BPInsights: January 10, 2026

What's Happening on Crypto Market Structure?

Negotiations continue among senators on the crypto market structure bill, with a markup planned for Jan. 15, according to a U.S. Senate Committee on Banking, Housing, and Urban Affairs notice published late Friday. Sen. Angela Alsobrooks (D-MD) has proposed language that would allow exchanges to "pay rewards on transactions made with dollar-pegged stablecoins, but bar programs that pay rewards on tokens sitting in a digital wallet," according to POLITICO. Alsobrooks said she wants "to make sure that we are not doing anything that mimics a bank-like product without bank-like protections." Earlier this week, Republicans sent a draft to Democrats with proposed changes, including amending the Bank Secrecy Act to specify that digital commodity intermediaries are financial institutions under that law, and creating a working group to fight illicit finance involving digital assets.

• Agriculture Committee. Meanwhile, on the Senate Agriculture Committee, the other committee of jurisdiction, a new draft led by Chairman John Boozman (R-AR) has failed to garner buy-in from Sen. Cory Booker (D-NJ), who has led Democratic negotiations on the panel. This could jeopardize bipartisan passage at next week's markup.
• BPI Concerns. BPI has expressed strong concerns about the risks of unregulated crypto, including the negative effects of stablecoin adoption on bank credit, the risks of stablecoin interest payment and the exacerbating impacts of DeFi lending on crypto shocks.

Five Key Things

1. OCC Issues Proposal to Clarify National Trust Banks' Authority on Nonfiduciary Activities

The OCC on Thursday issued a proposal to "clarify the longstanding authority" of national trust banks to engage in nonfiduciary activities in addition to fiduciary activities. The OCC stated that the proposal would amend the OCC's chartering regulation to align with the OCC's statutory authorization in the National Bank Act to charter a national bank whose operations are "limited to those of a trust company and activities related thereto." The OCC asserts that this statutory language includes authority to engage in nonfiduciary activities. However, the proposal would not otherwise clarify, or articulate limitations on, the permissible activities of national trust banks.

2. Bowman Outlines Upcoming Supervision Reforms

Federal Reserve Vice Chair for Supervision Michelle Bowman previewed reforms to bank supervision in a speech on Wednesday. The Fed will soon issue proposals defining "unsafe or unsound" practices and removing reputational risk from the supervisory process, aligned with similar proposals from the OCC and FDIC, Bowman said. Such proposals reflect a broader effort to realign supervision with core financial risks and streamline its execution. "An unfocused, process-heavy approach to regulation and supervision leaves banks less able to support economic activity, displaces activity into unregulated sectors, and ultimately makes the overall financial system less safe and stable," Bowman said in her remarks. BPI published a blog post this week on the legal definition of unsafe or unsound practices.

• Reducing Overlap. The law requires the Fed to rely "to the fullest extent possible" on examinations performed by a subsidiary bank's primary state or federal supervisors, Bowman noted. "In practice, complying with this requirement imposes significant limits on the Fed's supervisory activities," she said. The requirement is designed to avoid redundant and burdensome examination processes, she noted. "However, to be effective, the Fed must have confidence in the supervisory processes and outcomes of these OCC, FDIC, and state banking agency exams, which requires access to and a thorough review of examination reports and activities."
• CAMELS, MRAs. The Fed is making several changes to reflect the principle that examination reports must focus on material financial risk, Bowman said: revisiting the standard for issuing MRAs and MRIAs; ensuring that CAMELS ratings reflect a bank's risk profile and financial condition, including that the "M" for management is assessed on measurable factors; and reviving the use of non-binding supervisory "observations," which identify matters of note that do not rise to the level of an MRA or MRIA.
• Transparency. Bowman cited the Fed's recent publication of its LISCC Operating Manual, a key rubric for oversight of the largest banks. The release of such manuals is "just the beginning of our efforts to increase the transparency of our administrative processes," Bowman said, noting that the Fed is considering the release of other documents to shed light on its processes. She also flagged concerns about the expansive scope of confidential supervisory information, such as barriers to banks sharing cyber or fraud defense information and the shielding of abusive supervisory behavior. "To address these weaknesses, we are reviewing approaches to better define or create circumstances in which CSI can be shared, including through creating limited use cases exempt from the definition of CSI," Bowman said.
• Asset Thresholds. The Fed will reconsider asset thresholds that determine which requirements apply to which banks, Bowman said. "[W]e will reconsider these regulatory thresholds and will work to support Congress in updating thresholds that have become outdated and too low relative to the broader economy," she said. "A simple solution would be to adjust thresholds by nominal GDP, which includes both economic growth and inflation. Doing so will result in a more robust and resilient system over time, proactively integrating indexed changes into the framework." The Fed may also consider whether single-metric thresholds should be adjusted to include more nuance.
• Material Risks. Bowman pointed out that identifying material risks in the supervision process "does not mean focusing primarily on checking boxes in reviewing processes, procedures, and documentation, regardless of the assessment risk," nor does it mean "ignoring other aspects of the established supervisory program." Examiners should use reasoned judgment to prioritize through every stage of an examination, and differentiate what should be addressed by MRAs versus by less formal means.

3. BPI's Tabitha Edgens Joins FedSoc Panel on Access to Banking

Tabitha Edgens, BPI Executive Vice President and Co-Head of Regulatory Affairs, participated on Wednesday in a Federalist Society panel discussion titled "Regulation and Fair Access to Banking" alongside Brian Knight of the Alliance Defending Freedom and the Competitive Enterprise Institute's John Berlau. The panel was moderated by American Banker Washington Bureau Chief John Heltman. Here are a few highlights.

• Backdrop. Panelists noted that the White House issued an executive order in August targeting "politicized and unlawful debanking," which is currently being implemented by the banking agencies. The OCC issued a recent report on the topic.
• Behind the Scenes. Supervision largely occurs out of public view, Edgens noted, because of the restrictions of confidential supervisory information and suspicious activity reporting. "A lot of what happens in supervision is behind the scenes," she said. She cited the example of recently published FDIC letters with banks seeking to engage in crypto activities as a rare "peek behind the curtain." Brian Knight noted the legal limits that bolster the opacity of account closures, such as the prohibition on sharing information with the subject of a suspicious activity report. Berlau suggested that banks should be allowed to disclose the reason for an account closure if they choose to do so. "They should certainly be able to be able to be forthcoming with a customer like that," he said. "Some of the law enforcement justification is, 'well, this will tip off potential criminals.' And chances are, if they're potential criminals, they're already going to be tipped off by the bank account closing itself. …Banks should be able to talk about [it] and give the reason why."
• Ongoing Reforms. Panelists discussed the banking agencies' pending reforms to increase transparency and align supervision with material risks. "Both the FDIC and the OCC are trying, via regulation, to define what an unsafe and unsound practice is, and that will help bind the examiner and will provide more predictability to the banks about … 'OK, well, where is that line where the regulator may have a legitimate interest, versus what is just sort of our general course of business?'" Knight said. That key reform will empower banks to make business judgments that better serve customers and the economy, Edgens said. "For the first time, they're adopting a proposed definition of this term that is a huge behemoth in banking regulation, and they're tying it to financial risks consistent with the case law that has defined what unsafe or unsound practices are," she said. "So by tying it to actual financial risks … it's eliminating so much of that subjectivity in the supervision process."
• Unknown Scale. When asked about quantifying the scale of bank account closures, Edgens responded that "my understanding is that the percentage of accounts that are closed each year is small," and cited a recent FDIC survey showing that 96 percent of American households have bank accounts, the highest number the agency has recorded since the survey began. "There's certainly more work to do, but … it is trending well, and access to financial services, fortunately, is increasing, and we're committed to increasing it further," she said.

• Business Judgments. Panelists agreed that banks should not be required to provide services that they are not equipped to provide or that do not make business sense for the institution. Edgens said: "the harder sort of line drawing exercise…is…how we ensure that institutions can make business decisions that work for the business, that work for their risk management, [and] that work for their legal compliance." Knight said: "We need to, we need to allow banks to make economically rational, profitable, sensible choices…"

4. OCC Proposes to Raise Size Cutoff for National Banks Subject to 'Heightened Standards' and Seeks Feedback on the Guidelines

Federal Reserve Governor Christopher Waller, who interviewed this week for chair of the central bank, said he would emphasize to the President the importance of central bank independence. "I spent 20 years of my life working on central bank independence and why it was important. There's no doubt," Waller said in a CNBC interview this week. "I've got a long paper trail of this. The one thing everybody always forgets in central bank independence is there's another side of it, which is accountability. There's no institution in this country that is unaccountable to the electorate … and that's what people often forget is that we want central bank independence to be free of political interference, but we still have to be accountable to the American public, and we try to do that with the chair testimony to Congress twice a year" and with post-FOMC meeting press conferences. Other candidates for the chairmanship include Kevin Hassett, Kevin Warsh, Michelle Bowman and Rick Rieder, according to media reports.

5. OCC Issues Proposals on Preemption of State Escrow Interest Laws

The FDIC this week proposed licensing rules to govern banks' applications to issue of stablecoins through a subsidiary and to engage in stablecoin-related activities. The proposal would implement provisions of the GENIUS Act, a stablecoin law enacted earlier this year that allows insured depository institutions to issue payment stablecoins through a subsidiary and to engage in certain related activities.

In Case You Missed It

BPI, Joint Trades Urge FCC to Go Further to Stop Fraudulent Calls

In a comment letter this week, BPI and a coalition of trades called on the Federal Communications Commission to strengthen efforts to require telecom providers to authenticate calls. Illegal "spoofed" calls enable criminals to impersonate banks and other legitimate companies to defraud customers. More broadly, the letter calls for telecom providers to take proactive steps to combat fraud. "Currently, fraud committed through voice calls and text messages continues unabated because, unlike banks and credit unions that have customer identification obligations, wireless providers take few steps to stop fraudsters from impersonating legitimate companies and gaining consumers' trust," the letter says. "That must end."

• Learn More. Fraud is a pervasive national threat that can only be resolved through coordination among affected industries and between the private sector and government, BPI has emphasized. Banks have invested significantly in fighting fraud, but telecom, social media and tech companies like Meta have an obligation to prevent and mitigate fraud that proliferates on their platforms. Read more here.

The Crypto Ledger

Here's the latest in crypto.

• World Liberty Financial Applies for National Trust Bank Charter. World Liberty Financial, a crypto firm affiliated with the Trump family, has applied for an OCC national trust bank charter, the firm announced this week. The company aims to use a national trust bank charter to issue its USD1 stablecoin and to allow customers to use and convert the coin more efficiently.
• Wyoming Issues State-Backed Stablecoin. Wyoming this week announced it has issued the first state-backed stablecoin - specifically, the "first blockchain-based asset backed by a U.S. state."
• 'Wrench Attacks' Hit Retirees, Retail Investors. Violent robberies, sometimes known as "wrench attacks," have targeted retail investors in crypto, including elderly retirees, according to a recent Bloomberg Businessweek article.

CFPB, FTA Appeal Court Order Pausing Compliance Deadline for 1033 Rule

The CFPB in late December appealed a federal district court's Oct. 29, 2025 order pausing the compliance deadline for the Section 1033 data-sharing rule and blocking enforcement of that rule while the CFPB engages in a new rulemaking process. The Financial Technology Association also appealed the order. BPI has emphasized that a stay of the compliance deadline is necessary to avoid forcing banks to invest resources in building systems that will be rendered obsolete by a subsequent rule.

Traversing the Pond

Here's the latest in international banking policy.

BCBS Risk Data Principles (BCBS 239). The Basel Committee on Banking Supervision this week published a paper outlining key themes and challenges related to banks' risk data aggregation and reporting practices. The paper centres on the BCBS global standard that sets principles for how banks should manage, aggregate, and report their risk data so that information is accurate, complete and timely. Such accurate, timely and comprehensive reporting is critical for identifying and managing material risks, the BCBS said. Recent outreach to the banking industry on this topic included information sharing on cross-border issues, governance of risk data aggregation activities and implications from leveraging emerging technology, among other discussions.

The paper:

• Acknowledges "complexity of implementation" which implicitly recognises that banks need flexibility to design and implement long term strategies "reflecting changes in the business, technology and risk landscape". Banks are therefore expected to adapt their approaches over time as business models, technology and the risk landscape evolve, which implicitly requires flexibility in how they design and implement their strategies.
• Notes there significant cross border regulatory complexity in this area and specifically comments that "internationally active banks face particular challenges in aligning data management practices across subsidiaries and local affiliates in various countries". The paper flags the importance of consistency and inherent difficulty of aligning with differing principles, expectations and, in some cases, requirements across jurisdictions, and points to the use of standardised practices to promote greater consistency.
• Identifies the importance of risk and materiality. The paper emphasises that risk data aggregation and reporting should support the identification and management of material risks that could lead to financial losses and affect the safety and soundness of institutions. In the paper, for instance, it notes that compensating control mechanisms work best when they are riskbased, applying greater caution to outputs where there are known data aggregation shortcomings and stresses the need to focus efforts on inscope, material data and to adapt to changes in risk and business environment.
• Lagarde's Successor: Key Candidates. Economists in a recent Financial Times survey favor Pablo Hernandez de Cos and Klaas Knot to succeed Christine Lagarde as the next ECB president. Hernandez de Cos is the former governor of Spain's central bank, while Knot has led the Dutch central bank. The position will become available in November 2027 when Lagarde's term expires. Other contenders may include the German Bundesbank's Joachim Nagel and ECB board member Isabel Schnabel.
• Digital Cloud Providers. Three European financial supervisory authorities flagged 19 critical third-party cloud or software providers under the Digital Operational Resilience Act. The list includes tech giants like Amazon, Google and Microsoft, consultants such as Accenture and other firms, including software vendors and cloud providers. Experts debate how much control the EU can exert over multinational cloud service providers in practice.

Things to Watch Next Week

• The House Financial Services Committee's Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity holds a hearing on the Fed's balance sheet on Wednesday.
• The House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on Tuesday on fintech innovation.
• The Economic Club of Washington, D.C. hosts an event on Friday with Circle CEO Jeremy Allaire.

Member News

Fifth Third, Comerica Shareholders Approve Merger

The shareholders of Fifth Third Bancorp and stockholders of Comerica Inc. voted this week separately to approve the proposed merger of the two banks. The transaction is expected to close in the first quarter of 2026.

JPMorgan Takes Over Apple Card

JPMorgan Chase this week announced it will become the new issuer of the Apple Card, taking over the portfolio in approximately two years. Learn more here.

Upcoming Events

• 1/13/2026: House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Hearing on Tuesday on Fintech Innovation
• 1/14/2026: House Financial Services Committee Task Force on Monetary Policy, Treasury Market Resilience and Economic Prosperity Hearing on Fed Balance Sheet
• 1/15/2026: Senate Banking Committee Market Structure Markup
• 1/15/2026: Economic Club of Washington, D.C. Event on Digital Money with Circle's Jeremy Allaire