Washington D.C.

A couple of weeks ago Bankeration talked about an AI executive order that appeared imminent. This week, it arrived. President Trump signed an order directing AI developers to provide advance access to certain frontier AI models before public release and instructing agencies to help community banks, rural hospitals, utilities, and state and local governments gain access to AI-driven cybersecurity tools. The administration also plans to establish a voluntary AI cybersecurity clearinghouse to coordinate vulnerability detection and remediation.

The heads of the Federal Reserve, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA) appeared before the House Financial Services Committee this week, where lawmakers focused on stablecoins, private credit, bank mergers, and supervisory reform. Regulators defended efforts to shift supervision toward material financial risks rather than procedural deficiencies, highlighted ongoing implementation of the GENIUS Act, and signaled support for updating merger reviews to reflect competition from fintechs and other nonbanks. Officials also warned about growing AI-driven cybersecurity risks and said they are collecting more data on private credit markets amid concerns about opacity and underwriting quality.

All 11 Democrats on the Senate Banking Committee introduced legislation that would fully restore the Consumer Financial Protection Bureau’s funding and make Federal Reserve transfers to the agency mandatory. The bill has little chance of advancing in the current Congress, but it offers a preview of Democrats’ plans should they regain control of Congress after the midterm elections. Republicans cut the CFPB’s funding cap roughly in half last year, and the proposal would restore the agency’s original funding formula established under Dodd-Frank.

Regulation

The Federal Reserve’s latest Supervision and Regulation Report painted a largely positive picture of the banking system. More than 99% of banks remained well capitalized at the end of 2025, deposits reached a record $19.5 trillion, loan growth remained steady, and profitability stayed near recent historical norms. The report also provided the clearest look yet at Vice Chair for Supervision Michelle Bowman’s effort to reshape bank oversight. More large banks are now considered “well-managed,” outstanding supervisory findings have declined, and examiners are being directed to focus on material financial risks rather than procedural or documentation deficiencies.

The Trump administration took steps this week to bring banks and payments providers more directly into its immigration enforcement efforts. The Consumer Financial Protection Bureau issued guidance stating that lenders may need to consider a borrower’s immigration status when assessing repayment ability, while the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and federal banking agencies urged banks to scrutinize potential unauthorized employment schemes, including certain uses of individual taxpayer identification numbers, payroll arrangements, and shell companies. Separately, Tennessee enacted a new tax on international remittances sent through money transmitters, adding to a growing set of federal and state policies aimed at restricting financial activity associated with undocumented immigrants.

Efforts to exempt taxes and tips from credit card interchange fees suffered a series of setbacks this week. Illinois lawmakers delayed implementation of the state’s interchange fee law for a second time, and a federal judge subsequently ruled that federal law preempts key portions of the measure for national banks, federal savings associations, and payment networks. Meanwhile, Colorado Gov. Jared Polis vetoed a similar bill, citing legal uncertainty, operational challenges, and concerns about creating a state-specific carveout within the national payments system.

Rates

Treasury yields moved higher this week after a stronger-than-expected jobs report led investors to scale back expectations for Federal Reserve rate cuts and revive speculation about additional tightening. The two-year Treasury yield ended the week at 4.16%, its highest level in more than a year, while the 10-year Treasury yield rose to 4.54%. Mortgage rates edged lower, with Freddie Mac’s 30-year fixed-rate mortgage easing to 6.48% from 6.53% the prior week.

Economic data pointed in different directions this week. The Institute for Supply Management’s manufacturing index rose to 54, indicating the fastest pace of factory-sector expansion in four years, while its services index climbed to a three-month high, signaling continued growth across most of the services economy. Labor market data remained firm, with job openings jumping to 7.62 million in April, the highest level since 2024, and nonfarm payrolls increasing by 172,000 in May. Unemployment held at 4.3%. Some economists attributed part of the hiring surge to preparations for the FIFA World Cup, particularly in leisure and hospitality. Elsewhere, consumer borrowing continued to rise, small-business hiring plans fell to their lowest level since May 2020, and initial jobless claims reached their highest level since February. Manufacturing and services firms also reported accelerating input costs, with the services-sector prices gauge reaching its highest level since 2022.

Credit

The Small Business Administration (SBA) raised its cumulative loan limit for the first time since 2010, allowing borrowers to combine up to $5 million in financing from the agency’s flagship 7(a) program with another $5 million from its 504 program. The change, which takes effect July 4, doubles the maximum amount of SBA-backed financing available to a single borrower and is intended in part to support manufacturing investment. Industry groups and lenders welcomed the move, though many continue to advocate for raising the standalone 7(a) loan cap, which remains at $5 million.

Private credit found itself under the spotlight again this week. The Wall Street Journal reported that lenders have begun tightening underwriting standards, raising pricing, limiting leverage, and scaling back borrower-friendly terms as investor demand becomes more selective. At the same time, insurers are reportedly increasing premiums and reviewing coverage for private-credit firms amid expectations of greater litigation and regulatory scrutiny. Speaking at Bloomberg’s Global Credit Forum, several credit investors argued that defaults and losses have yet to fully work through the system, pointing to rising default rates and ongoing debate around valuations and disclosure practices.

Digital Assets (aka Cryptocurrency)

A new industry group focused on crypto “vaults” launched this week, The Block reports, with support from firms including Galaxy, Morpho, BitGo, and Andreessen Horowitz. Crypto vaults allow users to deposit digital assets into a pooled investment vehicle that automatically lends, stakes, or otherwise deploys those assets in pursuit of higher returns. In exchange, users receive a token representing their share of the pool. The coalition, organized by the Crypto Council for Innovation, is seeking greater regulatory clarity around how these structures should be treated under U.S. securities laws, arguing that existing financial regulations do not neatly map onto the underlying technology.

The Wall Street Journal reported that JPMorgan Chase, Citigroup, Bank of America, Wells Fargo and other large banks are working through the Clearing House to launch a shared tokenized-deposit network in 2027, allowing bank deposits to move across blockchain infrastructure with near-instant settlement. Separately, Mastercard expanded its stablecoin settlement capabilities, adding support for several dollar-backed stablecoins, including USDC and RLUSD, and enabling settlement across multiple public blockchains as part of its push toward 24/7 payments.

Fresh announcements from crypto and fintech firms this week included plans by Revolut’s proposed U.S. bank to offer stablecoin services alongside traditional FDIC-insured banking products, according to Reuters, while Coinbase partnered with payments processor Checkout.com to allow merchants to accept stablecoin payments and continue settling in U.S. dollars. Separately, Ethena selected Anchorage Digital to manage collateral for its growing institutional lending business, allowing borrowers to access crypto-native credit while keeping assets in regulated custody.

Transactions

• CORA Group acquired Finastra’s mid-market banking products, including its Phoenix core banking system and MalauzAi digital banking offerings. CORA Group is owned by Toronto-based Constellation Software. Terms were not disclosed.

• Omaha-based First National of Nebraska agreed to acquire Missouri-based Blue Ridge Bancshares, Inc. The transaction will add $850 million in assets to FNN’s $35 billion balance sheet. Terms were not disclosed.

Earnings

The Federal Deposit Insurance Corporation’s (FDIC) first-quarter Quarterly Banking Profile showed industry earnings rising to $80.5 billion, annual loan growth accelerating to 7.1%, and domestic deposits increasing for a seventh consecutive quarter. Net interest margin declined 8 basis points to 3.31%, unrealized securities losses rose to $325 billion, and capital ratios edged lower as balance sheet growth outpaced capital accumulation.

Community banks largely reflected those broader trends. Net income increased 3.9% to $8.1 billion, loan growth remained steady, and deposits continued to expand. Community bank net interest margin declined 6 basis points during the quarter to 3.71%, while capital ratios generally improved. The more notable developments were on the credit side, where past-due and nonaccrual loans reached their highest level since early 2020, driven primarily by commercial real estate and farm lending. The FDIC also reported that the number of problem banks fell from 60 to 54, while the industry lost a net 60 institutions during the quarter, largely due to mergers and consolidations.

Washington D.C.

The New York Times published a lengthy investigation this week examining the Commodity Futures Trading Commission’s handling of several crypto and prediction-market firms with ties to the Trump family. The report alleged that agency leadership sidelined career staff, reduced enforcement activity, and intervened on behalf of firms seeking regulatory approvals. The White House rejected the allegations, with spokesman Davis Ingle stating: “there are no conflicts of interest.” The story has complicated the path forward for the CLARITY Act. TD Cowen reiterated its view that market structure legislation is unlikely to pass this year, citing growing pressure on Democrats to demand conflict-of-interest provisions. President Trump, meanwhile, renewed his support for the legislation, pledging to establish a “future-proof” digital asset market structure. The banking industry also intensified its opposition. JPMorgan Chase CEO Jamie Dimon vowed that banks would continue fighting the bill in its current form, saying, “We’ll fight it. If we lose, we lose. We’ll live. But it will be fought.”

Fair-lending advocates sued the Consumer Financial Protection Bureau (CFPB) over its recent changes to Regulation B under the Equal Credit Opportunity Act, arguing that the revisions improperly narrow anti-discrimination protections. Separately, the CFPB ordered employees back to the office five days per week and directed roughly 450 out-of-state workers to relocate to Washington, D.C. by the end of August. The move follows the closure of the agency’s regional offices and comes as the Trump administration pursues a broader reduction in force that could cut the bureau’s staffing levels roughly in half.

Regulation

The FDIC proposed anti-money laundering and sanctions compliance standards for stablecoin issuers that largely mirror a Treasury Department framework released in April. The proposal would require the FDIC to notify the Treasury Department’s Financial Crimes Enforcement Network at least 30 days before pursuing most formal anti-money laundering enforcement actions against a stablecoin issuer, giving FinCEN an opportunity to review and comment.

The fight over Illinois’ Interchange Fee Prohibition Act intensified as the law’s July 1 effective date approaches. Bank and credit union groups asked a federal court to resolve key legal questions by early June, arguing that the requirement to exempt taxes and gratuities from interchange fees is technically unworkable. Merchants, meanwhile, urged the Office of the Comptroller of the Currency to withdraw its recent preemption order, which would shield national banks from the law. The outcome could have implications beyond Illinois, with Colorado lawmakers advancing a similar measure and other states watching closely.

The Financial Stability Board warned that the rapid growth of private credit could pose risks to the broader financial system, citing limited transparency, fragmented data, and increasingly complex links between private credit funds and banks. The report estimated the market has grown to between $1.5 trillion and $2 trillion globally and noted that banks remain deeply involved through investments and financing arrangements. Regulators in the United States and abroad continue to monitor the sector, though officials have said they do not currently see evidence of broader financial contagion.

Rates

Treasury yields fell this week as markets responded to signs that a reopening of the Strait of Hormuz may be nearing and shifted focus to next week’s employment data. The 10-year Treasury yield declined 11.8 basis points over the week to 4.45%, while the two-year fell 11.3 basis points to 4.01%. Freddie Mac reported that the average 30-year fixed-rate mortgage rose slightly to 6.53% from 6.51% the prior week, while the 15-year fixed-rate mortgage increased to 5.87%.

Economic data painted a mixed picture this week. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, rose 3.8% year-over-year in April, while Core PCE increased 3.3%. First-quarter GDP growth was revised down from 2.0% to 1.6%, consumer spending rose just 0.1% in April, and inflation-adjusted disposable income fell for a third consecutive month as the personal savings rate dropped to 2.6%. Initial jobless claims increased to 215,000, though they remain near historically low levels. Consumer confidence slipped, CEO confidence fell into negative territory, and food inflation continued to accelerate, with grocery prices posting their largest increase in nearly four years. In housing, the national foreclosure inventory rose to 0.4%, its highest level since 2020, with 77% of metro areas reporting year-over-year increases.

Digital Assets (aka Cryptocurrency)

The Bank for International Settlements reported that its Project Agorá prototype successfully demonstrated how tokenized central bank reserves and commercial bank deposits could be used to settle cross-border transactions across multiple currencies and jurisdictions. The project, which includes major central banks and more than 40 private-sector institutions, will now move to real-value testing. The BIS said the results suggest tokenization could reduce settlement delays and operational friction while preserving existing anti-money laundering, sanctions screening, and compliance frameworks.

Paxos became the first blockchain-native firm to receive Securities and Exchange Commission approval to operate a registered clearing agency, allowing its subsidiary to provide securities clearing and settlement services using blockchain-based infrastructure after several years of pilot programs. Separately, Mastercard secured a New York BitLicense, one of the industry’s most demanding licenses, as it expands its stablecoin and tokenized-deposit strategy and prepares to support digital-asset settlement across its payments network.

Several large consumer-facing crypto, payments, and fintech firms rolled out new products this week aimed at expanding the use of digital assets in everyday financial activity. Coinbase relaunched its direct deposit service, allowing customers to route paychecks directly to the platform and automatically convert funds into stablecoins or other digital assets. Block’s Cash App, meanwhile, added support for USDC transfers across Ethereum, Solana, Polygon, and Arbitrum, expanding beyond its traditional Bitcoin focus. SoFi made its SoFiUSD stablecoin available to all 15 million members, becoming one of the first federally chartered banks to offer a native stablecoin directly through a consumer banking app and outlining plans to pair it with tokenized deposits.

The Commodity Futures Trading Commission approved two notable expansions of the crypto derivatives market this week. Kalshi received approval to offer Bitcoin perpetual futures, bringing a product long associated with offshore crypto exchanges into a regulated U.S. venue. Separately, Coinbase received permission to offer U.S. customers access to offshore perpetual futures markets through its Deribit subsidiary, making it the first U.S. exchange authorized to provide access to the global crypto perps market.

Spot Bitcoin exchange-traded funds recorded nine consecutive days of net outflows through May 28, with investors pulling roughly $2.8 billion from the products. The withdrawals pushed year-to-date flows into negative territory and coincided with weaker demand from large Bitcoin holders, according to CryptoQuant. The firm reported that balances held by large investors have been contracting at a pace similar to the 2022 bear market, while a record share of Bitcoin is now held by long-term investors rather than new buyers entering the market.

Transactions

• Scotiabank agreed to acquire Dallas-based (but Tulsa-headquartered) Maple Financial Holdings Inc. The deal will only add $1 billion in assets to Scotiabank’s $1.48 trillion CAD balance sheet, but will give the third-largest Canadian bank the ability to offer FDIC insurance. Terms were not disclosed.

• Coastal Carolina Bancshares, Inc. and Beacon Holding Company, Inc. agreed to a merger of equals in an all-stock transaction. The two South Carolina institutions will combine to hold approximately $2.2 billion in assets.

• Legend Bancorp, Inc. agreed to acquire Graham Savings and Loan, SSB. The two Texas banks will combine to hold approximately $1.4 billion in assets. Terms were not disclosed.

• 1870 Holdings, Inc. agreed to acquire Rushville Bancshares, Inc. in an all-stock transaction. The two Illinois institutions will combine to hold approximately $1 billion in assets. The price was not disclosed.

• Missouri-based Alliance Bancshares agreed to acquire Illinois-based ASB Management Corp. The combined institution will hold approximately $512 million in assets. Terms were not disclosed.

Washington D.C.

President Trump issued an executive order directing federal financial regulators to review rules that may be restricting fintech and digital asset firms’ access to the banking system. The order specifically instructed the Federal Reserve to evaluate whether uninsured depository institutions and nonbank financial companies should receive direct access to Federal Reserve payment accounts and services, and whether existing law allows broader access. One day later, the Federal Reserve advanced its proposed “skinny” payment account framework for public comment. The proposal would give certain eligible nonbanks and crypto firms limited access to Fed payment rails, including Fedwire and FedNow, while excluding ACH access, discount window borrowing, and interest on balances.

The House passed its revised housing package in a 396–13 vote, sending the legislation back to the Senate. The updated bill softened an earlier restriction on build-to-rent investors by removing a requirement that firms sell properties within seven years, while preserving broader limits on institutional ownership of single-family homes. The House version also includes several community bank measures omitted from the Senate bill, including provisions that would ease rules around brokered and custodial deposits and reduce oversight for smaller institutions.

President Trump signed an executive order directing Treasury, banking regulators, and the Consumer Financial Protection Bureau (CFPB) to develop anti-money-laundering guidance focused on financial activity tied to undocumented workers and employers who violate immigration laws. The order stops short of requiring banks to verify customers’ citizenship status, but instructs agencies to issue new “red flag” guidance, propose changes to Bank Secrecy Act rules, and revisit customer identification standards over the coming months.

Regulation

Federal banking regulators proposed the first major overhaul of the CAMELS supervisory ratings framework since the 1990s, continuing the Trump administration’s broader push to reduce subjectivity in bank supervision. The proposal would reduce the weight of the “Management” component in determining a bank’s overall rating, focus supervision more narrowly on material financial and operational risks, and remove reputational risk considerations entirely. Regulators said the changes are intended to create clearer, more quantitative, and more predictable standards for evaluating bank safety and soundness.

The Office of the Comptroller of the Currency (OCC) finalized a rule preempting state laws that require national banks to pay interest on mortgage escrow accounts, affecting homeowners in states including New York and California. The agency said the move provides clarity and reinforces federal preemption standards after several conflicting court decisions. State regulators and consumer advocates argued it could reduce protections and lower returns for homeowners holding escrow balances. The rule is likely to face additional legal challenges.

The Securities and Exchange Commission (SEC) delayed plans to release a proposed “innovation exemption” that would have allowed crypto firms to trade tokenized versions of publicly traded stocks under a lighter regulatory framework. The proposal reportedly drew concern from stock exchanges, former regulators, and market participants over the possibility of “third-party” tokens being issued without the involvement of the underlying companies, raising questions around shareholder rights, dividend payments, voting procedures, and sanctions compliance. SEC Commissioner Hester Peirce pushed back on some of the criticism, saying the proposal was intended to cover only digital representations of existing publicly traded equities rather than synthetic or unbacked products.

South Carolina enacted a crypto-focused law prohibiting state participation in central bank digital currency pilots while protecting the use, self-custody, and mining of digital assets. The state’s Strategic Digital Assets Reserve Act, which made news when it was announced last year, remains pending.

Rates

Treasury yields were volatile this week as markets reacted to inflation concerns, the Iran conflict, and growing expectations that the Federal Reserve may need to keep rates higher for longer. The 30-year Treasury yield briefly touched 5.2%, its highest level since 2007, before ending the week near 5.06%, while the 10-year yield climbed as high as 4.69% before closing around 4.57%. Mortgage rates moved higher alongside the bond selloff, with Freddie Mac’s 30-year fixed rate mortgage rising 15 basis points to 6.51%, its highest level since last September.

Economic data this week painted a mixed picture. Pending home sales rose 1.4% in April for a third consecutive monthly increase, though housing starts fell 2.8% as single-family construction posted its largest decline since August. Manufacturing activity expanded at the fastest pace in four years, with the S&P Global flash manufacturing PMI rising to 55.3 as businesses accelerated stockpiling amid supply-chain concerns and rising input costs. Initial jobless claims remained subdued at 209,000. Meanwhile, consumer sentiment fell to a record low in the University of Michigan survey, with long-run inflation expectations rising to 3.9% and 57% of respondents citing high prices as a strain on household finances. Energy markets also remained in focus after U.S. crude inventories posted a record drawdown of 17.8 million barrels as exports surged.

Artificial Intelligence (AI)

Visa warned that generative and agentic AI are dramatically lowering the cost and sophistication threshold for fraud, with scammers increasingly using deepfakes, synthetic identities, and automated phishing campaigns at scale. An independent report from AI safety nonprofit METR also found that frontier AI systems at Anthropic, Google, Meta, and OpenAI were capable of deceptive behavior during testing, including attempts to falsify task completion and conceal activity.

The regulatory response to Anthropic’s Mythos model continued to evolve. Bloomberg reported that the Federal Reserve and the OCC have paused some cyber-related examinations at large banks while firms assess vulnerabilities exposed by the model. Anthropic also revised the terms of its Project Glasswing cybersecurity program to allow partners, including JPMorganChase, to share Mythos-discovered vulnerabilities with community banks, regulators, and industry peers. The White House appeared set to issue an executive order establishing a voluntary framework for frontier AI testing and information sharing before abruptly pulling the signing event. Politico later published the unsigned draft order, which proposed voluntary pre-release reviews of advanced AI models and expanded access for critical infrastructure operators, including community banks, to AI-enabled cybersecurity tools.

Also in the news this week: OpenAI launched a Plaid integration allowing ChatGPT Pro users to connect bank accounts directly to the chatbot for personal financial management and tailored financial advice. Meanwhile, Mozilla announced that its upcoming Firefox redesign will include a prominent setting allowing users to disable all AI features entirely.

Digital Assets (aka Cryptocurrency)

Tokenized equities trading volume reached a record $3.57 billion this week, according to The Block, as firms continue pushing traditional market activity on-chain. Binance and Hyperliquid accounted for most of the volume. Separately, Standard Chartered projected that tokenized assets could reach $4 trillion by the end of 2028, with decentralized finance protocols expected to capture much of the resulting activity. JPMorgan took a less rosy view of tokenized money market mutual funds, advising that the asset class is unlikely to grow beyond 10% to 15% of the stablecoin market without regulatory changes.

Bitcoin ATM operators remained under pressure. Bitcoin Depot filed for Chapter 11 bankruptcy and began winding down operations, citing litigation and regulatory costs, while Missouri sued CoinFlip over allegations that its kiosks facilitated fraud targeting elderly consumers.

Institutional consolidation continued as Deloitte acqui-hired blockchain infrastructure firm Blocknative, while Standard Chartered moved to absorb the crypto custody operations of Zodia Custody into its own digital asset infrastructure.

Transactions

In a noteworthy development that isn’t quite a transaction but seems to fit in this section, Hovde Group launched a technology and media vertical. Hussain Ali and Arman Khoshbin of Khoshbin Capital will lead the initiative. Hovde previously joined with the Independent Community Bankers Association and others to form BankTech Ventures, and described the new unit as a “natural extension” of its longstanding focus on financial institutions.

• San Francisco-based fintech Mercury raised $200 million in a Series D round after receiving conditional approval from the OCC to form a de novo bank. Mercury Bank will be headquartered in Salt Lake City, Utah.

• Bank First agreed to acquire PSB Holdings, Inc. in an all-stock transaction valued at $202.9 million. The two Wisconsin banks will combine to form a $7.6 billion asset institution.

• Morton Community Bank agreed to acquire First Bank of Manhattan and New Lenox. The two Illinois institutions will combine to form a $5.6 billion asset institution. Terms were not disclosed.

Washington D.C.

The Senate confirmed Kevin Warsh as Federal Reserve chair in a narrow 54–45 vote, the slimmest margin for a Fed chair since Senate confirmation became required in 1977. Warsh takes over as inflation accelerates amid higher energy prices tied to the Iran conflict, setting up an immediate tension between the Fed’s inflation mandate and the administration’s push for rate cuts.

The House passed three bipartisan bills aimed at easing regulatory burdens on community banks and credit unions, continuing House Financial Services Chair French Hill’s push to “make community banking great again.” The SMART Act streamlines examinations for well-capitalized and well-managed institutions under $6 billion in assets. The TRUST Act raises the threshold for 18-month exam cycles from $3 billion to $6 billion in assets. A third bill would codify a Treasury Department program pairing smaller institutions with larger firms to help them develop operational capacity and compete for government financial services contracts. The Independent Community Bankers of America urged the Senate to quickly advance the measures.

House lawmakers unveiled a revised housing package that softens the Senate’s proposed restrictions on institutional investors purchasing single-family homes. The House version would still allow large investors owning 350 homes or more to continue purchasing single-family homes under certain exemptions, after lawmakers warned the Senate approach could slow rental housing development and construction. The bill also incorporates several community bank provisions, including brokered deposit relief, streamlined de novo bank applications, and support for minority and rural institutions.

Clarity Act

The Senate Banking Committee advanced the Clarity Act in a bipartisan 15–9 vote, moving the long-stalled crypto market structure bill to the Senate floor after months of negotiations among lawmakers, the White House, crypto firms, and banking trade groups. The legislation would split oversight between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), establish a certification process for digital assets, and preserve key protections for decentralized finance developers.

The banking lobby took a hard loss on stablecoin rewards. The Tillis-Alsobrooks compromise language — prohibiting rewards “economically or functionally equivalent” to interest on a bank account — remained intact after Senate Banking Chair Tim Scott blocked a bank-backed amendment from receiving a vote during markup. Banking trade groups said they will press the issue on the Senate floor, warning the bill could accelerate deposit flight from traditional banks.

Significant hurdles remain to passing the legislation. Democrats are pushing for stronger ethics provisions tied to President Trump’s family crypto ventures, additional anti-money-laundering safeguards, and broader consumer protections, while analysts caution the bill still lacks the bipartisan support needed to clear the Senate’s 60-vote threshold.

Regulation

The Federal Deposit Insurance Corporation (FDIC) published a detailed study on deposit flows in the 2023 bank failures, finding that deposit concentration and large depositor behavior were central to the runs. The FDIC understandably tackles the data through the lens of deposit insurance, but the underlying data show the largest depositors were far more likely to flee even after accounting for coverage. At the three banks that collapsed in March 2023, a small group of top depositors held between 39% and 62% of deposits, and business deposits — overwhelmingly uninsured — accounted for most of the outflows. The FDIC found that depositors who ran generally withdrew nearly all balances, including operational accounts typically used for payroll, escrow, or payments activity. The findings dovetail with the Federal Reserve Bank of New York’s 2024 “Tracing Bank Runs in Real Time” report, which concluded the March 2023 turmoil was driven primarily by a relatively small number of large wholesale depositors moving funds through Fedwire, rather than by retail depositors.

California Governor Gavin Newsom appointed former Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra to lead the state’s newly created Business and Consumer Services Agency, which launches July 1 pending Senate confirmation. The new agency will oversee eight departments, including the California Department of Financial Protection and Innovation, alongside regulators covering alcohol, cannabis, horse racing, and real estate. Newsom framed the appointment as a consumer protection counterweight to the Trump administration’s rollback of CFPB rules and enforcement activity.

Rates

Treasury yields rose sharply this week as markets priced in prolonged Middle East tensions and higher energy prices. The 10-year Treasury yield climbed 23 basis points to 4.60%, while the 30-year Treasury yield reached 5.13%, its highest level since 2007. Mortgage rates were little changed despite the move in long-term yields, with Freddie Mac’s 30-year fixed-rate mortgage averaging 6.36%, down one basis point from the prior week.

Inflation data this week showed higher energy costs spreading through the economy. Consumer prices rose 0.6% in April and 3.8% year over year, while producer prices climbed 6% annually, the fastest pace since 2022. Import prices rose 1.9% in April as petroleum costs jumped 19%, electricity prices increased 6.1% from a year earlier, and transportation and freight costs accelerated sharply. Gasoline prices rose 5.4% in April after a 21.1% jump in March, while grocery prices climbed 0.7% and airfares rose 2.8%. Despite mounting price pressures, retail sales increased 0.5% for a third straight monthly gain and industrial production rose 0.7%, its strongest increase in more than a year. The Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED) found households still generally viewed their own finances positively, though concern about inflation and job security continued to rise.

Credit

Commercial real estate lenders are reportedly abandoning the industry’s long-running “extend and pretend” strategy and taking losses on troubled properties instead. According to Bloomberg, banks and private lenders including Goldman Sachs and Deutsche Bank have begun selling distressed loans at steep discounts, foreclosing on struggling assets, and forcing sales as more than $130 billion in distressed commercial real estate debt remains outstanding. Distress remains concentrated in offices and multifamily properties, while foreclosures tied to commercial mortgage-backed securities reached their highest level since the post-financial crisis cleanup period.

American Banker reports that the end of pandemic-era mortgage relief programs is beginning to produce a new wave of distress among Federal Housing Administration (FHA) borrowers. Industry participants pointed to rising delinquencies tied to payment shock from deferred balances, higher taxes and insurance costs, and stricter FHA loss mitigation rules. Property data firm ATTOM reported foreclosure filings rose 18% from a year earlier in April, marking the 14th straight month of annual increases, though filings declined 8% from March. Completed foreclosures rose 42% year over year, while FHA-backed foreclosures increased 28% in the first quarter from a year earlier.

Digital Assets (aka Cryptocurrency)

Traditional finance firms continued expanding tokenized market infrastructure this week. JPMorgan filed to launch a tokenized money market fund on Ethereum, DTCC partnered with Chainlink on blockchain-based collateral management, and Franklin Templeton teamed with Kraken parent Payward on tokenized securities products. Also, Bloomberg had a great article this week about increasing use of blockchain in the repo markets – it’s worth a read if you have access.

Charters

Augustus, the fintech formerly known as Ivy, received conditional approval from the Office of the Comptroller of the Currency (OCC) to launch a national bank. The Dallas-based institution plans to focus on modernizing payment clearing infrastructure, built on a stablecoin-based, AI-native core system. Augustus Bank N.A. will be led by CEO Ferdinand Dabitz, the youngest CEO of a federally chartered bank in 140 years, alongside President , an OCC alum and former CEO of Green Dot Bank and United Texas Bank.

The FDIC approved Stellantis’ application for deposit insurance, clearing the way for the automaker to launch an industrial loan company (ILC) focused on captive auto lending. The proposed bank would fund itself through affiliated deposits, brokers, listing services, and direct online deposits while purchasing retail installment contracts from Stellantis dealers nationwide.

Transactions

• Mississippi-based Hancock Whitney agreed to acquire Florida-based OFB Bancshares, Inc. in an all-cash transaction valued at $377.6 million. The transaction will add approximately $2.1 billion in assets to Hancock Whitney’s $37 billion balance sheet.

• Brookfield Bancshares, Inc. agreed to acquire NSTS Bancorp in an all-cash transaction valued at $73.7 million. The two Illinois institutions will combine to form a $600 million asset entity.

• Two mutual banks agreed to merge their holding companies. New Hampshire-based Mascoma Bank and Maine-based Androscoggin Bank will continue to operate independently, and the CEOs of each institution will join the newly formed parent, ClearNorth Financial Mutual Holding Company. Terms were not disclosed.

• Texas-based Victory Bank announced a deal to acquire a 40% stake in McDonald Capital Management, a Texas-based wealth manager with assets under management of approximately $350 million. Terms were not disclosed.

Washington D.C.

Washington’s attention turned firmly toward crypto legislation this week. As we told you last week, new compromise language emerged in negotiations over stablecoin yield and broader market structure legislation. May 1 also marked the end of the comment period on the Office of the Comptroller of the Currency’s (OCC) proposed rule implementing the GENIUS Act. More than 250,000 comments were reportedly submitted, though only 223 had been publicly released by week’s end — including 84 added after the formal close of the comment period, largely featuring the crypto and banking industries’ heaviest hitters. Side note: a letter from Bankeration’s publisher, Attion Consulting, made the cut as well — more on that another time.

With everyone’s cards now on the table, the fight over stablecoin yield moved fully into public view. Banking groups including the American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Financial Services Forum, and Independent Community Bankers of America warned that the latest Tillis-Alsobrooks compromise still leaves room for crypto firms to recreate deposit-like products through staking, membership programs, balance-based rewards, and other “yield-like” incentives. The groups argued the proposal “falls short” of preventing deposit substitution and warned firms could evade restrictions through what one industry letter described as “cosmetic structuring.” Crypto firms, meanwhile, embraced the framework as the first workable path forward after months of deadlock. Coinbase executives publicly urged lawmakers to move ahead, accusing banks of trying to “kill competition” by steadily broadening the definition of prohibited yield, while Sens. Thom Tillis and Angela Alsobrooks signaled they are prepared to move forward over banking industry objections.

The pressure campaign is now colliding with the calendar. The Senate Banking Committee scheduled a May 14 markup and vote on the CLARITY Act — its second attempt after January’s planned markup collapsed. Even if Banking advances the bill next week, lawmakers still need to reconcile it with the Senate Agriculture Committee version and find 60 votes before sending anything to the House. Ethics provisions tied to President Trump’s crypto interests, anti-money-laundering standards, illicit finance concerns, and consumer protections all remain active points of negotiation. Sen. Kirsten Gillibrand warned this week there will be “no” crypto bill without ethics language restricting elected officials and senior administration officials from profiting off digital asset ventures tied to their public office.

The release of comments to the OCC rule also caught the attention of our friends and allies across the pond. Bank of England Governor Andrew Bailey warned of a coming “wrestle” with the U.S. over international stablecoin standards, arguing that dollar stablecoins with weak redemption mechanics could create run risks and destabilize jurisdictions with stricter convertibility regimes. European Central Bank President Christine Lagarde struck a similarly skeptical tone, arguing that even euro-denominated stablecoins pose risks to financial stability and monetary policy transmission, while again pushing the digital euro as Europe’s preferred alternative. The OCC comment file included several submissions addressing foreign issuer treatment and cross-border supervision. Groups including the Institute of International Bankers, BAFT, HSBC, Société Générale, Circle, and the Digital Chamber generally pushed against fragmented stablecoin regimes and duplicative oversight, instead favoring reciprocity, coordinated supervision, and “equivalent outcomes” between jurisdictions.

Regulation

Colorado lawmakers passed legislation banning swipe fees on the sales-tax portion of transactions, sending the measure to Gov. Jared Polis and potentially making Colorado the second state after Illinois to enact such a law. Merchant groups argued the bill was intentionally structured to regulate card networks rather than banks directly, an apparent effort to sidestep the Office of the Comptroller of the Currency’s (OCC) recent move to preempt Illinois’ law. Meanwhile, a federal appeals judge sent the Illinois interchange-fee challenge back to district court for further proceedings ahead of the law’s scheduled July 1 effective date. Banking groups continue arguing the laws are operationally unworkable, conflict with federal banking authority, and effectively impose price controls on interchange.

Rates

Rates closed the week little changed despite the volatile geopolitical backdrop. The 10-year Treasury yield ended Friday at 4.36%, down slightly on the week, while the 2-year closed at 3.89%. Mortgage rates moved modestly higher, with Freddie Mac’s average 30-year fixed-rate mortgage rising to 6.37% from 6.30% the prior week, while the 15-year fixed rate increased to 5.72%.

Indicators were mixed this week. Consumer sentiment fell to another record low at 48.2 in May as inflation expectations remained elevated and gasoline prices climbed above $4.50 per gallon nationally. At the same time, the labor market continued showing resilience: nonfarm payrolls rose 115,000 in April following a strong March gain, ADP reported the best month for private-sector hiring in more than a year, and initial jobless claims remained historically low at 200,000. New-home sales rose at the fastest pace of the year as builders cut prices and offered incentives, while consumer borrowing jumped by the most since 2022 and the personal saving rate fell to a three-year low.

The Federal Reserve’s latest Financial Stability Report struck a familiar balance: the banking system remains “sound and resilient,” but markets continue looking expensive and increasingly sensitive to shocks. The Fed again identified elevated asset valuations as the primary vulnerability facing the financial system, pointing to stretched equity prices, tight corporate credit spreads, and elevated leverage among hedge funds and life insurers. Officials also noted that Treasury market liquidity briefly deteriorated during March’s spike in interest-rate volatility tied to Middle East tensions, underscoring the market’s vulnerability during periods of acute stress. The Fed also said private credit redemption pressures remain “limited and manageable” despite growing scrutiny of the sector, while consumer credit and auto loan delinquencies continue running above pre-pandemic norms. In the Fed’s outreach survey, geopolitical risks, oil shocks, private credit, artificial intelligence, and persistent inflation ranked among the most-cited near-term financial stability concerns.

Digital Assets (aka Cryptocurrency)

Western Union may now be running the most important experiment in mainstream stablecoin adoption in traditional finance. The company this week formally launched USDPT, a dollar-backed stablecoin issued by Anchorage Digital Bank and built on Solana, with plans to use the token for treasury operations, cross-border settlement, exchange support, and agent payments. Consumer spending products tied to USDPT are expected to launch in more than 40 countries in 2026. Unlike many pilots to date, Western Union already operates at global scale, serving more than 150 million customers annually across more than 500,000 agent locations in over 200 countries and territories, including roughly 72,000 locations in the United States alone. The company processed approximately 290 million transactions in 2025.

Transactions

• Massachusetts-based Cambridge Financial Group, Inc. agreed to acquire New Hampshire-based First Seacoast Bancorp, Inc. in an all-cash transaction valued at $80.9 million. The transaction will add $639 million in assets to Cambridge’s $7 billion balance sheet.

• Pennsylvania-based NexTier, Inc. agreed to acquire Ohio-based Riverside Bank of Dublin, combining to form a $3.1 billion asset institution. Terms were not disclosed.

• Iowa-based Fidelity Ban Corporation agreed to acquire Minnesota-based Welcome State Bank. The transaction will add $44 million in assets to Fidelity’s $2.4 billion balance sheet. Terms were not disclosed.

• Tri-County Bancorp agreed to acquire Mayville Financial. The two Michigan banks will combine to form a $735 million asset institution. Terms were not disclosed.

Washington D.C.

Kevin Warsh advanced toward the Federal Reserve chairmanship this week after clearing the Senate Banking Committee on a 13–11 party-line vote. The nomination now moves to the full Senate ahead of Jerome Powell’s term as chair ends on May 15. Separately, Powell said he will remain at the Federal Reserve as a governor for an unspecified period, emphasizing he plans to keep a “low profile” and defer to Warsh once confirmed. His term as a Board governor runs through January 31, 2028, and he becomes only the second Fed chair to remain on the Board after stepping down, after Marriner Eccles in 1948.

Senators Thom Tillis and Angela Alsobrooks released compromise text on stablecoin yield that would bar rewards deemed “economically or functionally equivalent” to interest on bank deposits, while preserving activity-based incentives tied to bona fide platform use. The language directs regulators to define the equivalency standard and permissible activities through rulemaking. The deal, which has drawn support from Coinbase after earlier opposition, resolves a key sticking point that had delayed crypto market structure legislation and could clear the way for a Senate Banking Committee markup in the coming weeks.

The Treasury Department said it has initiated a review of Community Development Financial Institutions (CDFIs) to assess compliance with federal law and program requirements, including potential predatory practices and adherence to anti-discrimination standards. The move follows sustained criticism from the Trump administration, which has questioned the program’s use of taxpayer funds and delayed disbursement of congressionally appropriated funding through the Office of Management and Budget. Treasury officials said the review will coincide with additional rulemaking, with additional scrutiny expected for institutions serving minority or targeted communities.

Regulation

The Office of the Comptroller of the Currency (OCC) issued an interim final rule preempting an Illinois law that would ban interchange fees on taxes and tips, set to take effect July 1, 2026. The agency said the state measure would create an “unworkable” patchwork and interfere with national banks’ ability to operate card networks, affirming that federally chartered banks are not subject to the law. The move comes alongside ongoing litigation, with further legal challenges to the OCC’s preemption likely.

The Consumer Financial Protection Bureau (CFPB) finalized a scaled-back version of its small-business lending rule under Section 1071 of the Dodd-Frank Act, significantly narrowing its scope. The rule now applies to roughly 280 lenders, down from 2,500, and requires collection of 13 data fields beginning in 2028, with reporting in 2029. It raises the coverage threshold to lenders making at least 1,000 loans annually and reduces the definition of a small business to firms with $1 million in revenue, while eliminating more detailed demographic categories included in prior versions.

The Commodity Futures Trading Commission (CFTC) is turning to artificial intelligence to help review crypto-related registration applications and monitor markets, as the agency faces staffing constraints. Chair Michael Selig said AI tools can flag incomplete filings, speed up feedback, and automate parts of the review process, reducing reliance on manual workflows.

Oregon enacted a law offering new banks up to $1 million annually in state tax credits for three years to encourage de novo formation, with the program set to take effect in June. As American Banker reports, the move comes as the state has seen no new bank charters since 2006 and now has just 13 state-chartered banks, down from more than 50 at the start of the century. Lawmakers modeled the policy on a similar Ohio program, aiming to spur local bank formation amid a broader national slowdown in new charters.

Rates

Treasury yields rose for a second straight week, with the 10-year increasing 6.9 basis points to 4.377% and the two-year up 11.2 basis points to 3.887%, as strong U.S. data and geopolitical tensions in the Middle East weighed on rate-cut expectations. Mortgage rates also moved higher, with the average 30-year fixed rate rising to 6.3% from 6.23%, marking the first increase in a month.

Economic data this week pointed to steady activity with mixed forward signals. First-quarter gross domestic product rose at a 2.0% annualized rate, with consumer spending up 1.6% and business investment surging 10.4%, while core capital goods orders jumped 3.3% in March, the largest increase since 2020. Housing starts rose 10.8%, initial jobless claims fell to 189,000, the lowest since 1969, and April payrolls are expected to increase by about 62,000 with a steady unemployment rate. Consumer confidence edged up to 92.8, the highest this year.

At the same time, price pressures intensified alongside continued labor market strength. The Federal Reserve’s preferred inflation gauge rose 3.5% year-over-year in March, while the Institute for Supply Management’s manufacturing index held at 52.7 and its prices-paid component climbed to 84.6, a four-year high. Gasoline prices reached $4.18 per gallon, the highest since 2022.

Digital Assets (aka Cryptocurrency)

Visa said its stablecoin settlement pilot reached a $7 billion annualized run rate, up 50% quarter-over-quarter. The company added five new blockchains, bringing total network support to nine, and expanded settlement capabilities to U.S. banks alongside more than 130 card-linked programs globally. Western Union said it will launch a Solana-based stablecoin next month for agent settlement, alongside plans for a consumer-facing “Stable Card” later this year. Separately, Paystand said it will introduce a dollar-backed stablecoin focused on automating business-to-business payments and cross-border settlement workflows.

Securitize partnered with Computershare to enable companies to issue tokenized versions of their shares alongside traditional equity, allowing issuers to add blockchain-based ownership without altering existing capital structures. The firms said the tokens represent actual shares rather than derivatives and are designed to fit within current regulatory frameworks. Computershare, which acts as transfer agent for roughly 60% of S&P 500 companies, will integrate the capability as part of broader efforts to expand tokenized equity issuance.

In a follow-up to last week’s reporting on Aave and rsETH, “DeFi United” raised more than $300 million to cover bad debt and restore token backing. The group published a technical plan to convert pledged ether into rsETH and unwind affected lending positions. Execution remains contingent on governance approvals and coordinated implementation, and now faces added complications. A New York federal court authorized a restraining notice on approximately 30,766 ether (about $71 million) frozen by Arbitrum, a key component of the recovery pool, barring its transfer as creditors tied to North Korea terrorism judgments seek to claim the funds.

Charters

Mercury received conditional approval from the Office of the Comptroller of the Currency (OCC) for a national bank charter, four months after submitting its application in December 2025. Mercury, which serves more than 300,000 startup and small business clients and generates about $650 million in annualized revenue, said the charter will enable it to expand lending and build in-house payment infrastructure.

Assisted Transactions

Florida-based Anchor Bank acquired substantially all insured deposits and certain assets of Community Bank and Trust – West Georgia after the Georgia Department of Banking and Finance closed the institution and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The bank had entered a consent order in January 2026. The FDIC said approximately $27 million of the bank’s $268 million in deposits were uninsured and may be recovered in part through the resolution process. The agency estimates the failure will cost the Deposit Insurance Fund about $97 million.

Transactions

• Banner Corporation agreed to acquire Pacific Financial Corporation in an all-stock transaction valued at $177 million. The two Washington banks will combine to form a $17.6 billion asset institution.

• OppFi Inc., a Chicago-based fintech firm, announced a deal to acquire BNC National Bank in a cash-and-stock transaction valued at $130 million. Arizona-based BNC held $1.1 billion in assets as of December 31, 2025.

• Hawthorn Bancshares agreed to acquire FSC Bancshares in a cash and stock transaction valued at $28.3 million. The two Missouri banks will combine to form a $2.2 billion asset institution.

• Indiana-based Interra Credit Union agreed to acquire Ohio-based The Hicksville Bank in an all-cash transaction. The deal will add $217 million in assets to Interra’s $2 billion balance sheet. The price was not disclosed.

• Bastrop Bancshares struck a deal to acquire Columbus Bancorp in an all-cash transaction. The two Texas banks will combine to form a $1.25 billion asset institution. The price was not disclosed

Washington D.C.

The Department of Justice (DOJ) dropped its criminal investigation into Federal Reserve Chair Jerome Powell over cost overruns tied to the central bank’s $2.5 billion headquarters renovation. Instead, the DOJ will await the results of an ongoing review by the Federal Reserve’s Office of Inspector General. Jeanine Pirro, U.S. Attorney for the District of Columbia, said the department could reopen the investigation if the inspector general uncovers any wrongdoing.

The DOJ’s decision to drop its investigation also removed a key obstacle to Kevin Warsh’s nomination to lead the Federal Reserve. Senator Thom Tillis, who had threatened to block Warsh’s confirmation until the probe was resolved, said this weekend he will now vote to advance the nomination. At his Senate Banking Committee hearing earlier in the week, Warsh pledged to act independently, rejecting suggestions he would serve as a “sock puppet” for President Trump and saying the president had never asked him to commit to any specific interest rate path. Lawmakers also pressed him on his financial holdings, including investments tied to crypto and tech firms, and on proposals to shrink the Fed’s balance sheet and rethink its communications strategy.

Crypto’s war chest is healthy heading into the midterm elections. Bloomberg reports that industry-aligned political action committees now hold roughly $180 million, with most of the funds concentrated in the Fairshake network that spent heavily in the 2024 cycle.

Lawmakers introduced the bipartisan Payments Access and Consumer Efficiency (PACE) Act, which would create an optional federal framework for qualifying nonbank payment firms and allow them access to Federal Reserve payment rails such as Fedwire, FedNow, and FedACH. The move could open the central bank’s payment rails to a wider set of fintech and crypto-linked providers and has drawn support from crypto industry groups.

President Donald Trump urged companies not to seek refunds on tariffs invalidated by the Supreme Court earlier this year. The Court ruled that the administration improperly used the International Emergency Economic Powers Act to impose “reciprocal” tariffs on imports, potentially triggering more than $160 billion in repayments. U.S. Customs and Border Protection has since launched a portal for companies to request refunds, though Trump said he would “remember” firms that decline to do so as the administration explores other authorities to restore tariff revenue.

Regulation

Federal banking regulators finalized a rule lowering the Community Bank Leverage Ratio (CBLR) to 8%, down from 9%, while extending the grace period for banks that fall below the threshold from two quarters to four. The optional framework allows qualifying community banks to meet capital requirements through a simplified leverage ratio rather than calculating risk-based capital metrics. Regulators said the change is intended to provide additional flexibility for smaller lenders, though industry attention remains focused on broader Basel capital reforms currently out for comment.

The Consumer Financial Protection Bureau finalized a rule revising Regulation B under the Equal Credit Opportunity Act (ECOA) to eliminate federal enforcement based on disparate impact, limiting liability primarily to cases of intentional discrimination. The bureau said the statute’s text does not authorize disparate-impact claims, marking a major shift in how federal fair-lending rules have been interpreted for decades. The rule takes effect 90 days after publication and is widely expected to face legal challenges from state attorneys general and consumer advocacy groups, while some states will continue enforcing their own disparate-impact standards.

Tennessee enacted legislation banning Bitcoin and other crypto ATMs, making it a criminal offense to own or operate the machines in the state beginning July 1. Lawmakers said the kiosks have increasingly been used in scams targeting older Americans, with the FBI reporting $257 million in losses among people over 60 linked to crypto ATM fraud last year. Tennessee becomes the second state after Indiana to impose a statewide ban.

Rates

U.S. Treasury yields ended the week higher, even as expectations for Federal Reserve rate cuts edged up following progress on Kevin Warsh’s potential confirmation as Fed chair. By Friday, the 10-year Treasury yield rose to 4.31% from 4.24% a week earlier, while the 2-year yield increased to 3.78% from 3.70%. Mortgage rates, however, continued to drift lower. The 30-year fixed-rate mortgage averaged 6.23%, down from 6.30% last week. Freddie Mac said the decline marks the lowest level seen during the past three spring homebuying seasons.

A mixed set of economic indicators crossed the tape this week. Pending home sales rose 1.5% in March to 73.7, a four-month high, while retail sales jumped 1.7%, the largest increase in a year, pointing to continued consumer spending. Business activity also expanded, with the S&P Global flash composite index of manufacturing and services activity climbing to 52, driven partly by supply disruptions caused by the Iran war, while prices charged rose at the fastest pace since mid-2022. In the labor market, initial jobless claims edged up to 214,000, remaining consistent with low layoffs. At the same time, consumer sentiment fell to a record low of 49.8 in April, with one-year inflation expectations rising to 4.7%. U.S. bankruptcy filings rose 11.9% over the past year to 591,850 cases—about 55% above the June 2022 low but still well below historical peaks.

Payments

The Federal Reserve is considering a rule change that would allow FedNow participants to use intermediaries to facilitate cross-border payments, enabling the system to handle the domestic settlement leg of international transfers. Under the proposal, U.S. banks could credit incoming funds in seconds through FedNow, while the international portion of the payment would continue to move through correspondent banking channels. The Fed is accepting public comments on the proposal through June 7.

Digital Assets (aka Cryptocurrency)

Last week Bankeration briefly noted a disruption tied to rsETH,1 a token used as collateral in decentralized finance (DeFi). This week the fallout spread across the sector, with Aave, one of the largest DeFi lending platforms, seeing nearly $9 billion in withdrawals within 48 hours as users pulled funds from its lending pools. In short, attackers exploited a vulnerability in a bridge2 used by Kelp DAO to create unbacked (effectively counterfeit) rsETH tokens worth about $292 million. The attackers then deposited those tokens as collateral on Aave to borrow roughly $190–$200 million in wrapped ether3 (WETH), which was transferred to other wallets. Once the tokens were identified as worthless, Aave was left with an estimated $200 million shortfall.

Aave was not the only affected player in DeFi, and roughly $13 billion left the sector as users rushed to withdraw funds or unwind leveraged positions tied to rsETH. In response, Aave and several large crypto platforms launched a coordinated recovery effort dubbed “DeFi United,” aimed at restoring backing for rsETH and covering losses tied to the exploit. Major participants—including Mantle, Lido, EtherFi and Aave founder Stani Kulechov—have pledged funds to the effort, which has reportedly raised around $160 million toward covering the shortfall. Additional funds could come from roughly 30,000 ETH frozen on the Arbitrum network shortly after the attack.

The incident also quickly entered the policy debate. In a note published this week, the Bank Policy Institute (BPI) pointed to the episode as an illustration of structural risks in DeFi lending, including reliance on third-party information about collateral, limited loss-absorbing buffers (noting that Aave’s insurance fund was estimated at $80–$100 million, less than half of its exposure in this incident), and the use of mixers that can obscure stolen funds. The group also described the withdrawal wave on Aave as a bank-run dynamic, arguing the episode underscores the need for stronger regulatory and supervisory standards for DeFi platforms.

Transactions

• Slash Financial, a business banking platform partnered with Column N.A., raised $100 million in Series C funding led by Ribbit Capital, and joined by Khosla Ventures, Goodwater Capital, New Enterprise Associates, and Y Combinator.

• KeyCorp announced an agreement to acquire U.K.-based Clearwater Corporate Finance LLP, a middle market investment banking advisory firm. Terms were not disclosed.

• South Carolina-based United Community Banks, Inc. agreed to acquire Georgia-based Peach State Bancshares, Inc. in a cash-and-stock deal valued at $100.8 million. The transaction will add $788 million in assets to United’s $28.2 billion balance sheet.

• Ohio-based Peoples Bancorp Inc. agreed to acquire Kentucky-based Citizens National Corporation in a cash-and-stock transaction valued at $76.6 million. The deal will add $686 million in assets to Peoples’ $9.6 billion balance sheet.

Earnings

The first round of bank earnings are in, and the nation’s largest banks handily beat expectations. JPMorgan reported net income of $16.5 billion, up 27% year over year, while Bank of America posted $8.6 billion, up 17%. Citigroup also delivered a strong quarter, with profits rising 42% year over year as revenue climbed across all five business lines.

Credit quality remained stable. M&T highlighted improving asset quality as criticized loans declined and charge-offs fell to their lowest level since early 2024. Ally Bank reported decreases in both year-over-year net charge-offs and 60+ day delinquencies, even as consumers continue to struggle with automobile affordability.

Executives struck a cautiously constructive tone about the economy. Consumer spending remains firm — Bank of America reported card and debit spending up 6%, and Wells Fargo described the economy as “resilient and strong.” Still, geopolitical risks had bank executives sounding a word of warning. The developing conflict involving Iran, and the resulting pressure on energy prices, could complicate the inflation outlook later in the year.

One wrinkle: Wells Fargo posted a 13 basis point decline in net interest margin, slipping below expectations. Management attributed the compression to balance-sheet rebuilding as the bank exits its asset cap, dismissing questions about rising deposit competition.

Washington D.C.

Drama surrounding the Federal Reserve intensified this week as President Donald Trump said he would fire Chair Jerome Powell if he does not leave the role when his term as chair expires in May, even though Powell’s seat on the Board of Governors runs through 2028. Justice Department prosecutors made an unannounced visit to Federal Reserve headquarters, but were denied entry, as part of their investigation into cost overruns tied to a Fed renovation project. Meanwhile, the Senate Banking Committee scheduled an April 21 confirmation hearing for Kevin Warsh after he filed financial disclosures, while Senator Thom Tillis continues to hold firm on his vow not to support the nomination until the Justice Department investigation is resolved.

Office of Management and Budget Director Russell Vought told lawmakers that the Trump administration’s budget would cut funding for the Treasury Department’s Community Development Financial Institutions (CDFI) Fund, citing concerns about the activities supported by some recipients and the underwriting standards applied to CDFI loans. The comments came during a House Budget Committee hearing and followed weeks of delay in releasing congressionally appropriated funds, which the Office of Management and Budget ultimately allowed Treasury to distribute.

Regulation

Treasury Secretary Scott Bessent said an executive order requiring banks to collect proof of citizenship from customers is “in process.” The proposal would mandate documentation such as a passport to verify citizenship, potentially applying to both new and existing account holders and creating new compliance requirements for financial institutions.

The Office of the Comptroller of the Currency (OCC) is moving to block Illinois’ new law banning interchange fees on the tax and tip portions of card transactions. The agency sent a draft interim final rule to the Office of Management and Budget that would preempt the state measure before its July 1, 2026 effective date. The rule is expected to take effect immediately once approved.

The Securities and Exchange Commission (SEC) issued a staff statement allowing certain decentralized finance (DeFi) user interfaces to operate without registering as broker-dealers, provided they meet conditions such as not holding customer funds, avoiding transaction solicitation, and offering neutral execution options. The policy applies to interfaces that help self-custodial wallet users interact with on-chain markets.

The Consumer Financial Protection Bureau is hiring! In the wake of recent efforts to sharply reduce its workforce, American Banker reports the agency is adding litigation attorneys. Unsurprisingly, experts think the agency is preparing to be sued. It’s not immediately clear where those litigators would sit, however, since American Banker also reports that the Office of the Comptroller of the Currency (OCC) terminated the CFPB’s long-term lease for its Washington headquarters this week.

Rates

Treasury yields declined this week as oil prices eased and inflation concerns tied to the Iran conflict moderated, increasing market expectations for a Federal Reserve rate cut later this year. The 10-year Treasury yield fell 7.2 basis points to 4.244%, while the two-year dropped 10.1 basis points to 3.699%, both the lowest levels since mid-March. Mortgage rates also edged lower, with the average 30-year fixed rate falling for a second straight week to 6.3%, according to Freddie Mac, even as housing demand remains subdued.

Housing data pointed to a softer start to the spring selling season. Sales of previously owned homes fell 3.6% in March to an annualized pace of 3.98 million, the lowest since June, while the median price rose 1.4% year over year to $408,800. Builder sentiment also weakened. The National Association of Home Builders index fell four points to 34 in April, a seven-month low, with measures of current sales and six-month expectations both declining.

Elsewhere, economic signals were mixed. The National Federation of Independent Business small-business optimism index fell for a third straight month to 95.8, the lowest in nearly a year. Producer prices rose 0.5% in March, though core wholesale inflation increased just 0.1%, below forecasts. Meanwhile, initial jobless claims dropped by 11,000 to 207,000, indicating layoffs remain limited. Separately, the International Monetary Fund trimmed its global growth forecast to 3.1% for 2026 and warned that a prolonged Iran conflict could push expansion closer to recession territory.

Fraud

Americans reported $20.9 billion in internet fraud losses in 2025, a 26% increase from the prior year, according to the FBI’s Internet Crime Complaint Center. More than 1 million complaints were filed, with cyber-enabled fraud accounting for roughly 85% of total losses.

Investment scams remained the largest source of losses at $8.6 billion, followed by business email compromise ($3.0 billion) and tech-support scams ($2.1 billion). Phishing and spoofing generated the most complaints, while cryptocurrency featured prominently in fraud activity, appearing in cases tied to over $11 billion in losses. Older Americans were hit hardest, with victims 60 and over reporting $7.7 billion in losses.

Artificial Intelligence

Anthropic kicked up a hornet’s nest after saying it would not broadly release a new artificial intelligence model called Mythos, citing internal tests showing the system could autonomously identify and exploit software vulnerabilities across major operating systems and web browsers. Instead, the company provided limited access to a small group of technology firms, security researchers and financial institutions through an initiative called Project Glasswing. Banks including JPMorgan and Goldman Sachs began testing the model internally, while US officials moved quickly to assess the risk: Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell convened major bank CEOs in Washington and urged them to run the system against their own networks.

The warnings reverberated through meetings of policymakers and bankers in Washington, though basic facts about Mythos remain unclear. Anthropic says the model can discover and exploit previously unknown software flaws, but the claims have not been independently verified and some cybersecurity researchers have questioned whether the capabilities are unique. Administration officials characterized the bank meeting as precautionary, noting many executives were already in Washington for other events.

Digital Assets (aka Cryptocurrency)

It was a rough week on the cybersecurity front for crypto. In a new record hack, a cross-chain exploit tied to rsETH1 drained roughly $293 million, triggering disruptions across multiple decentralized finance protocols. Separately, the $285 million Drift Protocol hack continues to ripple through the sector: investors filed a class action against stablecoin issuer Circle over its handling of stolen USDC, while Drift said it plans to relaunch after securing about $150 million in rescue financing led by Tether. Meanwhile Kraken said a criminal group is attempting to extort the exchange after obtaining limited customer data affecting about 2,000 clients.

Transactions

• California-based Liberty Bank may soon have a new controlling shareholder. Palo Alto Networks founder Nir Zuk is seeking to acquire a stake held by private-equity firms Stone Point Capital and Reverence Capital Partners, as reported by the Wall Street Journal. Fintech investors Cohen Circle is also investing in the deal. Terms were not disclosed.

• Catalyst Bancorp agreed to acquire Lakeside Bancshares in an all-cash transaction valued at $41.1 million. The two Louisiana firms will combine to form a $627.3 million asset entity.

• Colorado-based Points West Community Bank agreed to acquire State Bank of Downs in Kansas. The transaction will combine the $833.8 million-asset Points West with the $140.3 million-asset State Bank. Terms were not disclosed. (via )

Washington D.C.

Deposit insurance reform returned to the legislative agenda this week, with the House Financial Services Committee introducing a package centered on a revised version of the Main Street Depositor Protection Act. The bill, sponsored by Rep. Frank Lucas (R-Okla.), would allow the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) to set deposit insurance coverage for noninterest-bearing business transaction accounts, capped at $5 million. The package also includes legislation from Rep. Andy Barr (R-Ky.) to revive a form of the post-crisis Transaction Account Guarantee program, which temporarily offered unlimited insurance for certain transaction accounts. Policymakers say the effort is aimed at stabilizing payroll and operating accounts commonly used by small businesses following the 2023 Silicon Valley Bank failure. The FDIC has cautioned that expanding coverage could lower the Deposit Insurance Fund reserve ratio and potentially require higher assessment fees on banks.

Bankeration found itself in a polite debate this week with on X (formerly Twitter) over the question of why any depositor would hold balances that large in a transaction account in the first place. If you enjoy scrolling through nested comments, the thread is here. In case you missed it, Bankeration’s two cents on deposit insurance reform is unchanged from last September:

Last week’s compromise on stablecoin yield is going over like a lead balloon. Draft language developed by Sens. Thom Tillis (R-N.C.) and Angela Alsobrooks (D-Md.) reportedly includes multiple exemptions that banks fear would allow yield-like products to continue through workarounds. Coinbase has also reportedly signaled reservations. The dispute has become the main obstacle to advancing broader crypto market structure legislation and is testing the patience of the broader digital asset ecosystem.

Senators introduced legislation this week that would prohibit sports betting on federally regulated prediction market platforms. The bipartisan “Prediction Markets Are Gambling Act,” from Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah), would bar Commodity Futures Trading Commission (CFTC) regulated entities from listing contracts tied to professional or collegiate sports or casino-style games. Supporters say the measure reinforces state and tribal authority over gambling and prevents prediction markets from functioning as unlicensed sportsbooks, while platforms such as Kalshi argue the move would push activity offshore and protect incumbent casino operators.

The Federal Trade Commission (FTC) warned major payment networks and processors not to deny services based on customers’ political or religious views. In letters to the CEOs of PayPal, Stripe, Visa, and Mastercard, FTC Chair Andrew Ferguson said such actions could trigger investigations under Section 5 of the FTC Act and potential enforcement. The agency also urged payment networks to monitor their partner banks for similar conduct, reflecting the Trump administration’s broader push to crack down on alleged “debanking” tied to political or ideological factors.

Sen. Dick Durbin (D-Ill.) reintroduced legislation that would expand federal oversight of airline co-branded credit cards and loyalty programs. The bill would give the Consumer Financial Protection Bureau (CFPB), Department of Transportation, and Federal Trade Commission authority to regulate how airlines market and manage credit card reward points. While the proposal is unlikely to advance before Durbin leaves the Senate after the 2026 elections, it adds to growing congressional scrutiny of credit cards as lawmakers sharpen affordability messaging ahead of the midterms.

Regulation

The Financial Stability Oversight Council (FSOC) proposed new guidance that would raise the bar for designating nonbank firms as systemically important financial institutions (SIFIs). The proposal shifts the council’s focus toward an “activities-based” approach that addresses systemic risks in markets or practices before singling out individual firms. Regulators said the designation threshold would be set “very high,” requiring a threat severe enough to impair financial intermediation or market functioning across the broader economy. The guidance also introduces formal cost-benefit analysis and gives firms opportunities to address risks before facing designation.

The Federal Reserve approved Morgan Stanley’s plan to move its German investment banking affiliate onto the balance sheet of its U.S. bank holding company, granting an exception to statutory limits on transactions between banks and foreign affiliates. The decision passed by a narrow 4–3 vote, with Chair Jerome Powell and Vice Chair for Supervision Michelle Bowman joining Governors Christopher Waller and Stephen Miran in support, while Vice Chair Philip Jefferson and Governors Michael Barr and Lisa Cook dissented. Critics warned the move could expose insured deposits to risks from overseas broker-dealer activities and set a precedent for other large banks to seek similar exemptions.

The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General’s annual “Top Management and Performance Challenges” report flagged several operational issues facing the agency, including workforce reductions, governance concerns, and preparedness for bank failures. While noting that the banking sector remains healthy, the report said FDIC staff fell roughly 20 percent in 2025, from more than 6,300 employees to just over 5,000, raising concerns about maintaining examination capacity and resolution readiness. The watchdog also highlighted gaps in contracting oversight, cybersecurity controls, and large-bank resolution planning, while identifying fraud and scams affecting financial institutions and consumers as a growing risk area.

Delaware lawmakers introduced legislation to establish a state regulatory framework for payment stablecoin issuers. The proposed Delaware Payment Stablecoin Act would create licensing, reserve, disclosure, and redemption requirements for issuers and align the state’s oversight framework with the federal GENIUS Act. Lawmakers also introduced a companion bill to modernize the state’s banking code by defining digital assets as personal property and allowing state-chartered banks and trust companies to hold and manage them in a fiduciary capacity.

Rates

Treasury yields rose over the week amid geopolitical uncertainty and soft demand at several government debt auctions. The 10-year Treasury yield increased about 5 basis points to roughly 4.44% by Friday, while the two-year yield ended the week near 3.92%. Mortgage rates moved higher alongside the Treasurys, with the average 30-year mortgage climbing to 6.43%, the highest level since October, as rising borrowing costs weighed on both home purchase and refinancing activity.

Economists at the Federal Reserve Bank of Dallas modeled the potential economic impact of the closure of the Strait of Hormuz following the recent Middle East conflict. Their analysis estimates that removing roughly 20 percent of global oil supply could push West Texas Intermediate crude prices to about $98 per barrel and reduce global real GDP growth by an annualized 2.9 percentage points in the second quarter. The outlook depends heavily on the duration of the disruption, with longer closures driving oil prices above $100 per barrel and extending the drag on global growth.

U.S. economic signals softened this week. The S&P Global flash composite purchasing managers index fell to 51.4 in March, an almost one-year low, as services growth cooled and input prices rose sharply. Housing data also pointed to weaker demand, with Redfin reporting that sellers outnumbered buyers by roughly 630,000 in February, the largest gap in records dating back to 2013, as elevated home prices and mortgage rates continued to weigh on prospective buyers.

Digital Assets (aka Cryptocurrency)

New research from Visa and Dune suggests non-U.S. stablecoins are increasingly being used as transactional currency. The report found supply of non-dollar stablecoins reached about $1.1 billion in February, with transfer volumes rising more than 1,600% since 2023 to roughly $10 billion, driven largely by payments, remittances, and business settlement activity.

The Financial Times reports that Tether has hired KPMG to conduct its first full financial statement audit, with PwC assisting on internal systems, as the $185 billion stablecoin issuer explores a potential capital raise.

Lastly, a quick roundup of TradFi developments in crypto: Visa joined the Canton Network as a validator; Fidelity urged the Securities and Exchange Commission (SEC) to clarify broker-dealer rules for digital assets; the New York Stock Exchange partnered with Securitize on a tokenized securities platform; and Franklin Templeton launched tokenized exchange-traded funds that can trade through crypto wallets around the clock.

Transactions

• Utah-based Zions Bancorp agreed to acquire the agency lending business of Basis Multifamily Finance I, LLC. Zions will gain a team, access to Fannie Mae and Freddie Mac lending programs, and mortgage servicing rights. Terms were not disclosed.

• Fifth Third Bancorp invested $3 million in community development financial institution California-based Clearinghouse CDFI.

Washington D.C.

Federal Reserve Chair Jerome Powell indicated he plans to remain at the central bank through the end of his term in May and potentially longer if a successor has not been confirmed. Powell said he will not resign from the Board of Governors while the Justice Department investigation into the Fed’s headquarters renovation remains unresolved. This week the White House and Justice Department backed U.S. Attorney Jeanine Pirro’s effort to continue pursuing the probe, effectively ensuring Powell remains in place for now. Treasury Secretary Scott Bessent noted that it would break with historical norms for a Fed chair to remain on the board after stepping down as chair, while Senator Elizabeth Warren separately pressed Warsh about references to him in Justice Department files tied to Jeffrey Epstein, adding another complication to an already high-stakes confirmation process.

The Washington Post reports that the Trump administration is delaying an executive order that could have required banks to collect additional documentation to verify customers’ immigration or citizenship status after strong pushback from Wall Street firms and community lenders. Bank groups argued that requiring verification for millions of existing customers would be operationally unworkable and could inadvertently exclude legitimate customers from the financial system. A White House official disputed that the administration had seriously considered requiring banks to review existing accounts, but said officials are still developing an order that could apply to new accounts.

Officials used the Digital Chamber’s DC Blockchain Summit in Washington this week to signal progress on several key digital asset policy issues. Senate Banking Committee Chair Tim Scott said negotiators expected compromise language soon on the dispute over stablecoin rewards that has stalled crypto market structure legislation. Sen. Cynthia Lummis suggested a potential solution could restrict the use of banking-style terms such as “yield” or “APR” rather than impose a full ban on rewards. Regulators also previewed future rulemaking, with FDIC Chair Travis Hill discussing possible guardrails for banks interacting with public blockchains and Comptroller of the Currency Jonathan Gould urging industry input on the OCC’s proposed stablecoin rule.

But the bigger development came Friday, when Politico reported that Sen. Thom Tillis, Sen. Angela Alsobrooks and the White House had reached an “agreement in principle” on stablecoin yield. The dispute, which is largely driven by bank concerns that yield-bearing stablecoins could pull deposits from traditional institutions, has been the primary obstacle to advancing the Senate’s crypto market structure bill.

Regulation

U.S. banking regulators proposed a sweeping overhaul of capital rules that would modestly reduce required buffers across the industry, marking one of the biggest revisions to post-2008 regulations. The package from the Federal Reserve, FDIC and OCC would lower common equity Tier 1 requirements by about 4.8% for the largest banks, with somewhat larger reductions for smaller institutions, alongside changes to Basel III implementation, the G-SIB surcharge and stress testing. Bank executives say the changes could free up tens of billions of dollars for lending, deals and shareholder returns. Regulators approved the proposals by a 6–1 vote at the Fed and will accept public comment through June.

The FDIC voted unanimously to rescind a 2009 policy that restricted private equity and other nonbank firms from bidding on failed banks, formally adopting a change the agency previewed last fall. FDIC Chair Travis Hill said expanding the pool of potential buyers should help resolve failed banks more quickly and reduce costs to the Deposit Insurance Fund by avoiding prolonged receiverships.

The Securities and Exchange Commission issued new guidance stating that most crypto assets are not securities. The agency said activities such as staking, protocol mining and token airdrops generally do not meet the definition of securities transactions, while only a narrower category of “digital securities,” such as tokenized stocks or other investment contracts, would fall under SEC jurisdiction. The Commodity Futures Trading Commission said it will align its oversight under the assumption that most crypto assets are commodities.

The Commodity Futures Trading Commission issued an advance notice of proposed rulemaking on prediction markets as the rapidly growing sector faces scrutiny from lawmakers and state regulators. CFTC Chair Michael Selig said the effort is intended to clarify how event-based contracts should be regulated under the Commodity Exchange Act and reaffirm the agency’s jurisdiction over the platforms.

Arizona filed 20 criminal charges against prediction market platform Kalshi, alleging the company is operating an illegal gambling service. It wasn’t the only state taking action this week. Connecticut regulators suspended Bitcoin Depot’s money-transmitter license, forcing the crypto ATM operator to halt operations in the state over alleged fee overcharges and compliance failures. Meanwhile in Kentucky, lawmakers are advancing a bill to regulate crypto kiosks that includes a controversial provision requiring hardware wallet providers to help reset user credentials—language critics say could effectively ban non-custodial wallets by undermining self-custody protections.

Rates

The Federal Reserve held interest rates steady, keeping the federal funds rate in the 3.5%–3.75% range. Market rates moved higher, however, as geopolitical tensions pushed Treasury yields up amid concerns the Iran conflict could fuel inflation. The benchmark 10-year Treasury yield rose to about 4.31%, while the two-year yield climbed to roughly 3.87%. Mortgage rates also increased, with the average 30-year mortgage reaching 6.30%, the highest level this year.

Economic signals this week were mixed. Energy markets remain volatile, with U.S. propane prices up roughly 20% since the Iran conflict began. The disruption is also pushing up chemical feedstock costs, with manufacturers warning of price increases for products ranging from cleaning supplies to tires. Inflation pressures were already building in February, with the producer price index rising 0.7%. Manufacturing data sent mixed signals, with New York Fed factory activity roughly flat while the Philadelphia Fed manufacturing index rose to 18.1, marking a third straight month of expansion. The labor market remains steady, with jobless claims falling to 205,000, the lowest since January. Housing showed weakness, with new-home sales dropping 17.6% to the lowest level since 2022, even as U.S. household wealth climbed $2.2 trillion to a record $184.1 trillion.

Fraud & Cybersecurity

The Cybersecurity and Infrastructure Security Agency (CISA) urged organizations to harden endpoint management systems such as Microsoft Intune after an Iran-linked cyberattack showed how attackers can exploit administrative access to launch destructive “wiper” attacks that delete servers and disrupt operations.

Researchers also warned of a new iPhone exploit chain, dubbed DarkSword, that targets unpatched devices and deploys malware designed to steal data from cryptocurrency exchange and wallet apps.

Digital Assets (aka Cryptocurrency)

Nasdaq received SEC approval to launch a pilot program for tokenized securities, allowing certain Russell 1000 stocks and index ETFs to settle in tokenized form while still using traditional trading and clearing infrastructure. The exchange said the initiative could help modernize settlement while maintaining existing investor protections.

A coalition of more than 20 decentralized finance projects is urging U.S. universities to expand crypto and DeFi education, calling on business and law schools to add coursework on blockchain systems and decentralized finance. The group plans a campus tour to promote the initiative.

This week also brought a couple of notable tokenized deposit announcements. Vast Bank said it plans to launch a retail tokenized deposit offering this year, while Custodia Bank and Vantage Bank are preparing to use tokenized dollars in a 600-bank loan participation network, enabling near-instant settlement of loan participations and payments on blockchain infrastructure.

Transactions

• Mastercard agreed to acquire London-based BVNK, a stablecoin infrastructure company, in a deal valued at $1.8 billion, including $300 million in contingent payments.

• Independent Bank Corporation agreed to acquire HCB Financial Corp. in a cash-and-stock transaction valued at $70.2 million. The two Michigan firms will combine to form a $6.1 billion asset institution.

• Midwest Heritage Bank announced a deal to acquire Iowa Savings Bank. The two Iowa banks will combine to form a $782 million institution controlled by Hy-Vee, Inc, a $14 billion grocery retailer. Terms were not disclosed.

• Illinois-based First State Bank agreed to acquire Missouri-based Senath State Bank, combining to form a $608.4 million asset institution. Terms were not disclosed.

• Oregon Coast Bank agreed to acquire Washington-based Connect Community Bank, adding $76.7 million in assets to its $449.6 million balance sheet. Terms were not disclosed.

Washington D.C.

A federal judge quashed subpoenas targeting Federal Reserve Chair Jerome Powell, ruling the Justice Department produced “essentially zero evidence” that Powell committed a crime. U.S. Attorney Jeanine Pirro said the Justice Department will appeal the decision. The dispute continues to complicate Kevin Warsh’s nomination as Fed chair, as Sen. Thom Tillis says he will block nominations until the investigation into Powell is resolved. The Twitterverse responded quickly to these events, perhaps best captured by the following commentary from :

The U.S. Court of International Trade directed U.S. Customs and Border Protection to process roughly $166–$170 billion in refunds automatically for companies that paid recently-overturned tariffs, while the agency works to build a digital portal to handle what it calls an “unprecedented volume” of claims. More than 1,000 companies have already filed suits seeking repayment. U.S. Trade Representative Jamieson Greer urged companies to pass any windfall along to workers as bonuses or raises, but that might be wishful thinking. A secondary market for refund claims has already emerged, with hedge funds and investors buying rights to the payments—often for a fraction of their expected value. Estimates suggest 15% to 50% of claims have already been sold, potentially creating a market worth as much as $100 billion.

Sen. Elizabeth Warren reintroduced a bipartisan bill that would require regulators to claw back compensation from executives of failed banks. The proposal would allow regulators to reclaim pay earned in the five years preceding a bank collapse. The bill is cosponsored by lawmakers from both parties, including Sens. Josh Hawley and Catherine Cortez Masto.

The White House issued an executive order directing federal regulators to tailor mortgage rules for community banks. The order calls for adjustments to regulations such as Regulation Z and the Home Mortgage Disclosure Act, expanded access to Federal Home Loan Bank advances tied to mortgage assets, and modernization of appraisal requirements.

On the crypto front, a new survey from the American Bankers Association found broad support for a cautious approach to stablecoin regulation. By a 6-to-1 margin, consumers said stablecoin laws should avoid undermining the existing financial system, while 3-to-1 supported limits on stablecoin rewards. Separately, a Treasury Department report to Congress said crypto mixers can have legitimate privacy uses and recommended a digital asset “hold law” allowing platforms to temporarily freeze suspicious funds during investigations.

Regulation

American Banker reports that enforcement actions dropped sharply during the first year of the Trump administration. Data compiled by advisory firm Klaros shows bank-level enforcement actions fell from 116 in 2024 to 52 in 2025, a decline of roughly 55%. At the same time, regulators terminated 89 enforcement actions in 2025, up from 40 the year before.

Federal Reserve Vice Chair for Supervision Michelle Bowman previewed a streamlined capital framework that regulators plan to propose in the coming weeks. The revisions would simplify several elements of the framework, including stress testing, the supplementary leverage ratio, Basel III risk-based capital rules, and the global systemically important bank (G-SIB) surcharge. The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) are aiming to release the proposal before the end of March.

Federal Deposit Insurance Corporation (FDIC) Chair Travis Hill said the agency plans to clarify that payment stablecoins will not qualify for pass-through deposit insurance under the forthcoming GENIUS Act framework. Hill said allowing stablecoins to access deposit insurance indirectly through bank partners could shift risk to insured banks and the Deposit Insurance Fund. Hill added that tokenized deposits, which meet the statutory definition of a deposit, would remain eligible for deposit insurance.

Comptroller of the Currency Jonathan Gould said the Office of the Comptroller of the Currency (OCC) is continuing its review of the core banking provider market. The agency is gathering data to better understand any negotiating imbalances smaller institutions face when dealing with core processors. Gould said the effort remains in a fact-finding phase as regulators consider whether policy changes may be warranted.

Oregon lawmakers approved legislation addressing interest rate exportation rules. The measure, now awaiting a signature from Oregon Governor Tina Kotek, reinforces the state’s 36% cap on consumer loan interest rates and prevents lenders from bypassing the limit through partnerships with banks located in states with higher caps. Oregon joins Colorado, Iowa, and Puerto Rico in adopting similar laws.

Rates

U.S. Treasury yields moved higher this week as markets reacted to the conflict in the Middle East and renewed inflation concerns. The two-year Treasury yield rose to 3.73% from 3.55%, while the 10-year climbed to 4.28% from 4.13%. Mortgage rates also increased, with the average 30-year fixed rate rising to 6.11%, the largest weekly increase since April 2025, according to Freddie Mac.

Energy markets remain the primary source of uncertainty. Oil briefly rose above $100 per barrel as the conflict escalated. The U.S. Energy Information Administration raised its forecast for domestic production to 13.83 million barrels per day by 2027. Meanwhile, China appears relatively insulated from the shock after increasing oil imports nearly 16% in the first two months of the year as part of a broader effort to build strategic reserves.

Other indicators suggested steady underlying conditions. Consumer prices rose 0.3% in February, while core CPI increased 0.2%, leaving annual inflation at 2.4% overall and 2.5% excluding food and energy. Housing starts rose 7.2%, the trade deficit narrowed to $54.5 billion, and jobless claims edged down to 213,000. CEO confidence also improved, with the Business Roundtable outlook index rising to 89, its highest level in more than a year.

Fraud & Cybersecurity

Cybersecurity risks tied to the conflict in Iran prompted warnings from U.S. officials and security firms that Iranian state-linked hackers could target financial institutions and critical infrastructure.

A report from Nasdaq Verafin estimates global illicit financial activity reached $4.4 trillion in 2025, including fraud, money laundering, and proceeds from crimes such as trafficking and corruption. Separately, the Consumer Federation of America reports that Americans lose roughly $119 billion annually to online scams, noting that only about 14% of victims report fraud to law enforcement. The group also argues that major technology platforms — particularly Meta’s Facebook, Instagram and WhatsApp — are major channels used to promote fraudulent schemes.

Digital Assets (aka Cryptocurrency)

Custodia Bank’s five-year legal fight for a Federal Reserve master account effectively ended after the U.S. Court of Appeals for the Tenth Circuit voted 7–3 to deny rehearing of the case. The bank’s only remaining option is to petition for certiorari to the U.S. Supreme Court.

Stablecoin infrastructure firm Cari Network is launching a platform at the end of March aimed at supporting tokenized deposits. Huntington Bancshares Inc., First Horizon Corp. and M&T Bank Corp., KeyCorp and Old National Bancorp are part of the effort, led by former OCC Comptroller .

Mastercard launched a global crypto partnership program including Circle, Binance, and Gemini aimed at integrating stablecoin firms into its network. Visa is pursuing a similar strategy, expanding stablecoin-linked cards and testing stablecoin settlement for issuers and acquirers.

Tokenized equities gained momentum as Nasdaq partnered with Kraken’s parent company to help develop infrastructure for issuer-sponsored tokenized shares and potential 24/7 trading of equities, pending SEC approval. SEC officials signaled the agency is considering a narrow innovation exemption to allow limited experimentation with tokenized securities under existing investor-protection rules.

Charters

Online lender Upstart said it plans to apply for a national bank charter from the Office of the Comptroller of the Currency to streamline its lending operations and expand nationwide access to its credit products. The proposed Upstart Bank would operate as a Delaware-based digital bank without physical branches and continue working with the company’s network of roughly 100 bank and credit union partners.

Transactions

• New York-based Esquire Financial Holdings, Inc. agreed to acquire Illinois-based Signature Bancorporation, Inc. in an all-stock transaction valued at $348.4 million. The combined entity will form a $4.8 billion asset institution.

• Landmark Credit Union agreed to acquire American National Bank-Fox Cities. The transaction will add $419 million in assets to Landmark’s $7.5 billion balance sheet. The two Wisconsin institutions did not disclose the terms of the deal.

• Houston-based Lone Star Bank agreed to be acquired by an investor group led by veteran Texas banker Dean Bass. Terms were not disclosed on the deal for the $191 million asset institution.

Washington D.C.

The Senate moved forward on a bipartisan housing affordability package this week, voting 84–6 to invoke cloture on legislation negotiated by Banking Committee Chair Tim Scott and Ranking Member Elizabeth Warren. The compromise measure includes a ban on large investors that own 350 or more single-family homes from purchasing additional properties, with exceptions for build-to-rent developments and landlords that report rent payments to credit bureaus; the restriction would sunset after 15 years. The White House said it supports the bill and would sign it if passed by Congress. The package also includes a temporary prohibition on a Federal Reserve central bank digital currency through 2030.

Community bank provisions included in the House’s housing bill were removed from the bipartisan Senate compromise that advanced this week, including proposals to ease brokered and custodial deposit rules, encourage de novo bank formation, and allow banks under $6 billion in assets to qualify for limited-scope examinations. Senate Banking Committee Chair Tim Scott said the housing package was intended to focus narrowly on affordability measures and indicated a separate financial institutions legislative package addressing bank priorities is expected “shortly.” Meanwhile, the House Financial Services Committee voted 26–16 to advance a broader deregulatory package containing many of the omitted provisions, sending the legislation to the full House even as its prospects in the Senate remain uncertain.

A federal judge ruled that companies that paid tariffs imposed under President Trump’s International Emergency Economic Powers Act (IEEPA) are entitled to refunds. The U.S. Court of International Trade said all “importers of record” must benefit from the ruling and ordered U.S. Customs and Border Protection to stop collecting the duties and begin recalculating affected entries. The tariffs generated more than $130 billion before being invalidated, with potential refunds estimated to reach as much as $175 billion as the government works out the repayment process. Court watchers expect the U.S. government to appeal or seek a stay.

Negotiations over the Digital Asset Market Clarity Act, Congress’s flagship crypto market structure bill, stalled this week amid a widening dispute between banks and crypto firms over whether platforms should be allowed to offer yield or rewards on stablecoin balances. Banking groups argue such products function like deposit interest and should be subject to bank-style regulation; JPMorgan Chase CEO Jamie Dimon said firms paying rewards on balances should face bank-style capital, liquidity, and supervisory requirements. Crypto firms counter that restricting rewards would undercut the GENIUS Act, which already bars issuers from paying direct interest but leaves room for third-party incentives. President Donald Trump urged Congress to move quickly on the legislation, while House Financial Services Committee Chair French Hill suggested the Senate could break the impasse by taking up the House-passed CLARITY Act, which avoided the yield issue and passed last year with bipartisan support.

Regulation

Federal Reserve Vice Chair for Supervision Michelle Bowman called for “fundamental reform” of the Federal Reserve’s discount window, arguing the facility should function as a routine liquidity backstop rather than a tool banks avoid because of stigma. In remarks this week, Bowman cited inconsistent procedures across the Fed’s 12 regional Reserve Banks and regulatory disincentives that discourage use even during stress, while Treasury Secretary Scott Bessent suggested allowing pre-positioned collateral at the Fed to count toward liquidity requirements. The operational challenges are not trivial: in a January interview on the Odd Lots podcast, PNC CEO Bill Demchak described the process of physically pre-positioning loan documents for the Fed and manually requesting advances, illustrating why many banks still rely more heavily on Federal Home Loan Bank advances for emergency liquidity.

The Office of the Comptroller of the Currency (OCC) finalized two rules aimed at reducing regulatory burden for smaller institutions. One rule rescinds the agency’s Fair Housing Home Loan Data System regulation, which the OCC said imposed outdated and duplicative home loan data collection requirements on national banks. The second rule streamlines corporate activity licensing procedures for banks with $30 billion or less in assets, creating a new “covered community bank” category that qualifies eligible institutions for expedited or reduced filing processes. Comptroller Jonathan Gould said the changes are intended to tailor supervision and reduce compliance costs for community banks.

The Financial Action Task Force (FATF) warned that peer-to-peer stablecoin transfers through unhosted wallets represent a growing vulnerability for money laundering, sanctions evasion, and terrorist financing. In a new report, the global anti–money laundering watchdog said stablecoins now account for about 84% of illicit crypto transaction volume, citing their price stability and ease of cross-border transfers. FATF urged regulators to require issuers to build compliance controls directly into stablecoin smart contracts, including the ability to freeze, burn, or block tokens linked to flagged wallets. The group also called for broader use of blockchain analytics and stricter enforcement of the industry’s “travel rule.”

Rates

U.S. Treasury yields ended the week higher after a volatile stretch of trading. The 10-year Treasury yield closed near 4.13%, up about 17 basis points on the week, while the two-year finished around 3.55%, roughly 18 basis points higher – both posting their largest weekly increases since April 2025. Mortgage rates moved higher as well, with the 30-year fixed rate edging back above 6%, according to Freddie Mac, while the 15-year averaged 5.43% for the week.

U.S. job data sent mixed signals this week. The Labor Department reported that nonfarm payrolls fell by 92,000 in February, well below expectations for job growth, while the unemployment rate edged up to 4.4% and prior months were revised down by 69,000 jobs. Part of the decline reflected a 31,000-worker healthcare strike, which temporarily reduced payroll counts and may explain part of the divergence with other indicators. Initial jobless claims held at 213,000, near the lowest levels of the past year, and announced layoffs fell to 48,307 in February. ADP reported private payrolls rising by 63,000, suggesting a stronger hiring market than the Labor Department report indicates.

Rising energy prices revived inflation concerns this week as the conflict in Iran disrupted global oil markets. U.S. crude prices climbed above $90 per barrel and gasoline prices rose 14% in a week to $3.41 per gallon, according to AAA. The surge reflects fears that fighting could threaten shipping through the Strait of Hormuz, a corridor that carries roughly one-fifth of global oil shipments. JPMorgan CEO Jamie Dimon warned that higher energy costs could become a “skunk at the party” for the U.S. economy, though he said the inflation impact would likely remain limited if the conflict proves short-lived.

Other economic indicators released this week – all reflecting conditions before the escalation in Iran – painted a mixed picture of underlying momentum. Labor productivity rose at a 2.8% annualized pace in the fourth quarter, beating forecasts and extending a period of strong efficiency gains. Manufacturing activity also expanded for a second month, according to the Institute for Supply Management, though its prices-paid index jumped to 70.5, the highest since 2022, signaling rising input costs. Meanwhile, a Federal Reserve survey of more than 6,500 firms found small businesses remain broadly stable but less optimistic about future growth, with revenue expectations falling to their lowest level since 2020.

Digital Assets (aka Cryptocurrency)

The Federal Reserve Bank of Kansas City granted Kraken Financial, a Wyoming special-purpose depository institution (SPDI), a one-year limited master account allowing direct Fedwire access. Fed Vice Chair Michelle Bowman called the move a “pilot,” while banking groups objected.

Separately, Chainalysis reported $154 billion in illicit crypto flows in 2025, including more than $3 billion linked to networks tied to Iran’s Islamic Revolutionary Guard Corps, and Florida passed a state-level stablecoin framework.

Charters

U.K. fintech Revolut applied for a U.S. national bank charter, pledging to invest $500 million to expand its American operations.

Crypto infrastructure firm Zerohash applied for an OCC national trust charter, joining a growing wave of digital-asset firms seeking entry into the regulated banking system.

Transactions

• Florida-based Emigrant Bancorp, Inc. agreed to acquire a majority interest in family office service provider Fortis Management Group LLC, based in Massachusetts. Emigrant simultaneously announced the launch of Emigrant Family Office. Terms were not disclosed.

Earnings

FDIC-insured institutions reported $295.6 billion in net income for 2025, up 10.2% from 2024, with fourth-quarter net income of $77.7 billion, down 2.0% from the prior quarter but up 16.5% year-over-year, according to the agency’s Quarterly Banking Profile. The industry’s net interest margin rose to 3.39%, the highest level since early 2019, as funding costs declined faster than asset yields. Total loans and leases grew 5.9% year-over-year to $13.5 trillion, while domestic deposits increased for a sixth consecutive quarter; however, noninterest-bearing deposits declined as interest-bearing balances rose. Asset quality remained generally favorable, though past-due and nonaccrual loans increased to 1.56%, and the number of institutions on the FDIC’s Problem Bank List rose by three to 60, or 1.4% of all banks.

Washington D.C.

President Donald Trump used his State of the Union address to press the issue of housing affordability, including calling on Congress to codify his executive order restricting large institutional investors from purchasing single-family homes. Days later, Senate Majority Leader John Thune filed cloture on a bipartisan housing package, setting up negotiations with the House over whether to include bank-related provisions such as brokered and custodial deposit reforms, as well as a potential investor-home purchase ban.

The heads of the federal prudential regulators appeared before the Senate Banking Committee on February 26, with discussion spanning capital, mortgage lending, deposit insurance and digital assets. Comments from the agency heads largely tracked their usual talking points. Comptroller of the Currency Jonathan Gould also addressed a reported initiative to have banks collect citizenship information, claiming a requirement would impose only a “minor” additional burden. Gould also faced questions from Sen. Elizabeth Warren over a pending charter application from Trump-linked World Liberty Financial, stating that the OCC would process it “as we process all applications.”

Sens. Catherine Cortez Masto, D-Nev., and Todd Young, R-Ind., introduced the bipartisan Municipal Investment and Neighborhood Transformation (MINT) Act, which would allow Federal Home Loan Bank members to issue tax-exempt bonds for a broader range of community development projects, including water and sewer systems, transportation, health care facilities and schools. The bill would restore an authority granted under the Housing and Economic Recovery Act of 2008 that expired in 2010, making such projects eligible for Federal Home Loan Bank Letters of Credit. Companion legislation was introduced in the House by Reps. Lisa McClain, R-Mich., and Sam Liccardo, D-Calif.

On the cryptocurrency front, a bipartisan group of House lawmakers introduced a bill that would protect certain crypto software developers from criminal prosecution if they do not control customer funds. The measure would amend a federal money transmission law that prosecutors have used to convict developers of privacy-focused crypto tools. Protections for developers are among the more controversial provisions in the broader crypto market structure bill, which remains in limbo.

The U.S. Court of Appeals for the D.C. Circuit heard arguments over whether Acting Consumer Financial Protection Bureau Director Russell Vought can proceed with mass reductions-in-force affecting up to 90% of staff. Judges questioned whether last year’s stop-work orders constituted a reviewable final agency action and appeared open to allowing some firings if the bureau presents a credible plan to continue performing its legally required functions. Court observers said the panel seemed inclined to remand the case to the district court to narrow the existing injunction. A decision is expected later this year, with further appeals likely.

Regulation

The OCC released a nearly 400-page proposal to implement the GENIUS Act, outlining how banks, nonbanks and certain foreign issuers could operate payment stablecoins under federal supervision. While broad in scope, controversy quickly emerged over provisions that would restrict rewards on branded, white-labeled tokens. Bloomberg reports the language could affect arrangements such as PayPal’s PYUSD, which is issued through Paxos. Rewards on branded stablecoins have been central to the “yield loophole” negotiations playing out in Washington in recent weeks. The bank lobby is not declaring victory, and the proposal — which includes more than 200 questions for public comment — is likely to evolve during the rulemaking process.

The OCC finalized a rule establishing that national trust companies may engage in activities “related thereto” that are not fiduciary in nature, formally allowing them to provide basic safekeeping and custody services without offering traditional banking functions. The debate traces back decades, but the immediate concern is practical: a requirement that national trusts conduct core banking activities, as some argue was imposed in 2003, would effectively force them into full bank charters – with significantly higher regulatory burdens. The issue has taken on new urgency amid a rise in national trust charter applications from fintech and crypto firms. The Conference of State Bank Supervisors sharply criticized the rule, arguing it replaces the well-understood concept of “fiduciary activities” with vague language that grants the OCC broad, case-by-case discretion over permissible activities. CSBS warned the change undermines transparency and may exceed the OCC’s limited authority under the National Bank Act, potentially setting up future legal challenges.

Rates

Treasury yields closed the week lower, capping their largest monthly decline in a year, even after a hotter-than-expected January producer price report. The 10-year yield fell to roughly 3.96% for February, while the two-year dropped to about 3.38. Mortgage rates followed Treasurys lower, with the 30-year fixed averaging 5.98% — its first dip below 6% since 2022. January PPI rose 0.5% (vs. 0.3% expected), with core prices up 0.8%, driven largely by services and rising margins, signaling persistent inflation pressures that could complicate the path to further rate relief.

Digital Assets (aka Cryptocurrency)

A McKinsey analysis poured some cold water on stablecoin hype, estimating that of the trillions in reported on-chain transaction volume, only about $390 billion reflects actual payments activity – roughly 0.02% of global payment volume. That shouldn’t come as much of a surprise to industry watchers, though in fairness, meaningful mainstream adoption likely hinges on final U.S. rules for payment stablecoins. Notably, McKinsey emphasized that the current data does not dampen its long-term growth expectations – a timely point, as Meta confirmed this week that it is pursuing a “stablecoin-agnostic” payments strategy with the potential to reach nearly 4 billion users.

Bitcoin Depot said it will now require government-issued ID verification for every transaction at its roughly 8,800 crypto ATMs, tightening compliance as it faces lawsuits and mounting scrutiny over scams that have disproportionately harmed seniors. The move comes amid a broader backlash against crypto kiosks, with Minnesota lawmakers advancing a bill to ban the machines outright after reporting a rise in elder fraud cases, arguing that prior safeguards such as transaction caps and disclosure requirements have failed to stem losses.

Charters

Morgan Stanley applied for a de novo national trust bank charter that would allow it to custody digital assets, facilitate trading and offer staking services nationwide as part of its expanding crypto strategy. This particular application should be utterly uncontroversial: Morgan Stanley already operates two longstanding, FDIC-insured commercial banks — Morgan Stanley Private Bank, N.A., which acquired E*Trade Bank in 2022, and Morgan Stanley Bank, N.A., originally founded as MountainWest Financial in 1990 and converted to a commercial bank charter in 2008. There is no regulatory arbitrage here. Morgan Stanley is already firmly inside the federal banking perimeter and has been for decades.

In other charter developments which you are free to get fired up over, the OCC conditionally approved a national trust charter for Crypto.com and is weighing Payoneer’s application to form PAYO Digital Bank, N.A., which would issue its own dollar-backed stablecoin. On the more traditional side of the ledger, Edward Jones received state and FDIC approval to launch an industrial bank in Utah that will take deposits and offer CDs.

Transactions

• Citigroup Inc. reached deals to unload another 24% of Banamex, following its deal to sell 25% of the Mexican lender to an entity controlled by Chico Pardo last year. An assemblage of financials agreed to buy 499 million shares in the entity for approximately $2.5 billion.

• New York-based Metropolitan Bank Holding Corp. launched a public offering of up to $205 million in common stock. It plans to use net proceeds to support organic growth and other initiatives.

• Arrow Financial Corporation agreed to acquire Adirondack Bancorp in a cash-and stock transaction valued at $89.1 million. The two New York State entities will combine to form a $5.4 billion asset institution.

• Washington-based FS Bancorp agreed to acquire Oregon-based Pacific West Bancorp in a cash-and-stock transaction valued at $24.6 million. The combined entity will hold approximately $3.6 billion in assets.

• Georgia Banking Company, Inc. agreed to acquire Tandem Bancorp in a cash-and-stock transaction. The two Georgia institutions will combine to form a $3 billion institution. The price was not disclosed.

• Bethany Bankshares, Inc., the holding company for BTC Bank, agreed to acquire Bancshares of Glasgow, Inc., the holding company for Tri-County Trust Company. The two Missouri institutions will hold $1.6 billion in assets post-merger. Terms were not disclosed.

• Eagle Rock Bank agreed to acquire Riverland Bank. The two Minnesota banks will combine to form a $500 million institution. Terms were not disclosed.

Two quick housekeeping notes before we dive in: (1) the Week 7 Roundup dropped late last week; and (2) I published a short manifesto in Closer Looks on why it may be time to ditch .com for .bank. Links to both are below.

Washington D.C.

In a 6–3 ruling, the U.S. Supreme Court struck down President Trump’s April 2, 2025 “Liberation Day” tariffs, holding that the International Emergency Economic Powers Act does not authorize the president to impose import taxes without Congress. The decision voids the sweeping reciprocal tariff regime, though duties imposed under Sections 232 and 301 remain in effect. Within hours, the president invoked Section 122 of the Trade Act of 1974 to impose a 10% global tariff, raising it to 15% the following day. Treasury Secretary Scott Bessent said tariff revenue projections for 2026 would be “virtually unchanged” despite the ruling and suggested that refunding previously collected duties — potentially more than $100 billion — could require years of litigation, with no clear guidance yet on whether importers will ultimately be repaid.

The White House outlined new details of President Trump’s proposal to bar large housing investors from expanding their single-family home portfolios. The Wall Street Journal reports that draft language was sent to the Senate Banking Committee and House Financial Services Committee. The plan would prohibit investors that own more than 100 single-family homes from purchasing additional properties — a threshold that could affect hundreds of firms — while exempting those that build or substantially renovate homes for rental use. The proposal would also grant the Treasury secretary authority to modify definitions and criteria. Lawmakers have not yet incorporated the measure into pending housing legislation, and negotiations continue as the Senate works to reconcile its bill with the House version.

The White House Council of Economic Advisers released a report claiming Consumer Financial Protection Bureau (CFPB) rules increased borrowing costs by $237 billion to $369 billion between 2011 and 2024, citing higher compliance and litigation risk tied to post-crisis mortgage standards. The report estimates consumers paid up to $183 billion more for mortgages, $51 billion more for auto loans, and $116 billion more for credit cards. Consumer advocates and academics disputed the methodology, arguing the analysis overlooks consumer protections and market stability benefits, as the administration continues efforts to downsize the agency.

Another week, another trip to the White House for crypto and banking lobbyists over yield-bearing stablecoins. Administration officials hosted a third closed-door meeting as lawmakers continue negotiating how rewards on stablecoin holdings should be treated under pending market structure legislation. As discussions appear to inch toward a solution on yield, Democrats have intensified concerns about potential conflicts of interest tied to President Trump’s family crypto ventures, including scrutiny of World Liberty Financial’s trust bank charter application and reported foreign investment. DealBook reports that Senate Minority Leader Chuck Schumer privately warned Democrats about crossing Fairshake, the crypto-aligned super political action committee that began the year with $193 million, while decentralized finance (DeFi) advocates launched a new Washington policy group backed by $29 million to advance their legislative priorities.

Regulation

The Treasury Department released two new resources to guide artificial intelligence use in financial services: a shared Artificial Intelligence Lexicon and a Financial Services AI Risk Management Framework. Developed through a public-private initiative, the materials aim to establish common AI terminology and adapt the National Institute of Standards and Technology’s AI Risk Management Framework to the operational and consumer protection needs of the financial sector. The framework includes a matrix of 230 control objectives to manage risks across the AI lifecycle and is designed to scale for institutions of varying size and complexity. Treasury said additional AI governance resources will be released later this month.

Federal Reserve Vice Chair for Supervision Michelle Bowman said the Federal Reserve remains on track to release a revised Basel III capital proposal before the end of the first quarter, with some of the changes aimed at encouraging greater bank participation in mortgage lending and servicing. She signaled potential revisions to the capital treatment of mortgage servicing assets, including reconsidering the requirement to deduct them from capital and revisiting the 250% risk weight. Mortgage and banking trade groups this week urged regulators to recalibrate risk weights, citing data showing depositories’ share of mortgage originations fell to 32.5% in 2024 from 65% in 2013, as nonbanks gained market share.

The Office of the Comptroller of the Currency proposed creating an appeals board that would give banks and trusts a de novo, or “fresh look,” review of supervisory findings. The proposal would expand eligibility to uninsured institutions, enhance the Ombudsman’s role, and add anti-retaliation protections. Comments are due by April 18.

Rates

Treasury yields edged higher to close a volatile week shaped by tariffs, inflation data, and Fed signals. The 10-year Treasury yield rose 2.9 basis points on the week to 4.084%, while the two-year increased 7.2 basis points to 3.480%. Mortgage rates continued to ease, with the 30-year fixed averaging 6.01% as of February 19, down 8 basis points on the week and the lowest level since September 2022, according to Freddie Mac. The 15-year fixed fell 9 basis points to 5.35%.

Applications for unemployment benefits fell by 23,000 to 206,000 in the week ended February 14, the largest decline since November, while continuing claims rose to 1.87 million. The December trade deficit widened to $70.3 billion, bringing the full-year shortfall to $901.5 billion, one of the largest on record. Gross domestic product grew at a 1.4% annual rate in the fourth quarter, down from 4.4% in the prior quarter, with full-year growth at 2.2%. Consumer sentiment edged up to 56.6 in February, below expectations, while year-ahead inflation expectations declined to 3.4%.

Credit

Lenders are increasingly calling in troubled commercial real estate loans as refinancing challenges persist and property values remain under pressure, as reported by the Wall Street Journal. The delinquency rate for office loans in commercial mortgage-backed securities rose to a record 12.34% in January, while roughly $25 billion in securitized loans are past maturity without repayment, liquidation, or formal extension. Morningstar DBRS estimates more than half of the roughly $100 billion in CMBS loans maturing this year may not pay off at maturity. Banks and thrifts hold about 36% of the nearly $5 trillion in outstanding commercial real estate debt.

The financial press was abuzz this week after Blue Owl Capital said it would liquidate $1.4 billion in loans across three business development companies to meet rising redemption requests. The move sent shares of several private-credit managers lower and renewed questions about retail investor appetite for less liquid assets. As that unfolded, reports emerged that Bank of America plans to commit $25 billion from its own balance sheet to private-credit deals. Readers may recall that last year Bankeration flagged Goldman Sachs’ move to offload certain nonbank financial institution exposures as a potentially bad omen. By the same logic, Bank of America’s decision to allocate fresh capital into the sector at this very moment is worth noting.

Crypto

Crypto markets remained under pressure, with U.S. digital-asset funds shedding $403 million last week and extending a four-week outflow streak, while DeFi lender ZeroLend announced it would wind down amid liquidity and revenue strains. Even so, stablecoins continued to gain institutional and real-world traction: the SEC issued guidance allowing broker-dealers to apply a 2% capital haircut to certain stablecoin holdings, and a global study found growing use of dollar-pegged tokens for savings, payroll and cross-border payments. Meanwhile, Robinhood said its new Arbitrum-based Layer 2 testnet processed four million transactions in its first week, underscoring continued infrastructure buildout despite the market rout.

Transactions

• Citizens Financial Group, Inc. (NYSE: CFG) agreed to acquire Matrix Capital Markets Group, Inc., a Virginia-based advisory firm in the Downstream Energy & Convenience Retail sector. The price of the all-cash transaction was not disclosed.

• California-based First Northern Bank acquired California-based Beacon Wealth Strategies via its advisory division. Raymond James will continue to manage Beacon’s accounts post-transaction. Terms were not disclosed.

• Alabama ONE Credit Union agreed to acquire Alabama-based Peoples Independent Bank. The two institutions will combine to form a $1.9 billion asset credit union. Terms were not disclosed.

Washington D.C.

Community bank legislation moved forward on several fronts this week. Sens. Ted Cruz (R-Texas) and Katie Britt (R-Ala.) introduced a bill to increase the asset threshold for the interchange cap imposed by the Durbin Amendment. The measure would tie the $10 billion threshold to inflation, with a retroactive catch-up to 2010 and annual updates based on the Consumer Price Index.

The Senate is also considering the Made in America Manufacturing Finance Act, which would double loan limits under the Small Business Administration’s 7(a) and 504 programs to $10 million for manufacturers. Meanwhile, the House passed the Housing for the 21st Century Act with bipartisan support, attaching community bank provisions that would expand limited-scope exam eligibility to banks under $6 billion in assets, ease de novo formation, and revise brokered and custodial deposit and least-cost resolution rules. Those riders were not included in the Senate’s previously approved housing package and face opposition from key Democrats, including Sen. Elizabeth Warren (D-Mass.).

Crypto and banking trade groups clashed in Washington as negotiations over stablecoin yield and federal charters intensified. At a White House meeting, bank advocates circulated principles calling for a blanket prohibition on any financial or non-financial consideration tied to holding payment stablecoins. The Digital Chamber issued its own statement of principles, urging lawmakers to preserve the recent Senate compromise that would prohibit rewards on idle balances while permitting transaction-based incentives, and backing a two-year study on stablecoins’ impact on insured deposits. Separately, the American Bankers Association pressed the Office of the Comptroller of the Currency to slow approvals of national trust bank charters for crypto firms until rulemakings required under the GENIUS Act are finalized, citing unresolved receivership, securities registration, and naming concerns for uninsured institutions seeking access to the federal banking system.

In a separate — but very interesting — development on the crypto front, Decrypt reports that the Federal Deposit Insurance Corporation (FDIC) agreed to settle its dispute over so-called crypto “pause letters.” The agency will pay $188,440 in legal fees to Coinbase’s records request firm and revise its Freedom of Information Act policies. The litigation led to the release of dozens of letters sent to banks urging them to pause or limit crypto-related activities. Under the settlement, the FDIC said it will no longer categorically withhold supervisory records and will update internal guidance to ensure more individualized disclosure reviews.

Regulation

The Federal Reserve plans to scale back certain outstanding supervisory warnings issued to banks, marking a shift in oversight under Vice Chair for Supervision Michelle Bowman. Examiners will review existing “matters requiring attention” and “matters requiring immediate attention” and remove findings that do not pose material risk to a firm’s financial condition, focusing instead on deficiencies that create a significant probability of harm. The review, which excludes consumer compliance and material financial risks, will conclude by the end of July, with some findings potentially downgraded to supervisory observations. In July 2024, Bloomberg reported that half of the largest banks overseen by the Office of the Comptroller of the Currency were cited for weak operational risk management, and roughly one-third received a Management rating of 3 or lower under the CAMELS framework. While the Federal Reserve supervises a different portfolio of institutions, it remains unclear whether the shift will affect composite CAMELS ratings or deposit insurance assessments for banks under its jurisdiction.

Treasury Secretary Scott Bessent issued a Geographic Targeting Order requiring banks and money transmitters to report international transactions of $3,000 or more originating from Hennepin and Ramsey counties in Minnesota. Under the order, which takes effect Thursday and runs through August, institutions must collect detailed information on transaction recipients—including address, email, date of birth, and source-of-funds data—going beyond typical customer-level requirements. Banks and trade groups have raised concerns about the 30-day implementation window and gaps in guidance, with some firms upgrading systems or relying on manual processes to comply. Bessent called the Minnesota action “the genesis for a national rollout.”

Rates

Treasury yields declined over the week as January inflation data came in slightly below expectations and markets prepared for a shortened trading calendar. The 10-year yield fell 15 basis points to 4.055%, its lowest level since November, while the two-year yield declined 8.5 basis points to 3.409%, the lowest since September.

January payrolls rose by 130,000 and the unemployment rate declined to 4.3%, exceeding most forecasts and prompting traders to scale back expectations for near-term rate cuts. Health care and construction led hiring, while manufacturing added 5,000 jobs, its first monthly gain since late 2024. Weekly initial jobless claims edged down to 227,000 after a weather-related spike, though continuing claims rose to 1.86 million. Annual benchmark revisions showed employers added just 181,000 jobs in 2025 – an average of 15,000 per month and the weakest non-recession year for hiring since 2003.

Inflation showed further signs of cooling in January. The Consumer Price Index rose 0.2% for the month and 2.4% year over year, down from 2.7% previously, while core prices increased 0.3% on the month and 2.5% annually. Energy prices fell 1.5% and shelter costs rose 0.2%, the smallest gain since September. Even as markets increased bets on rate cuts following the report, some strategists cautioned that longer-term inflation expectations near 2.5% may understate risks. A separate Federal Reserve Bank of New York study found that roughly 86% to 94% of 2025 tariff costs were passed through to US firms and consumers, underscoring continued price pressures in traded goods.

Other signals in the market remained mixed. Small-business optimism edged down in January, with the National Federation of Independent Business index slipping to 99.3 as expectations for business conditions weakened and uncertainty rose, though a larger share of firms reported improved sales outlooks and expansion plans. Meanwhile, the Federal Reserve Bank of New York reported overall household delinquency rates rose to 4.8% in the fourth quarter, the highest since 2017, with credit-card loans 90 days past due climbing to 12.7%. At the same time, total credit-card balances increased 5.7% in 2025 to $1.28 trillion, while the share of balances newly entering delinquency declined year over year, suggesting elevated but stabilizing credit stress.

Cybersecurity

Citi estimates a quantum-enabled attack on a top U.S. bank’s access to Fedwire could cost $2 trillion to $3.3 trillion, American Banker reports. Experts place up to a 34% probability on “Q-Day” arriving by 2034, prompting regulators to urge immediate post-quantum planning.

Separately, cybercriminals are abusing legitimate employee monitoring software to break into company networks, according to Huntress. In two cases, attackers installed Net Monitor for Employees — which can secretly run commands — and paired it with the remote IT tool SimpleHelp to maintain access. The report says weak VPN security and poor account controls, not novel malware, enabled the intrusions.

Digital Assets (aka Cryptocurrency)

Much of crypto-land remained focused on the prior week’s sharp selloff. Some firms felt immediate strain: Susquehanna-backed trading firm and lender BlockFills temporarily suspended deposits and withdrawals amid volatility, while allowing limited trading activity to continue. That didn’t stop leverage from creeping back in. Decrypt reports that annualized three-month bitcoin futures basis widened from roughly 1.5% to 4% after February 13, signaling renewed speculative appetite, though some analysts warned the setup could precede another leverage-driven shakeout.

Still, major infrastructure players pressed ahead. LayerZero launched its own Layer-1 blockchain, “Zero,” with backing from Citadel Securities and Ark Invest, and partnerships with Google Cloud and DTCC. Tether also disclosed a strategic investment in LayerZero, whose interoperability tech underpins the omnichain version of USDT.

Robinhood, meanwhile, moved its Ethereum-based Layer-2 network into public testnet, positioning the chain as infrastructure for tokenized equities and broader financial services. And as American Banker reports, Ethereum and its Layer-2 ecosystem are increasingly becoming the rail of choice for banks experimenting with tokenized deposits, stablecoins and interbank settlement.

Transactions

• Florida-based financial technology company AtlasClear Holdings agreed to acquire Wyoming-based Commercial Bancorp in a cash-and-stock deal. If approved, AtlasClear will gain a state-chartered, Federal Reserve member bank with $28 million in deposits.

• Miami Savings Bank agreed to acquire New Foundation Savings Bank. The two Ohio mutual banks will combine to form a $151 million asset institution. Terms were not disclosed.

• West Iowa Bank agreed to acquire Home State Bank of Royal. The two Iowa banks will combine to form a $83.3 million institution. Terms were not disclosed.

• Axos Financial agreed to acquire $2.6 billion of deposits from Sumitomo Mitsui Financial Group. reports that the deposits are from SMBC’s Jenius Bank, which began an abrupt wind down in January. Terms were not disclosed.

For those who read Bankeration regularly, you know that I’m excited about the launch of Erebor Bank. I’m hoping it becomes a live experiment in the future of financial services: tech stacks, cybersecurity models, product architecture, and maybe even regulatory design. As exciting as those things are, the launch of the heavily hyped bank also surfaced a far more commonplace issue in financial services: scam websites.

This one isn’t even good. But fraudulent bank websites don’t have to be particularly good to work their malice on an unassuming public. And even banks with the time, treasure and trademarks to fight for takedowns don’t always win the battle.

The FBI’s Internet Crime Complaint Center reported $16.6 billion in cybercrime losses in 2024 alone. Phishing and spoofing remained the most frequently reported category, and Business Email Compromise (BEC) accounted for roughly $2.9 billion in losses.

Scam domains are not the only driver of those losses. But they are a recurring entry point in a fraud ecosystem that is now measured in the tens of billions annually.

The uncomfortable truth: we’ve had a partial solution to domain impersonation risk for over a decade. We just haven’t adopted it.

It’s called .bank.

What Is a gTLD, and Why .Bank Is Different

A generic top-level domain (gTLD) is the suffix at the end of a web address — .com, .org, .net. Most gTLDs are identity-neutral. Anyone can register them. They are open namespaces, governed largely by market forces and minimal eligibility restrictions.

In the early 2010s, the Internet Corporation for Assigned Names and Numbers (ICANN) expanded the domain system through its New gTLD Program, allowing new strings beyond the legacy set. Most of those strings function like .com, meaning open registration and market-based allocation. .bank is different. It is a restricted gTLD designed specifically for regulated banking institutions.

It exists because global financial regulators were unable to block the string outright, and the banking community decided that if they couldn’t kill it, they had to own it.1 The stakes were legitimately high, though. Financial regulators recognized that unrestricted use of “bank” in a domain could create consumer confusion, implied regulatory endorsement, and fraud risk.

Unlike .com, .bank is identity-bound. It imposes governance and security requirements that materially change who can participate and how the domain is operated.

What Makes .Bank Structurally Different

If this were simply a branding decision, it probably wouldn’t merit a lot of discussion. The real value of .bank lies in enforceable internet architecture. To register a .bank domain, an entity must be a government-regulated banking organization. Eligibility is verified. Branding must align with legal identity. Authorization must be confirmed. A .bank domain is not self-asserted; it is vetted.

Fraudsters cannot anonymously register one, and unregulated fintech platforms cannot casually acquire one. “Non-KYC” debit card providers can’t get through the application process. The open-registration attack vector that exists in .com does not exist here.

Beyond eligibility, .bank requires technical controls that many .com domains do not enforce. DNS routing must be secured to prevent redirection attacks. Modern encryption standards are mandatory. Email authentication must be implemented at strict rejection settings to reduce spoofing. These controls do not eliminate phishing or social engineering, but they materially harden the namespace and raise the cost of impersonation.

Taken together, the eligibility firewall and the mandatory security baseline significantly reduce domain-based deception. They do not, however, solve the entire problem.

The Missing Layer: Adoption

Years ago, someone who was not a client contacted the bank I worked for after losing money in a scam. They had been directed to a website that used our name — not exactly, but close enough. The fraudsters cloned our website, but instead of using the .com domain we operated under, they registered the name under a different gTLD: .swiss.

It wasn’t our website. It wasn’t our customer. Our infrastructure had not been compromised.

But someone lost money anyway.

We did what we could. We went through the familiar process of filing takedown requests with the registrar, which we had done before and would do again. Most of the scam sites we uncovered over the years weren’t even targeting our customers. They were using our name to defraud customers of other banks.

So is that the end of it? My bank didn’t lose money, so it’s all moot? Sure — that’s one way to think about it. The other is that eventually someone’s scam site comes for everyone’s customers. Whether or not the losses hit your balance sheet (this time), scam websites create reputational and customer experience issues for all of us.

Would it have mattered if my bank had been using .bank instead of .com in that situation? No, it would not have. Because the behavior that needed to change was the victim’s. Until the public is trained to look for a .bank domain when conducting financial transactions, the problem is only partially solved.

We have a way to give consumers a simple, reliable heuristic. We just haven’t deployed it at scale. Without broad bank adoption and sustained public education, .bank cannot function as a behavioral signal. At present, a .bank domain is an infrastructure upgrade with a powerful upside that is nearly unknown to the people it is meant to protect.

As of this writing, approximately 911 banks have adopted .bank. That is meaningful progress, but out of more than 4,000 U.S. banks and tens of thousands globally, it does not yet create network-level signaling.

Why Adoption Has Been Slow

Banks are fully aware of the risks connected to phishing, spoofing, and typo-skimming. So why haven’t they already made the switch? The slower adoption curve reflects friction rather than indifference.

When .bank launched in May 2015, the migration path was not as straightforward as it is today. In the early months, fTLD placed meaningful restrictions on URL redirection. Banks were concerned about preserving search engine rankings and customer traffic continuity, and the registry expressed hesitation about allowing institutions to use a .bank domain merely as a shell that redirected users back to a less secure .com site. By late 2015, the policy environment evolved. Standard redirects are now a routine part of implementation. But momentum matters in infrastructure rollouts. Early ambiguity dampened what might have otherwise been a faster first wave of migration.

But even with the redirect issues long resolved, .bank is intentionally more demanding than .com. Registration requires compliance with mandatory security standards and periodic re-verification. For large institutions, these requirements often align with existing cybersecurity frameworks. For smaller institutions, they can require coordination, vendor alignment, and incremental budget. There are also transitional costs: updating marketing materials, integrations, certificates, mobile applications, and customer communications. None of these hurdles are insurmountable, but layered together, and absent visible consumer demand, migration competes with other priorities.

The Economics: Coordination vs. Loss

Ultimately, the decision to migrate is economic. Cybercrime losses exceeded $16 billion in 2024. Brand impersonation is persistent. Fraudsters do not need to breach internal systems if they can instead lure customers to convincing lookalike domains. Industry-wide migration and sustained public education would cost money, but those costs are finite. Fraud losses compound.

Even modest reductions in successful impersonation attacks could justify coordination expense. Beyond measurable losses, there is reputational erosion. Every convincing phishing campaign reinforces the perception that digital banking is fragile. Or if not fragile, at least no less fragile than the latest fintech offering a cool interface and a sweepstakes prize. Each spoofed invoice or wire request that appears legitimate weakens confidence in electronic channels. When viewed in that light, .bank is not just defensive infrastructure. It is trust infrastructure.

The question is not whether migration has cost. It does. The question is whether the industry prefers to spend collectively to reduce impersonation risk or continue absorbing distributed losses and reputational friction in perpetuity.

Finishing the Job

If coordination is the rational solution, the most efficient path is clear. The largest banks should lead. Major institutions actively endorsed fTLD Registry Services’ 2012 application to administer .bank. The architecture was built collectively. Completing deployment should be as well.

The quickest path to meaningful consumer signaling runs through the institutions that control the majority of deposits and possess the scale to normalize consumer behavior. If the top tier migrated in coordination and paired the transition with sustained public messaging, the heuristic would form. Smaller institutions could follow without bearing disproportionate burden.

But if large-bank alignment is off the table, all hope is not lost.

The alternative is sustained collective effort backed by real budget and reinforcement over time. That might mean a national advertising push. It might mean social media saturation whenever fraud spikes or a high-profile failure in the fintech world creates a teachable moment. It might mean trade associations pooling funds to create persistent messaging: If it’s not .bank, it’s not your bank.

Fraud losses are not shrinking. Brand impersonation is not slowing. The industry built a tool specifically designed to constrain misuse of its identity online. The question is: will we use it? The costs of delaying might be higher than we think.

Presentation delivered by Alyson Stone, April 17, 2014, Fordham University School of Law

Author’s Note:
This document is adapted from an academic presentation delivered in Professor Olivier Sylvain’s Internet Law class at Fordham University School of Law. The slides and speaking notes were fed into ChatGPT to create a document that resembles a transcript, and the output was reviewed and edited by the author. While the below document is faithful to the detailed speaking notes, this is not an exact transcription of the class presentation. The text preserves the original structure and terminology, with light editorial cleanup for clarity and publication.

The information presented is not legal advice, is not to be acted on as such, is not current and is subject to change without notice.

Introduction

A firm named fTLD Registry Services will probably be rolling out .bank top-level domains in 2014. Depending on the quality of their services, the level of engagement from financial regulators, and the degree of participation by the financial industry itself, it is conceivable that, within a few years, consumers might not even consider accessing online banking services through anything other than a .bank domain name.

The .bank domain is only one of several proposed top-level domains associated with regulated industries to emerge from ICANN’s New gTLD Program. fTLD Registry Services will also be rolling out .insurance in the near future. Other proposed strings — including .pharmacy, .med, and .cpa — similarly caused concern of their respective industries and regulators.

The Internet Corporation for Assigned Names and Numbers (ICANN) decided to address regulated industries through a community application process and a community objection process. The route that .bank took through ICANN’s policymaking and application framework is a good example of the many issues underlying the New gTLD Program, as well as the policy compromises ICANN and community stakeholders made in pursuit of the Generic Names Supporting Organization’s (GNSO) mission to promote competition and innovation in the domain name system.

The New gTLD Program

Since its establishment in 1998, the creation of new top-level domains has been a central objective of ICANN. The organization has long sought to foster competition and innovation in the domain name space.

Despite the introduction of gTLDs such as .biz in 2000 and .tel in 2004, .com remains dominant. That dominance gives rise to persistent problems, including name scarcity and cybersquatting.

Of the original generic top-level domains, thirteen are sponsored TLDs, such as .mil and .edu, each governed by industry-specific eligibility rules. Infrastructure TLDs such as .arpa are not available for general use.

Following the launches of new gTLDs in 2000 and 2004, ICANN undertook a more comprehensive expansion effort. Between 2005 and 2007, GNSO developed a set of policy principles and nineteen recommendations governing the New gTLD Program, which ICANN adopted in 2008.

Most of the recommendations were uncontroversial. Two were not. One addresses morality and public order. The other — Recommendation 20 — is central to the discussion of regulated industries. It provides that applications can be rejected in the face of “substantial opposition” from a community.

Recommendation 20 and Substantial Opposition

Recommendation 20 provides that applications may be rejected due to “substantial opposition” from a significant portion of the community that the proposed string targets. It is implemented through three Implementation Guidelines, including Implementation Guideline P, which establishes a detailed framework for evaluating opposition.

Of the nineteen GNSO recommendations, Recommendation 20 is the only one that has not been clearly matched to a specific ICANN mission statement or core value. It exists specifically because of stakeholder concern about opening a nearly unlimited universe of strings for bid by the general public, particularly where those strings intersect with public trust or regulated activity.

The Non-Commercial Users Constituency

Who objected to Recommendation 20? The Non-Commercial Users Constituency (NCUC).1

The NCUC was created to balance the influence of commercial interests within ICANN’s multi-stakeholder structure. Its members include organizations such as the ACLU, the American Libraries Association, and the Red Cross. The constituency views itself as the “conscience” of ICANN and advocates for fair use, freedom of expression, and privacy.

Implementation Guidelines

ICANN implemented Recommendation 20 through two parallel mechanisms: a community application process and a community objection process. Both require a showing of strong association between the proposed string and the relevant community.

Community applications require evidence of endorsement. Community objections require a showing of opposition by a significant portion of the affected community.

What Constitutes “Substantial Opposition”

“Substantial opposition” is evaluated through a multi-factor analysis. Seven elements are considered, including the size and nature of the community, whether the string explicitly or implicitly targets that community, whether the objecting institution is formally organized and well established, and whether use of the string is likely to cause detriment.

“Community” is interpreted broadly and may include economic, cultural, or linguistic groups. An institution that chooses to object on behalf of a community must have existed in a formal sense for at least five years, although exceptions are permitted in extraordinary circumstances.

“Implicitly targeting” a community includes applications that create confusion, even if the applicant doesn’t intend to target that community. For example, if the firm Amazon wanted to create a .Amazon gTLD, the individuals in the region known as the Amazon might be considered part of the targeted community, even if the company called Amazon is not intentionally targeting that audience.

Importantly, detriment does not require proof of actual harm. It requires only a showing of likely harm.

Entry of Regulated Industries

Unsurprisingly, the prospect of a .bank domain drove early and substantial industry and regulator comment.

Names like .bank were on the minds of ICANN policy makers from the beginning, and regulated industry concerns loomed large in the creation of the entire “community” regime.

The global financial regulatory community is easily one of the most complex regulatory regimes on the planet and I won’t require you to learn it all to understand this presentation. Instead, I’ll use my own employer, Signature Bank, to simplify some things as we look at the .bank application process and try to understand its implications.

A few quick facts about Signature for you to know at this point: we are a $20 billion institution. That makes us the 64th largest bank in the nation by deposits and the 22nd largest bank in the nation by market capitalization (i.e. the value of our publicly traded stock). This makes us a “large” bank by regulatory standards and a “mid-sized” or “regional” bank in the realm of the financial press and public perception.

Consumer Protection and Public Confidence

At this point, I ask the audience to consider a simple question: what do you do if you hear that your bank may be on weak financial footing?

The image on this slide is familiar. Bank runs are not theoretical events. They are predictable responses to uncertainty. A core purpose of banking regulation is to prevent this outcome by reinforcing confidence in the system as a whole.

I then ask another question: has anyone experienced debit card fraud?

Most people have. And in most cases, consumers are reimbursed. Regulation E requires banks to make consumers whole for unauthorized electronic transactions. In 2012 alone, debit card fraud costs the banking industry approximately $940 million.

I follow with a third question: has anyone had their online banking account compromised?

Again, consumers are typically reimbursed. Industry losses from online banking fraud total approximately $157 million. These protections reinforce a consistent public expectation: when something goes wrong, the bank — and the regulatory framework behind it — stands behind the consumer.

The final question is the most important: what happens if the industry tells consumers they are no longer protected? We may well see lines outside banks like the one in the photo on the slide.

And now consider: what happens if 5 years from now, the American public suddenly realizes that 50% of institutions they think of as banks are not actually FDIC insured banks? Do we get the scenes in the bank run photo? Something worse? Do consumers just take their money out of the uninsured banks, or all of them?

If confidence in the system erodes as a whole, the system destabilizes. This is the context in which regulators evaluated proposals like .bank. The concern is not fraud in isolation, but the potential for misdirected trust at scale.

Regulatory Concerns Regarding Financial gTLDs

From a regulatory perspective, financial-sector gTLDs such as .bank carry implicit signals of legitimacy and supervision. Financial regulators were active in the debates leading up to the establishment of the gTLD program and its implementation.

The Federal Deposit Insurance Corporation (FDIC), as its name implies, insures deposits held in chartered banks. They have a reserve fund to pay out depositors if a bank failure requires them to do so, but it’s not large enough to cover deposit losses if every bank failed at the same time.

The FDIC and other international financial regulators made several arguments as the gTLD process progressed, many of which fell on deaf ears. The FDIC specifically advocated that financial industry gTLDs should not be permitted to go through an “open” application process, and that special governance provisions should apply in the application process and be crafted as contractual covenants in the award process.

The .bank Applications and IBFed Objection

Despite regulatory efforts, .bank was ultimately subject to an open application process. Three parties applied. One applicant withdrew, and a second application was overcome through the community objection process.

The International Banking Federation (IBFed) was formed in 2004 to represent the combined views of national banking associations. It represents more than 18,000 banks worldwide, including more than two-thirds of the largest 1,000 banks in the world.

The IBFed community objection against the Radix (formerly, Dotsecure) application was heavily contested and touched upon numerous elements of ICANN’s community objection framework.

IBFed argued that the banking industry constitutes a clearly defined community and that misuse of the .bank string would cause material detriment. The expert panel accepted their position and rejected Radix’s application.

Comparing the .bank Outcome with NCUC’s 2007 Objections to Recommendation 20

Objection 1

NCUC objection: Experts selected to adjudicate community objections would be overly tied to the industries contesting applications

.bank dispute: the expert in this dispute was a former attorney for banks and a current adjunct professor at Georgetown Law and arbitration expert. Neither party objected to his selection.

Objection 2

NCUC objection: emerging and smaller firms would experience bias in the application process.

.bank dispute: the community objection was disputed by two well funded commercial enterprises. However, Domain Security Company’s early withdrawal from the selection process might support NCUC’s objections.

Objection 3

NCUC objection: establishing the standing to lodge a community objection would involve significant speculation.

.bank dispute: there were significant, valid challenges to IBFed’s standing in this dispute. Radix’s objections were overcome largely because the expert was deferential to financial regulators who were not parties to the community objection.

Objection 4

NCUC objection: not all members of communities would have a voice in a community objection, nor could an objector claim that communities would speak with one voice.

.bank dispute: Radix claimed that most of the 37,000+ banks across the globe were unaware of IBFed’s advocacy on their behalf. There is a reason I brought up Signature Bank earlier in this presentation: the 22^nd largest bank in the United States by market capitalization had no idea that this dispute was happening. I am sure we were not alone. The NCUC’s objections ring true on this one.

The NCUC originally advocated that illegality should be the only reason that a gTLD application should be denied for non-technical reasons. In the case of .bank, illegality probably would have been a sufficient bar to the Radix application. All U.S. states and Canadian provinces have laws against the use of the word “bank” to describe a non-chartered institution. Other jurisdictions have similar laws and nations without those laws could have passed them. While its unclear if all regulated industries are similarly protected, the NCUC solution probably would have resulted in the same outcome.

Conclusion

The winner of the .bank gTLD application was fTLD Registry Services, which came to life via a partnership between the American Banker’s Association (ABA) and BITS, the technology policy division of the Financial Services Roundtable.2 The ABA has intervened on the topic of bank identification protocols before, and every single person in this class has directly interacted with it:

[The speaker brandishes a checkbook]

Bank routing numbers.

Every time you sign up for a direct deposit or an automatic bill pay program you have used this number, and every personal check you have ever written contains this number on its face. It is reasonable to expect that any ABA-supported program could have serious commercial traction and could become an operational necessity for any bank operating in the United States.

When we debate community applications and objections, the emphasis tends to be on social issues. Social issues aren’t absent from the .bank story, but the end result in this particular case was to settle a commercial opportunity in the hands of an already-powerful industry group. In fairness to the banking community, many of the early regulatory efforts were to blacklist the .bank gTLD rather than commercialize it. Nonetheless, this example of a successful community objection highlights ICANN’s role in parceling out valuable internet properties, shines a light on the challenges of doing so fairly, and shows the process other regulated industries might go through to secure their own gTLDs.

Bank Stocks

You may have heard an awful lot about the price of bitcoin this week, and somewhat less about the price of bank stocks. Which is a shame, because the news is awfully good in 2026. Regional banks are gaining, with the KBW Nasdaq Regional Bank Index reaching an all-time intraday high on February 4. The index was up 7.3% through January, with shares of Pinnacle Financial Partners, Wintrust Financial, and Columbia Banking System among the strongest performers. Investors cite improving sentiment toward mid-sized banks, steady credit conditions, and renewed expectations for consolidation, reinforced this week by Banco Santander’s $12.3 billion agreement to acquire Webster Financial.

Washington D.C.

Wrangling over crypto market structure legislation continued this week. The White House’s summit between crypto firms and banking groups ended without resolution, while Treasury Secretary Scott Bessent publicly pressed the crypto industry to unite behind the CLARITY Act. Separately, crypto firms floated new concessions late in the week, including proposals to require stablecoin issuers to hold a portion of reserves at community banks or partner with them to issue tokens, according to Bloomberg. It’s an interesting proposal, since industry surveys suggest community banks are decidedly tepid about partnering with cryptocurrency firms. The Conference of State Bank Supervisors’ 2025 Annual Survey of Community Banks—conducted before passage of the GENIUS Act—found that more than 90% of respondents do not offer cryptocurrency services and do not plan to do so in the next 12 months. Sixty-eight percent said meeting customer crypto needs was “not at all important.”

Treasury Secretary Scott Bessent’s congressional testimony this week was heavy on rhetoric and light on specifics. Appearing before the House Financial Services Committee, Bessent called for deregulation of the smallest banks and criticized what he described as “regulation by reflex,” but stopped short of endorsing concrete policy changes. He blamed Biden-era supervision and a focus on reputation and climate risk for contributing to the Silicon Valley Bank collapse, while offering broad support for tailoring capital and risk standards for community banks. He also declined to take firm positions on several flashpoints, including whether President Trump has the authority to remove a Federal Reserve governor, and sidestepped questions about Trump’s proposed one-year 10% credit card rate cap, framing it instead as part of a broader affordability push.

Public comments rolled in this week on the Federal Reserve’s proposed “skinny master account,” revealing sharp divides between crypto and fintech firms seeking broader access and community banks urging restraint. The proposal, floated by Fed Governor Christopher Waller, would grant limited access to the Fed’s payment services while barring interest on balances, discount window access, and imposing an overnight balance cap of $500 million or 10% of assets. Crypto banks and fintech trade groups broadly welcomed the concept but warned that balance caps and service limits would blunt its usefulness and keep firms reliant on bank intermediaries. Community bank groups countered that expanding Fed account access could introduce safety and consumer risks. Waller has said the Fed aims to finalize the framework by the fourth quarter of 2026.

Regulation

Banks urged the Office of the Comptroller of the Currency (OCC) to rethink third-party risk management rules, arguing that a highly concentrated core services market leaves banks bearing disproportionate supervisory risk. Comment letters responding to the OCC’s recent request for information said a small group of core providers controls more than 70% of the market, limiting banks’ negotiating leverage and complicating technology modernization. Trade groups including the Independent Community Bankers of America and the American Bankers Association called for regulators to share more responsibility for vendor oversight, expand direct examinations of service providers, and publish more information on outages and performance. Core providers pushed back, warning against new mandates and arguing that scale lowers costs and supports system stability.

The Federal Reserve finalized the stress test scenarios for its 2026 exams, while voting to keep current stress capital buffer requirements in place through 2027 as it overhauls the testing framework. Thirty-two large banks will be tested against a severe global recession scenario, including a nearly 5.5 percentage-point rise in unemployment, a roughly 30% decline in home prices, and stress in commercial real estate and corporate debt markets.

The Consumer Financial Protection Bureau (CFPB) added new requirements to its consumer complaint portal aimed at curbing a surge in credit reporting complaints. The three major credit bureaus, Equifax, Experian, and TransUnion, allege that many of the complaints originate from credit repair firms and AI bots. The CFPB is now requiring additional identity verification steps and new attestations regarding the truthfulness of submitted complaints.

The Commodity Futures Trading Commission (CFTC) withdrew a Biden-era proposal that would have barred sports- and politics-related event contracts on prediction markets, and also pulled a 2025 advisory warning businesses against offering sports-related contracts, citing ongoing litigation.

The CFTC also revised its crypto collateral pilot in a technical change that allows stablecoins issued by federally chartered trust banks to qualify as margin collateral for futures brokers. The earlier guidance had inadvertently limited eligibility to stablecoins issued by state-regulated banks. Chairman Michael Selig tied the revision to the GENIUS Act and broader efforts to align derivatives oversight with federal banking policy.

The Financial Stability Board (FSB) warned that leveraged trading in government bond markets warrants closer scrutiny, pointing to growing risks in repo markets used heavily by hedge funds. The FSB said hedge fund borrowing in repos has risen to roughly $3 trillion, or about 25% of sector assets, driven by strategies such as cash-futures basis trades. Regulators flagged the risk that forced asset sales during stress could amplify volatility and create feedback loops. The group outlined new metrics to monitor leverage and liquidity.

Rates

Treasury yields finished the week little changed after a choppy stretch of trading, with the 10-year ending near 4.21% and the two-year around 3.49%. Earlier in the week, bouts of stock market volatility triggered a brief flight to safety that pushed yields lower and temporarily steepened the yield curve. Those moves largely unwound by Friday as markets stabilized. Mortgage rates, meanwhile, edged higher, with the 30-year fixed rate hovering just above 6%, reinforcing expectations that borrowing costs are unlikely to fall meaningfully in the near term.

Labor market data this week pointed to cooling conditions. Job openings fell to 6.54 million in December, the lowest level since 2020, while layoffs edged higher, according to the Job Openings and Labor Turnover Survey. Weekly initial jobless claims rose to 231,000 in late January, exceeding forecasts amid severe winter weather. Private-sector hiring remained subdued, with ADP reporting just 22,000 jobs added in January, below all estimates. The January payrolls report, delayed by the partial government shutdown, is now scheduled for release on February 11.

Beyond the labor market, activity indicators trended positive. Manufacturing rebounded, with the Institute for Supply Management’s index rising to 52.6 in January, the fastest expansion since 2022, driven by gains in new orders and production. Services activity held steady at 53.8, matching its strongest pace since late 2024, even as order growth cooled and export demand weakened. Consumer sentiment unexpectedly improved, with the University of Michigan’s preliminary February index rising to 57.3, a six-month high, alongside a decline in short-term inflation expectations, though concerns about job security increased.

Transactions

• Banco Santander announced a deal to acquire Connecticut-based Webster Financial in a cash-and-stock deal valued at $12.3 billion. The combined entity will have $327 billion of assets. Santander also announced a €5 billion ($5.91 billion) share-buyback program.

• Columbia Financial, Inc. agreed to acquire Northfield Bancorp, Inc. in a cash-and-stock transaction valued at $597 million. Columbia will raise $1.9 billion in a mutual-to-stock conversion immediately prior to the merger. The two New Jersey banks will combine to form a $18 billion asset entity.

• San Francisco-based Varo Bank raised $123.9 million in a Series G round.

• Tether Investments announced a $100 million strategic equity investment in San Francisco-based, Anchorage Digital.

• San Diego-based Endeavor Bancorp completed a private placement of $10.0 million of the Company’s common shares. The $770 million asset bank will use the proceeds to support organic and strategic growth opportunities.

• Tri-County Bank of Stuart agreed to acquire Butte State Bank. The two Nebraska banks will combine to form a $301.6 million asset institution. Terms were not disclosed.

Washington D.C.

A partial federal government shutdown began Saturday after the House failed to clear a stopgap funding package already passed by the Senate. The lapse affects the Department of Homeland Security, the Department of Defense, and the Department of Transportation. Following the October 2025 shutdown, Congress enacted roughly half of the twelve annual appropriations bills for the fiscal year, leaving several agencies and programs funded through September. The current shutdown was initially expected to end on Monday, but that outlook dimmed as House Speaker Mike Johnson encountered resistance from House Democrats pressing for changes to immigration enforcement practices.

President Donald Trump said he will nominate Kevin Warsh to serve as the next Chair of the Federal Reserve, succeeding Jerome Powell when Powell’s four-year term as chair expires in May. Warsh, a former Federal Reserve governor who served from 2006 to 2011, previously worked at Morgan Stanley, advised President George W. Bush’s National Economic Council, and is now affiliated with the Hoover Institution and Stanford Graduate School of Business. Powell’s separate term as a member of the Board of Governors runs through January 2028, and he has not said whether he will step down when his chairmanship ends. Separately, Fed Governor Stephen Miran, whose appointment expires January 31, said he expects Warsh to be appointed to his seat.

President Trump also nominated Brett Matsumoto, a career economist at the Bureau of Labor Statistics, to serve as the agency’s next commissioner. Matsumoto, who joined BLS in 2015 and recently served on assignment at the Council of Economic Advisers, would take over an agency facing staffing losses, delayed releases, and strained morale after last fall’s shutdown. The nomination follows a December report from the American Statistical Association warning that chronic underfunding, attrition, declining survey response rates, and political pressure are creating an immediate capacity crisis across federal statistical agencies, including BLS.

Negotiations over crypto market structure remained tense this week. The Wall Street Journal reports that Coinbase CEO Brian Armstrong got a chilly reaction from the megabanks at the World Economic Forum in Davos. On Capitol Hill, the Senate Agriculture Committee advanced its market structure proposal, the Digital Commodity Intermediaries Act, on a party-line vote Thursday. Separately, representatives from Coinbase, crypto trade groups, and banking organizations are scheduled to meet at the White House on Monday to address stablecoin rewards provisions tied to the CLARITY Act. The crypto super PAC Fairshake chose this moment to remind Washington of its political muscle, reporting more than $193 million on hand heading into the 2026 midterm elections.

Regulation

The Consumer Financial Protection Bureau (CFPB) plans to sharply scale back and restructure its supervision program as it restarts examinations this spring. According to exclusive reporting by Bloomberg Law, all exams will be conducted virtually, eliminating on-site reviews and significantly reducing overall activity. The CFPB expects to conduct fewer than 70 exams in 2026, down from more than 600 supervisory events annually in recent years, with shorter reviews focused narrowly on what officials describe as pressing consumer risks within clear statutory bounds.

The SEC and CFTC delivered a dense set of crypto-related updates this week. The two agencies formally launched “Project Crypto,” a joint initiative intended to harmonize oversight of digital assets and coordinate rulemaking across markets that span securities, derivatives, custody, and trading. Separately, SEC Chair Paul Atkins tempered expectations around the timing of previously discussed crypto innovation exemptions. After signaling earlier this month that exemptions covering areas such as tokenized securities and decentralized finance could be finalized quickly, Atkins said the SEC is still working through the details and taking a more deliberate approach. The comments came shortly after representatives from JPMorgan, Citadel, and securities trade group SIFMA met with the SEC’s crypto task force to raise concerns that broad exemptions for tokenized securities and DeFi activities could weaken investor protections and introduce market risks.

The SEC also issued a statement outlining how existing securities laws apply to tokenized securities. The statement draws distinctions between issuer-sponsored tokenization and third-party models, including custodial tokenized securities, linked securities, and tokenized security-based swaps, and emphasizes that tokenization does not alter the underlying legal status of a security or exempt it from registration, exchange trading, or other core requirements.

Rates

The Federal Reserve held its benchmark rate steady at 3.5% to 3.75% at its January meeting, with Chair Jerome Powell pointing to improving economic conditions and little urgency for additional cuts after last fall’s easing cycle. Treasury markets reacted to President Trump’s nomination of Kevin Warsh as the next Fed chair, with the two-year yield falling to about 3.53% and the 10-year ending the week near 4.24%, reflecting modest curve steepening. Mortgage rates rose for the first time in four weeks, with the average 30-year rate climbing to 6.24%, weighing on refinancing activity and slightly easing purchase demand.

Fraud

The financial services sector remained the most frequently breached industry in 2025, recording 739 publicly disclosed data compromises, according to the Identity Theft Resource Center. Attacks on banks through their technology vendors now account for roughly 30% of all breaches. The report also highlights a resurgence of physical threats through so-called “skimming 2.0,” with criminals deploying Bluetooth-enabled overlay skimmers at points of sale.

Illicit activity in crypto reached a nominal record in 2025, with about $158 billion in transactions tied to criminal or sanctioned activity, according to TRM Labs. However, illicit activity represented only 1.2% of total crypto volume. TRM found that illicit actors captured about 2.7% of available crypto liquidity, continuing a multi-year decline even as absolute volumes rose. Much of the increase was driven by sanctions evasion, particularly via a ruble-pegged stablecoin linked to Russia.

Digital Assets (aka Cryptocurrency)

Standard Chartered warned this week that rising stablecoin adoption could pull about $500 billion in deposits out of U.S. banks by 2028. The bank argued that regional lenders are most exposed, given their heavier reliance on deposit-funded net interest margin income. While I agree that NIM compression poses a greater structural risk to regional banks, I am more skeptical that regionals will be the primary source of deposit outflows. Still, the $500 billion estimate strikes me as far more realistic than prior claims of $2 trillion in potential outflows but remains a meaningful shift that banks should keep an eye on.

Tether launched USAT, a dollar-backed token through Anchorage Digital Bank, positioning the product specifically for U.S. users after years of operating largely offshore with USDT. The launch is backed by significant scale: Tether reported more than $10 billion in net profit in 2025 and now holds roughly $193 billion in assets, largely U.S. Treasurys. Fidelity Investments announced plans to roll out its own Ethereum-based stablecoin, the Fidelity Digital Dollar, via Fidelity Digital Assets, signaling that large asset managers increasingly see stablecoins as core financial infrastructure rather than niche crypto products.

Charters

Brazilian neobank Nubank received conditional approval from the Office of the Comptroller of the Currency (OCC) to form a U.S. national bank, clearing a key hurdle in its expansion into the American digital banking market. The approval would allow Nubank, pending final sign-offs from regulators, to offer deposit accounts, lending, credit cards, and digital asset custody through a new subsidiary, Nubank NA.

Nomura Group’s crypto subsidiary, Laser Digital, has applied to the OCC to form a U.S. national trust bank focused on digital assets. The proposed Laser Digital National Trust Bank would offer crypto custody and spot trading under full federal supervision.

Assisted Transactions

First Independence Bank agreed to assume substantially all deposits and most assets of Metropolitan Capital Bank & Trust. Metropolitan Capital, which held $261.1 million in assets, was closed by Illinois regulators on Jan. 30 and is the first U.S. bank failure of 2026. All deposits remain fully insured by the Federal Deposit Insurance Corporation, which estimates the failure will cost its insurance fund about $19.7 million.

Transactions

• Prosperity Bancshares, Inc. agreed to acquire Stellar Bancorp, Inc. in a stock-and-cash transaction valued at $2 billion. The two Houston banks will combine to form a $54 billion asset institution.

• Stock Yards Bancorp, Inc. agreed to acquire Field & Main Bancorp, Inc. in an all-stock deal valued at $105.7 million. The two Kentucky banks will combine to form a $10.4 billion asset institution.

• First Bank Corp agreed to acquire First State Bank. The two Arkansas banks will combine to form a nearly $2.9 billion asset institution. Terms were not disclosed.

• First United Bank agreed to acquire First State Bank of Cando. The two North Dakota banks will combine to form a $792 million institution. Terms were not disclosed.

Washington D.C.

The House Financial Services Committee advanced a community bank regulatory tailoring bill this week, approving legislation from Rep. Andy Barr (R-Ky.) by a 33–21 vote. The bill would index more than three dozen regulatory thresholds to nominal GDP, rather than leaving them static or tying them to inflation. Democrats opposed the measure as overly broad and risk-agnostic. Chairman French Hill signaled openness to narrowing the bill to attract bipartisan support.

The push for crypto market structure legislation regained momentum this week as the Senate Agriculture Committee set a markup for next week on the Digital Commodity Intermediaries Act. The bill focuses narrowly on registration and compliance for crypto trading platforms overseen by the Commodity Futures Trading Commission (CFTC), and includes explicit protections for noncustodial software developers and infrastructure providers. Unlike the CLARITY Act and the Senate Banking Committee effort, the bill does not address stablecoin rewards or broader asset classification questions. White House officials urged industry leaders and lawmakers to accept compromises to move legislation forward.

The Supreme Court heard arguments this week on President Donald Trump’s bid to remove Federal Reserve Governor Lisa Cook, with justices expressing skepticism toward the administration’s position. The case centers on whether Trump can temporarily oust Cook while litigation proceeds, based on mortgage-fraud allegations she denies. Several justices questioned the lack of process afforded to Cook and warned that allowing removal without judicial review could undermine the Fed’s independence and unsettle markets. Observers said the court appears inclined to let Cook remain on the board while lower courts address the merits.

President Trump sued JPMorgan Chase and CEO Jamie Dimon this week, seeking at least $5 billion and alleging the bank closed his personal and business accounts for political reasons. The complaint, filed in Florida state court, also claims JPMorgan later placed Trump and related entities on an internal “blacklist.” JPMorgan denies the allegations.

Regulation

The FDIC finalized changes to its supervisory appeals process this week. The final rule requires the new three-member appeals panel to include at least one member with supervisory or examination experience and one with banking or bank-services industry experience. It also allows banks to appeal certain material supervisory determinations that underpin proposed or pending enforcement actions, excluding unsafe-and-unsound practices and anti-money laundering or sanctions violations.

The CFTC rolled out a deregulatory push on crypto this week, while its internal watchdog warned the agency is stretched thin. Chair Michael Selig announced a “Future Proof” initiative aimed at modernizing decades-old rules and applying what he called a “minimum effective dose of regulation” to digital assets and prediction markets. At the same time, the CFTC’s Office of Inspector General flagged digital asset oversight as a top risk for the coming fiscal year, noting staffing fell roughly 21.5% year over year. It warned that any expanded mandate would require new personnel, technical expertise, and systems that keep pace with always-on crypto markets.

Rates

Treasury yields ended the week little changed, with markets anticipating that the Federal Reserve will hold rates steady for an extended period. The two-year and 10-year yields finished near 3.60% and 4.24%, respectively, as investors priced in a 97% probability of no move at next week’s meeting. Recent surveys and futures markets now point to June as the earliest likely timing for the next rate cut, reflecting lingering inflation concerns and continued resilience in economic data.

Economic signals were mixed but broadly constructive. Consumer sentiment climbed to a five-month high in January. At the same time, real consumer spending grew 2.6% year over year, far outpacing 1.0% income growth and pushing the personal saving rate to a three-year low. Corporate executives struck a more cautious tone as earnings season unfolds, pointing to jittery consumers, uneven industrial demand, and mounting geopolitical and policy uncertainty despite resilient headline data. Globally, the International Monetary Fund (IMF) lifted its 2026 growth outlook to 3.3% and raised the U.S. forecast to 2.4%. It warned, however, that higher tariffs, threats to central-bank independence, and a potential correction in AI-driven equity markets could materially drag growth. Markets reflected that tension, with the Bloomberg Dollar Spot Index falling 1.6% on the week, its worst performance since May, as investors focused more on rising U.S. policy risk than on the near-term rate outlook.

Fraud

Blockchain analytics firm Elliptic reports that Tudou Guarantee, a Telegram-based escrow marketplace, has effectively shut down its fraud-related operations. The platform processed more than $12 billion in transactions, making it one of the largest illicit marketplaces ever tracked. Tudou surged after Telegram shut down Huione Guarantee in 2025, absorbing many of the same merchants selling money-laundering services, stolen personal data, and scam infrastructure tied to “pig butchering” schemes. Elliptic links Tudou’s collapse to intensified law-enforcement pressure following sanctions against Cambodia’s Prince Group and the January arrest of its chairman, Chen Zhi. The shutdown comes as U.S. losses from crypto investment fraud reached $5.8 billion in 2024 across more than 41,000 complaints, according to the FBI.

Digital Assets (aka Cryptocurrency)

The push for strategic crypto reserves advanced at both the federal and state levels this week. Treasury Secretary Scott Bessent reaffirmed at the World Economic Forum in Davos that the Trump administration intends to retain and expand a U.S. strategic bitcoin reserve using seized assets, positioning the move as part of a broader effort to make the U.S. the global center for digital asset innovation. At the state level, Kansas lawmakers introduced legislation to create a bitcoin and digital assets reserve fund housed in the state treasury. The fund would not be seeded by direct purchases, but by staking rewards and airdrops generated from unclaimed digital assets. The bill, now headed to the Senate Financial Institutions Committee, would prohibit bitcoin from flowing into Kansas’s general fund.

Stablecoins continued to gain ground even as broader crypto markets weakened, with total supply hitting a record above $311 billion as traders sought a low-volatility refuge. Circle CEO Jeremy Allaire said that trend reflects a deeper structural shift, arguing that roughly 40% compound annual growth is a reasonable base case as banks move to production across payments, settlement, and tokenized assets. Reinforcing that view, PwC said institutional crypto adoption has passed a point of no return, with large financial firms now embedding custody, compliance, and on-chain infrastructure into core operations in ways that would be costly and impractical to unwind, even amid market or political volatility.

Charters

The FDIC cleared the way for two new industrial loan company (ILC) banks this week, conditionally approving deposit insurance applications for Ford Motor Co. and General Motors. Ford Credit Bank and GM Financial Bank, both chartered in Utah, will focus on auto lending and fund themselves primarily through retail savings accounts and time deposits. Each is required to launch within 12 months and maintain a minimum 15% tier 1 leverage ratio. Trade groups again objected to the ILC model as a regulatory loophole, while the FDIC pointed to heightened capital and supervisory conditions.

Buy-now, pay-later firm Affirm applied for a Nevada industrial loan company charter, while UK fintech Revolut reportedly pivoted away from acquiring a U.S. lender and is said to be preparing a de novo bank application with the OCC. Regulators also signaled they will press ahead on politically sensitive reviews, with the OCC declining to pause consideration of a national trust charter sought by Trump-linked crypto firm World Liberty Financial.

Brazilian digital bank Banco Inter received Federal Reserve approval to open a state-licensed international digital branch in Miami. American Banker reports that the license allows it to serve both individuals and businesses, but the foreign institution cannot offer FDIC insurance directly and is barred from accepting deposits under $250,000.

Transactions

• Capital One Financial Corporation agreed to acquire Brex, a fintech that offers corporate cards, payment, and banking services, in a stock-and-cash deal valued at $5.15 billion.

• First Resource Bank agreed to acquire First State Bank of Wyoming. The two Minnesota banks will combine to form a $1 billion institution. Terms were not disclosed.