Hello Fintech Friends,

Welcome to another week of fintech policy updates! This week, we delve into the latest developments in crypto regulation, enforcement, and payments, alongside updates related to the Consumer Financial Protection Bureau (CFPB) from the past week.

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1. Crypto Regulation

On April 30, Reps. Drew Ferguson (R-GA) and Wiley Nickel (D-NC) introduced the Providing Tax Clarity for Digital Assets Act, a new crypto bill aimed at addressing taxation issues within the digital asset space. Specifically, the draft legislation seeks to classify staking rewards as created property under the U.S. tax code and proposes taxing them upon sale rather than upon acquisition. Unlike existing crypto bills, this bipartisan initiative focuses narrowly on providing tax clarity for digital asset rewards. Due to its limited scope and the secondary importance of the issues it covers compared to other crypto legislative priorities, the bill faces slim odds of advancing through Congress.

Internationally, the Argentine Chamber of Deputies, the lower chamber of the Argentine parliament, has recently approved the "Omnibus law," which offers citizens the opportunity to declare unannounced cryptocurrency holdings abroad valued at up to $100,000 without incurring any fees or taxes. The bill has now been forwarded to the Argentine Senate for further consideration and voting. Meanwhile, Nigeria's National Security Adviser (NSA) is expected to designate crypto trading as a national security concern, indicating an imminent crackdown on peer-to-peer (P2P) crypto transactions. Should this initiative materialize, Nigerians would be required to conduct crypto transactions exclusively through licensed providers and crypto exchanges.

2. Enforcement

Last week, both the crypto community and the broader financial world were eagerly awaiting the sentencing of Changpeng Zhao (CZ), the founder of Binance, the world's largest cryptocurrency exchange. Ultimately, a federal courthouse in Seattle handed down a four-month prison sentence to CZ for violating the Bank Secrecy Act, primarily due to Binance's failure to register as a money transmitter. The judge recognized CZ's significant charitable contributions and his willingness to take responsibility by turning himself in. In addition to the prison term, CZ paid a substantial $50M fine, alongside the $4.3B settlement Binance paid. However, he will get to retain the bulk of his estimated $33B fortune.

3. Payments

Last week, the Federal Trade Commission (FTC) announced a settlement with payment processing company BlueSnap, its former CEO Ralph Dangelmaier, and former Senior Vice President Terry Monteith. The FTC accused them of knowingly facilitating payments for deceptive and fraudulent companies between 2019 and 2021. Meanwhile, fintech behemoth Block, which owns Cash App and Square, is under scrutiny as reports emerge of a Department of Justice investigation. Federal prosecutors are engaging with a former employee regarding allegations of widespread compliance failures within Cash App and Square dating back several years. Across the pond, the Bank of England urged payment firms to update their operations to ensure compliance with the Bank’s Operational Resilience Policy released in 2021. The policy aims to bolster the ability of financial market infrastructure (FMI) firms to mitigate disruptions to payment systems, particularly during crises such as cyber-attacks or severe weather conditions.

4. CFPB

On April 30, the CFPB released a report indicating that consumers tend to pay more for products with complex pricing structures. Based on experiments conducted in simple market settings involving multiple buyer-seller interactions, the report shows a consistent trend: participants end up paying higher prices for goods with intricate pricing models. This suggests a challenge facing consumers in understanding such complexities, as highlighted by the report.

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See you next week!