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On September 14, the New York Department of Financial Services (NYDFS) published a notice of proposed rules under New York’s Commercial Financing Disclosure Law (CFDL) (we discussed this previous rulemaking in a blog post here). Under the CFDL, commercial finance companies are required to give consumer-style loan disclosures to potential recipients when a specific offering of finance is extended for certain commercial transactions of $2.5 million or less. We note some items in particular from the latest proposed rule:
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Continue Reading New York Publishes Proposed Rules on Commercial Financing Disclosures

Recently, the Louisiana lawmakers and regulators have taken steps to legalize operations in the state involving virtual currencies. On June 15, the Louisiana governor signed a bill that, effective August 1, 2022, will allow financial institutions and trust companies to provide virtual currency custody services to their customers as long as they satisfy certain requirements on risk-management and compliance. On June 20, the Louisiana Office of Financial Institutions (OFI) published proposed rules on licensing and regulation of virtual currency businesses in the state pursuant to the Louisiana Virtual Currency Business Act, which went into effect on August 1, 2020.
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Continue Reading Louisiana Approves Virtual Custody Services and Proposes Virtual Currency Business Licensing Rules

On May 4, the Connecticut Department of Banking issued a temporary cease and desist order directing a peer-to-peer lending platform that connected borrowers with third-party lenders to cease its lending-related activities on grounds that it was operating as an unlicensed small loan company.  The FinTech company was also cited for operating as an unlicensed consumer collection agency, and for engaging in deceptive acts or practices under consumer protection laws. …
Continue Reading Connecticut Stops FinTech from Unlicensed Lending Activities

In an apparent follow up to President Biden’s March Executive Order on Digital Assets (which we previously discussed here), this week, California Governor Gavin Newsom signed a similar executive order aiming to foster responsible innovation, bolster California’s innovation economy, and strengthen consumer protection through creating a transparent regulatory and business environment for Web3 companies.  Newsom’s executive order credits Biden’s executive order as paving the way for the assessment of key issues raised by crypto-assets and sets California on a path to harmonize its nascent crypto regulatory framework with forthcoming federal rules and guidelines and, hopefully, create regulatory clarity for businesses and consumers.
Continue Reading Governor Newsom Signs Blockchain Executive Order

On April 28, Governor Newsom signed Senate Bill 577 which will, among other things, bring back the California Financing Laws (CFL) licensing exemption which permits a lender to make a single commercial loan within a 12-month period without first obtaining a license.  The previous law, which contained this exemption, had expired by its terms on December 31, 2021.  The California Department of Financial Protection and Innovation has seen an uptick in California finance lender license applications this year, and speculation is that one of the reasons for that was the loss of this exemption.  The new law takes effect immediately as an emergency statute.  The exemption does not apply to consumer loans.
Continue Reading California Reinstates Licensing Exemption for Single Commercial Loan Made During 12-month Period

This January, Adrienne A. Harris was confirmed as superintendent of New York’s Department of Financial Services, which administers New York’s BitLicense program, among others.  In a March 28 interview, Harris discussed the BitLicense program in detail and addressed some of its longstanding issues, including its slow response times to applicants and updating some of the outdated regulatory and operational aspects of the program. …
Continue Reading New York’s Superintendent of Financial Services Addresses BitLicense Delays

On March 23, the California Department of Financial Protection and Innovation (DFPI) responded to a request for an interpretative legal opinion as to whether the virtual currency services offered by a company require it to obtain a license under the California Money Transmission Act (MTA).
Continue Reading DFPI: Virtual Currency Platform is not Money Transmitter

Decentralized finance, DeFi, has quickly grown in popularity and is beginning to gain the attention of regulators attempting to stay ahead of one of the latest investor crazes. Blockchain-based financial technology such as DeFi largely operate outside of the traditional finance ecosystem occupied by  governmental agencies, intermediaries, central banks, brokerages, exchanges, and  banks by utilizing cryptocurrencies. DeFi providers are offering lending, banking, and investing options that are decentralized and not dependent on financial markets or regulations. As a result, DeFi providers often operate illegally or lack the protections that govern traditional financial service providers.
Continue Reading State Investor Advisory Addresses DeFi Risks

On March 24, Utah Governor Spencer Cox signed SB 183 into law making Utah the third state in the country to enact a Truth in Lending-like commercial financing disclosure law.  Utah joins California and New York to adopt such statutory commercial financing disclosure requirements.  As opposed to similar laws in California and New York, however, the Utah Commercial Financing Registration and Disclosure Act (the Act) does not include an “APR” disclosure requirement and requires commercial lenders to register as commercial loan providers with the Nationwide Multistate Licensing System and Registry and Utah Department of Financial Institutions (DFI).  The law has an effective date of January 1, 2023.
Continue Reading Utah Enacts Commercial Financing Disclosure Requirement