Regulators Propose GENIUS Act Rule, OCC Tightens Application Standards, Housing Bill Advances With CBDC Ban and Prediction Market Disputes Continue

FinCEN, together with the OCC, the Federal Reserve, the FDIC and the NCUA, proposed a joint rule requiring permitted payment stablecoin issuers under the GENIUS Act to establish and maintain customer identification programs under the Bank Secrecy Act. The OCC issued a bulletin stating that it will return materially deficient applications without a decision and will publish its denials, which may be relevant to the pending pipeline of charter applications tied to stablecoin and digital asset activities. The CFTC issued a request for information on regulations and guidance that may impede fintech firms, and an industry trade association urged the SEC to conduct formal rulemaking, rather than rely on staff guidance, to define when providers of crypto wallet interfaces must register as brokers-dealers.

A major derivatives exchange operator sued the CFTC and its Chairman, contending that the agency’s approval of crypto asset perpetual futures should be regulated under the statutory regime for swaps rather than futures. In separate litigation, federal and state courts continued to divide over whether state gaming laws reach sports event contracts offered on prediction markets. The 6th Circuit declined to let the CFTC participate in oral argument in one such appeal, a federal court in Michigan declined to enjoin state regulators and the Kentucky Attorney General filed new suits, as the underlying jurisdictional question remains widely expected to reach the Supreme Court.

In Congress, the leaders of the Senate Banking and House Financial Services Committees released updated text reflecting a bicameral compromise on the 21st Century ROAD to Housing Act (H.R. 6644), which carries a provision barring the Federal Reserve from issuing a central bank digital currency through 2030 while exempting privately issued, dollar-denominated stablecoins.

Regulatory Updates

Federal Regulators Propose Customer Identification Program Rule for Stablecoin Issuers Under the GENIUS Act

• On June 18, FinCEN, the OCC, the Federal Reserve, the FDIC and the NCUA issued a joint notice of proposed rulemaking and a fact sheet implementing the GENIUS Act directive that permitted payment stablecoin issuers must establish and maintain an effective customer identification program under the Bank Secrecy Act. The proposal addresses how issuers must verify customer identities, maintain records and screen customers against applicable watchlists.
• The proposal complements the customer identification component in the anti-money laundering and sanctions proposal that FinCEN and OFAC issued earlier this year. Comments are due 60 days after publication in the Federal Register.
• Federal Reserve Gov. Michael Barr released a statement supporting issuance of the proposal while expressing concern that the GENIUS Act framework does not sufficiently address illicit finance risk on secondary market transactions in stablecoins.

OCC Clarifies Filing Decision Process and Will Publish Denials

• On June 17, the OCC issued Bulletin 2026-27, “Filing Decision Process,” stating that it approves a filing when it finds the filer has favorably met the appropriate statutory, regulatory and policy criteria related to the filing type and, where appropriate, the OCC will condition an approval to ensure the filer will operate in a safe and sound manner, consistent with OCC policy, and comply with applicable laws and regulations.
• The OCC also noted that it will return materially deficient filings without a decision and will not begin substantive review until all required information is submitted. The OCC identified missing financial data, undeveloped business plans, and gaps in corporate or senior leadership information as a basis for treating a filing as materially deficient.
• The OCC stated that it will publicly release denial decisions, including the written reasons, to show how it applies its decision criteria. A denial does not bar a subsequent application, though it would be subject to disclosure in later filings.
• The bulletin follows an increase in applications from firms seeking national bank or trust charters to support stablecoin issuance, digital asset custody and related activities.

CFTC Requests Information on Regulatory Barriers to Fintech Firms

• On June 16, the CFTC issued a request for information to identify regulations, guidance documents, orders, no-action letters and other items that may unduly impede fintech firms from partnering with federally regulated institutions, as well as items that could be amended to streamline application processes for eligible fintech firms.
• The CFTC stated that the request supports its review under Executive Order 14405, which directs the federal financial regulators to identify rules that could be updated to facilitate innovation and competition. The comment period runs 21 days after publication in the Federal Register.

Congressional Updates

Bicameral Housing Deal Advances With Temporary Fed CBDC Ban and Stablecoin Carve-Out

• On June 16, the chairs and ranking members of the Senate Banking and House Financial Services Committees released updated text reflecting a bicameral compromise on the 21st Century ROAD to Housing Act (H.R. 6644), and the Senate began advancing the measure.
• The package carries a provision that states the Federal Reserve “or a Federal reserve bank may not issue or create a central bank digital currency or any digital asset that is substantially similar to a central bank digital currency directly or indirectly through a financial institution or other intermediary,” through Dec. 31, 2030. The provision would require congressional authorization for any future CBDC and would codify a definition of a CBDC as a dollar-denominated instrument that is a direct liability of the Federal Reserve and widely available to the public.
• The provision exempts a dollar-denominated currency that is “open, permissionless, and private” and that preserves the privacy protections of U.S. coins and physical currency, language intended to place privately issued stablecoins outside the prohibition.

Additional Updates

Prediction Market Sports Contract Litigation Advances in Federal and State Courts

• On June 15, the 6th Circuit denied the CFTC’s motion for leave to appear at oral argument in a prediction markets platform’s appeal in a dispute with Ohio regulators. The CFTC remains a participant on the briefs, having filed an amicus brief in the same appeal on May 12 asserting exclusive federal jurisdiction over prediction markets. The one-page order did not state the court’s reasoning. Oral argument is scheduled for July 30.
• On June 17, the U.S. District Court for the Western District of Michigan denied preliminary injunctions sought by two prediction market platforms against Michigan gaming regulators, holding that the platforms were unlikely to succeed on their claim that sports event contracts are swaps within the CFTC's exclusive jurisdiction.
• On June 17, the Kentucky Attorney General announced lawsuits in Franklin Circuit Court alleging that two prediction markets platforms offer unlicensed sports wagering in violation of state consumer protection and gambling laws. The filings add to a series of state actions against prediction markets platforms, which the CFTC has opposed in its own suits asserting exclusive federal jurisdiction.

SIFMA Submits Letter on SEC Statement on Broker-Dealer Registration for Crypto Wallet Interfaces

• On June 16, the Securities Industry and Financial Markets Association submitted a letter encouraging the SEC to initiate notice-and-comment rulemaking on when providers of crypto wallet interfaces must register as brokers-dealers. SIFMA characterized the SEC staff’s April 13 statement on certain user interfaces as a departure from prior interpretations of the broker definition.
• The April 13 staff statement provides that providers of covered user interfaces meeting specified conditions need not register as broker-dealers, and is to be withdrawn five years from issuance absent further Commission action. Commissioner Hester Peirce separately stated that she favors a more permanent regulatory approach to the broker definition.

Exchange Operator Challenges CFTC Approval of Crypto Perpetual Futures

• On June 18, a major derivatives exchange operator filed suit in the U.S. District Court for the District of Columbia against the CFTC and its Chairman, challenging the agency’s approval of crypto asset perpetual futures. The complaint contends that the products are swaps under the Dodd-Frank amendments to the Commodity Exchange Act and that the CFTC approved them through the regime applicable to futures rather than the regime Congress prescribed for swaps.
• The challenge follows the CFTC’s late-May approval of a perpetual futures contract referencing the spot price of bitcoin listed by a CFTC-regulated prediction markets platform, the first such approval in the United States, and the CFTC’s contemporaneous policy statement on the listing of perpetual contracts.