Commentary

Happy New Year, FinTech! Welcome to 2023, the year that FinTech really gets messy.

I. Introduction

In a quiet but paradigm-shifting move, the Office of the Comptroller of the Currency (OCC) has rescinded Interpretive Letter 1179 (November 18, 2021) and reaffirmed that national banks and federal savings associations may engage in crypto-asset custody, operate distributed ledger (DLT) infrastructure, and issue stablecoins under specific regulatory conditions. The OCC's March 7, 2025, policy update clarifies these permissions, rolling back previous restrictions on tokenized deposit issuance, blockchain transaction validation, and digital asset settlement mechanisms (OCC, 2025).

Until recently, the US federal government has lacked both consistency and support for digital assets. Agencies have each defined the term “digital assets” differently, leaving the industry with conflicting interpretations depending on the regulatory agency involved. This lack of clarity has caused jurisdictional disputes, compliance challenges, and enforcement difficulties.

Judge Failla handed down heropinion on Coinbase’s motion to dismiss the SEC’s complaint in late March. Crypto enthusiasts, the FinTwit crowd, and even industry analysts paid little attention. The continuing saga of supervision of sponsor banks and the settlement of the injunctive class in the decades-long interchange litigation dominated the week’s agenda. I think the opinion merits more attention than it received. It sends an important signal of the limit of the SEC’s effort to regulate the digital asset industry. It also provides an opportunity to discuss the downsides of the use of enforcement to achieve regulatory objectives. 

For people of a certain age, those four words have a Proustian quality. When I read them, I flashback to the summer of 1985. Isee Christopher Lloyd as Doc turn to Michael J. Fox as Marty McFly and utter the now-famous line. I can smell the sweet sticky perfume of buttered popcorn, new Coke, and Skittles that hung in the air. I remember, too, my shock the following February whenPresident Reagan, with just the hint of a smirk, quoted the line in his State of the Union speech in an effort to urge young Americans, like me, to be optimistic about our collective future. All of that came rushing back a few nights back as I skimmed the highlights of the Federal Reserve’s 2022 triennial survey of payments in search of a way to explain a significant but seemingly overlooked change to the law of payments rolling out across the United States.