommittee on National Security, current provision sweeps in non-financial intermediaries International Development and Monetary Policy hosted a like miners and network validators who never take hearing entitled "The Promises and Perils of Central Bank control of a consumer’s assets and don’t have the Digital Currencies“. personal-identifying information needed to file a 1099 with the IRS. Source: US House Committee on Financial Services Source: US Senate Committee on Banking, Housing, and Urban Affairs Sen. Elizabeth Warren sends letter to US Treasury Secretary on cryptocurrency risks US Senators seek to cap consumer loans at 36% On July 26, 2021, Elizabeth Warren, US Senator, sent a On July 28, 2021, to put a stop to abusive and predatory letter to US Treasury Secretary Janet Yellen on the need lending practices that target vulnerable consumers, US for a coordinated and cohesive regulatory strategy to Senators Jack Reed (D-RI), Jeff Merkley (D-OR), Sherrod mitigate the growing risks that cryptocurrencies pose to Brown (D-OH), and Chris Van Hollen (D-MD), led the the financial system. reintroduction of legislation that would extend the protections of the Military Lending Act (MLA), which caps Source: US Senate the annual percentage rate (APR) on consumer loans at 36%, to cover veterans and other consumers. Source: US Senate Committee on Banking, Housing, and Urban Affairs Banking & Capital Markets FRB Governor Christopher Waller speaks on CBDCs Deputy Secretary of the Treasury Wally Adeyemo meets with BPI CEOs On August 5, 2021, Federal Reserve Board (FRB) Governor Christopher Waller delivered a speech entitled On July 30, 2021, Deputy Secretary of the Treasury "CBDC: A Solution in Search of a Problem?“ Wally Adeyemo met with three Chief Executive Officers (CEOs) from the Bank Policy Institute (BPI) Board of Source: Federal Reserve Board Directors to discuss issues related to economic inclusion. Source: US Treasury Regulatory Roundup | Deloitte Center for Regulatory Strategy, Americas 3 US regulatory developments (continued) Banking & Capital Markets (continued) FRB Governor Lael Brainard delivers speech on SEC Chair gives statement on climate risk and rebuilding the post-pandemic economy financial markets On July 30, 2021, Federal Reserve Board Governor Lael On July 28, 2021, Securities and Exchange Commission Brainard delivered a speech entitled "Assessing Progress (SEC) Chair Gary Gensler gave statement at a webinar as the Economy Moves from Reopening to Recovery". on 'Climate and Global Financial Markets'. He stated that he has asked SEC staff to develop a mandatory climate Source: Federal Reserve Board risk disclosure rule proposal for the Commission’s consideration by the end of the year. NYDFS Superintendent announces new initiative to promote diversity, equity and inclusion in Source: Securities and Exchange Commission depository and non-depository institutions IOSCO SPAC network discusses regulatory issues On July 29, 2021, Superintendent of Financial Services raised by SPACs Linda A. Lacewell announced new action by the New York State Department of Financial Services (NYDFS) to On July 27, 2021, International Organization of promote diversity, equity and inclusion in the banking Securities Commissions (IOSCO’s) SPAC network and non-depository financial industries. discussed the issues raised by special purpose acquisition companies (SPACs). While SPACs have long Source: New York State Department of Financial Services existed, transactions have surged recently, drawing regulatory attention to the issues SPACs raise. FRB issues statement regarding repurchase agreement arrangements Source: International Organization of Securities Commissions On July 28, 2021, the FRB issued a statement Insurance announcing the establishment of two standing repurchase agreement facilities, a domestic standing Superintendent Lacewell announces new NYDFS repo facility (SRF) and a repo facility for foreign and report on New York domestic insurers’ international monetary authorities (FIMA repo facility). management of the financial risks from climate These facilities will serve as backstops in money markets change to support the effective implementation of monetary policy and smooth market functioning. On July 28, 2021, Superintendent of Financial Services Linda A. Lacewell announced that the NYDFS has issued Source: Federal Reserve Board a report analyzing New York domestic insurers’ management of the financial risks from climate change OCC appoints new Climate Change Risk Officer and based on their 2020 responses to the National joins the in the NGFS Association of Insurance Commissioners (NAIC) Climate Risk Disclosure Survey and their Task Force on Climate- On July 27, 2021, the Office of the Comptroller of the Related Financial Disclosures (TCFD) reports. Currency (OCC) announced the appointment of Darrin Benhart as its Climate Change Risk Officer and its Source: New York State Department of Financial Services membership in the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). Fintech Source: Office of the Comptroller of the Currency SEC Chair delivers remarks on digital assets Investment Management On August 3, 2021, SEC Chair Gary Gensler delivered remarks on digital assets at the Aspen Security Forum. SEC issues statement on investor protection related to recent developments in China Source: Securities and Exchange Commission On July 30, 2021, SEC Chair Gary