BPInsights: November 1, 2025

Court Pauses Compliance Deadline for CFPB Data-Sharing Rule

The U.S. District Court for the Eastern District of Kentucky approved a request on Wednesday to stay the compliance deadline for the CFPB's Section 1033 rule. The Bank Policy Institute, Kentucky Bankers Association and Forcht Bank issued a joint statement shortly after the approval:

"We are grateful for the court's decision today to stay the existing rule's compliance deadline until the CFPB completes its new rulemaking. This is a common-sense procedural step that doesn't interfere with the rulemaking process but ensures banks won't be forced to invest time and resources preparing for a rule that is currently being rewritten."

Additional Background: BPI, KBA and Forcht Bank challenged the CFPB's Section 1033 rule in October 2024, arguing that it put sensitive consumer financial data at risk and exceeded the CFPB's legal authority. On July 29, the Court granted a motion to stay the litigation while the CFPB embarked on a new rulemaking. However, the order failed to address the original rule's compliance deadline, which obligated some financial institutions to comply with the existing rule as soon as summer 2026.

The co-plaintiffs filed a motion with the court on August 13, 2025, requesting that the court stay the compliance deadline. This week's ruling stays the compliance deadline until the CFPB completes its new rulemaking.

To access a copy of the court order, please click here.

Three Things to Watch Next Week

• The Clearing House hosts its annual conference on Tuesday and Wednesday, featuring BPI's John Court and Heather Hogsett.
• Santander hosts its International Banking Conference on Tuesday, featuring remarks by BPI CEO Greg Baer.
• Fed Governor Lisa Cook discusses the outlook for monetary policy and the economy at a Brookings Institution event on Monday.

Five Key Things

1. BPI Urges OCC to Preserve the Integrity of National Trust Charters

The Bank Policy Institute on Friday released a series of letters urging the Office of the Comptroller of the Currency to reject five pending limited-purpose national trust company charter applications submitted by digital assets firms Ripple, Circle, Paxos and National Digital Trust Company, and payments firm Wise.

These applications reflect a growing trend of nonbank financial companies seeking limited-purpose national trust bank charters, despite not planning to operate genuine trust companies. BPI cautions that endorsing this pathway and allowing firms to choose a lighter regulatory touch while offering bank-like products could blur the statutory boundary of what it means to be a "bank," heighten systemic risk and undermine the credibility of the national banking charter itself.

"BPI supports efforts to bring innovative new products and services into the regulated ecosystem and agrees that digital assets have a role to play in the U.S. financial system, provided that they are subject to the same rules and responsibilities as every other chartered institution engaging in the same activities," stated Paige Pidano Paridon, BPI Executive Vice President and Co-Head of Regulatory Affairs. "Companies should not receive trust charters unless they plan to operate as genuine trust companies. If they want to engage in traditional banking activities, they should seek full-service banking charters. Rigorous, uniform standards strengthen America's global competitiveness and offer customers the confidence and protections that define a well-regulated banking system."

Blurring the Boundaries of Permissible Trust Activities
Across all five applications, BPI notes that the OCC's trust charter authority is limited to institutions predominantly engaged in trust and fiduciary activities. However, the applicants propose to engage in activities such as managing stablecoin reserves, facilitating payments and taking deposits. These activities closely mirror core banking functions, yet the applicants would avoid obtaining deposit insurance, nor would they be subject to consolidated supervision and consumer protections and other safeguards required of full-service national banks and their parent companies.

A Lack of Transparency and Public Accountability
Each letter also highlights a lack of transparency in the review process due to the applicants' request to shield information from public oversight. Large portions of the applications, including business plans, are heavily redacted and labeled confidential, and BPI's Freedom of Information Act requests for additional information were rejected. BPI is requesting that the OCC release sufficient information to enable meaningful public comment.

To access copies of these letters, please see below:

• Paxos Trust Company, LLC, Charter Conversion Application (2025-Conversion-342828)
• First National Digital Currency Bank, N.A., Charter Application (2025-Charter-342299)
• National Digital Trust Company, N.A., Charter Application (2025-Charter-342009)
• Ripple National Trust Bank, N.A., Charter Application (2025-Charter-342347)
• Wise National Trust, N.A., Charter Application (2025-Charter-342106)

2. Federal Court Says Fed Has Discretion to Reject Master Account Bids

The U.S. Court of Appeals for the Tenth Circuit ruled on Friday that the Federal Reserve has the right to reject applications for master accounts, deciding in support of the Kansas City Fed's decision to reject crypto firm Custodia's master account bid. The ruling backed a lower-court decision from the U.S. District Court for the District of Wyoming, marking a defeat of Custodia's appeal. The affirmation of the Fed's authority to reject such bids is a critical development as master account requests from banks with novel charter types continue to increase.

BPI responded to the ruling: "The U.S. District Court for the District of Wyoming and U.S. Court of Appeals for the Tenth Circuit have both reached a wise conclusion. No institution is entitled to a Federal Reserve master account, and the Federal Reserve rightfully has the authority and discretion to ensure all applicants meet stringent standards to keep the financial system safe."

3. Powell Reaffirms Bank Capital 'About Right' (and Then Some)

At the press conference after this week's FOMC meeting, Federal Reserve Chair Jerome Powell responded to a question about whether he still believes capital in the banking system is "about right," in line with his previous remarks. The question came in the context of the banking agencies' forthcoming proposal on Basel Endgame and changes to the GSIB surcharge. "There's discussions going on … among the agencies, and I don't want to get ahead of those discussions," Powell said. "I continue to think that the level of capital when I said that in 2020 was about right, and of course, there's been much capital added since then through various mechanisms."

• Context. This is not the first time Powell has made similar comments. At a Congressional hearing in February this year, he said: "My long-held view, as I've said in many of these hearings, is that capital in the banking system for the largest banks is about right." In 2019, at an FOMC press conference, he said "I view the level of capital requirements and the level of capital in the system as being about right." He made similar remarks earlier that same year.

4. BPI's Hogsett: Banks 'On the Frontlines' of Fraud, But It Often Starts on Tech, Telecom Platforms

In a recent interview with ABC15, BPI's Heather Hogsett, Executive Vice President and Head of BITS, emphasized the need for action from tech, social media and telecom platforms to stop fraud where it starts. "Unfortunately, what we're seeing across the country today is a surge in fraud and scams against consumers," Hogsett said in the interview. "Banks, unfortunately, just have the frontline view to witness the devastation that is both very emotional and financial for their customers, but it really is starting, you know, long before it gets to us."

• Banks Can't Stop Fraud Alone. "Banks cannot prevent fraud alone," Hogsett said. "We need social media and telecom companies to do things like verifying ad buyers, taking down fraudulent content when it appears online, and removing things like these, how-to forums where people can go to basically learn how to train and recruit new scammers … We also need them to authenticate callers to make sure they cannot impersonate a bank, because that's really how consumers are being tricked today."
• To learn more about the necessity of tech and telecom platforms in fraud and scam prevention, click here.

5. Senate Banking Committee Considers Hill FDIC Nomination

The Senate Banking Committee on Thursday held a hearing on the nomination of Travis Hill to be chair of the Federal Deposit Insurance Corporation, along with several other nominees. Hill currently serves as the acting chair of the agency. Here are a few highlights.

• Correcting the Record. Hill responded to misleading assertions that proposed changes to the enhanced supplementary leverage ratio would reduce capital at large banks by 27 percent or $200 billion. "I would strongly disagree with that," Hill said. "The capital impact in aggregate at the parent company is less than 2 percent. The intent behind it is to return the leverage ratio to a backstop."
• MRAs. Sen. Katie Britt (R-AL) raised concerns about Matters Requiring Attention becoming "ineffective and inconsistent," an issue she and other senators flagged in a recent letter. She asked Hill about the MRA reform proposal that the FDIC and OCC recently issued. "The intent of it is to make sure that the things that we're criticizing are things that are truly safety and soundness concerns," Hill said. The example of SVB, which Sen. Britt mentioned as an example of ineffective MRAs, is "a great demonstration of the problem," Hill said - a focus on process instead of the most material risks. Chairman Tim Scott (R-SC) asked Hill what he anticipates accomplishing in the rulemakings on unsafe and unsound practices and MRAs. "The fundamental goal there is to reorient supervision so it's focused on the fundamental financial risks that matter most," Hill said.
• Deposit Insurance. Sens. Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD) mentioned their legislation to expand deposit insurance coverage. Hill discussed the potential impact of expanded deposit insurance - for example, the effect on the cost of resolving failed banks. "Overall, expanding deposit insurance has a mixed impact on potential resolution costs, both for … things like reducing run risk, things like that, and then also post-failure," Hill said. "Expanding coverage increases the cost of liquidation. So the ceiling on the potential cost goes up, but the flip side is it can make the failed institution more attractive to potential bidders, because insured deposits tend to have more franchise value." Hill also explained how deposit insurance premiums are calculated and what may happen if insured deposits rise. For large banks, "if insured deposits were to go up, that piece of the formula would increase, but that overall has a very small impact on the assessments," he said. "The major contributing factor is the bank's total liabilities."
• Account Closures. The FDIC has been working to reduce unnecessary account closures in line with a White House executive order directing the banking agencies to eliminate the use of reputational risk to prevent "debanking." On that topic, Sen. Thom Tillis (R-NC) noted his introduction of a draft bill titled the Fair Access to Banking Act, aimed at ending politically motivated debanking.
• Workplace Culture Issues. A few Senators raised questions about how the FDIC has fixed the harassment issue since the departure of then-Chair Martin Gruenberg. Sen. John Kennedy (R-LA) said his vote for Hill is not assured until he receives more details about how Hill and the FDIC have reformed the culture and punished the perpetrators of the harassment.

In Case You Missed It

Bessent Names Top 5 Candidates for Next Fed Chair

Treasury Secretary Scott Bessent on Monday unveiled the slate of five finalists to succeed Fed Chair Jerome Powell. The candidates are Governor Christopher Waller, Vice Chair for Supervision Michelle Bowman, former Governor Kevin Warsh, National Economic Council Director Kevin Hassett and BlackRock executive Rick Rieder. Powell's term as chair ends in May 2026. Bessent said he plans to present President Trump with a "good slate" of candidates after Thanksgiving. Trump said he would likely name Powell's replacement by the end of the year.

The Overlooked Risk in Bank AI Adoption: Regulatory Inaction

The banking system and its customers would benefit from a regulatory approach that actively encourages artificial intelligence adoption, BPI said in a letter filed this week in response to the White House Office of Science and Technology Policy's Request for Information on Regulatory Reform on Artificial Intelligence. A more proactive regulatory approach to AI would enable banks to protect against fraud and hacks, root out financial crime and serve customers more efficiently. This proactive approach, which aligns with the administration's call for supporting technological innovation, would require the modernization of legacy model risk frameworks, harmonization of federal regulations and standards on banks' use of AI and comparative parity for banks and nonbank innovators.

Background. The OSTP sought comment from the public on potential federal regulatory reforms and other government actions that can promote U.S. AI innovation and adoption, in line with the White House's AI Action Plan recommendations released in July 2025.

"Artificial intelligence is causing a seismic shift in society, and it requires an equally fundamental shift in bank oversight: one that acknowledges the risk to the banking system from inaction. Bank supervision in recent decades has taken a gradual approach to technology, but the rapid, large-scale adoption of AI leaves no time to hesitate. Banking agency principals and the White House have wisely chosen to break barriers to technological innovation in the banking sector, and reform of supervisory requirements that impede bank AI adoption would represent a sensible next step in these efforts." - Heather Hogsett, Executive Vice President and Head of BITS

The Crypto Ledger

Here's the latest in crypto.

• Crypto.com Seeks Trust Charter. Digital asset platform Crypto.com recently joined a flurry of other crypto firms, including Ripple, Coinbase and Circle, seeking national trust charters. The firm would use the charter to advance its custody offerings, including "staking."
• 'Crypto Banks' Cautiously Optimistic on Skinny Master Accounts. The prospect of a "skinny master account," suggested recently by Fed Governor Christopher Waller, is sparking cautious optimism among crypto-focused firms with limited banking charters, such as Custodia, Kraken and Anchorage, according to American Banker this week. Anchorage has a national trust bank charter and Custodia and Kraken have Wyoming Special Purpose Depository Institution charters. The prospect of a "skinny master account," suggested recently by Fed Governor Christopher Waller, is sparking cautious optimism among crypto-focused firms with limited, uninsured banking charters, such as Custodia, Kraken and Anchorage, according to American Banker this week. Anchorage has a national trust bank charter and Custodia and Kraken have Wyoming Special Purpose Depository Institution charters. The skinny master accounts would lack access to overdrafts and the Fed's discount window, and would not receive interest on reserve balances. Waller said the skinny master accounts would be available to all entities that are legally eligible for an account and subject to a streamlined review process by the Reserve Banks.
• Fortress Insolvency. Digital asset custodian Fortress Trust, a subsidiary of Elemental Financial Technologies, is on the brink of insolvency, according to Bloomberg this week. Nevada regulators issued a cease-and-desist order on Oct. 22 against the company, saying its liquidity position is "wholly inadequate to meet customer obligations." The state Financial Institutions Division found that Fortress owed millions of dollars to clients and could not meet customer withdrawals.

BPI, AABD Urge Court to Revisit Ruling that Favored OCC's In-House Courts

BPI and the American Association of Bank Directors this week urged the U.S. Court of Appeals for the Fifth Circuit to reconsider a panel decision ruling in favor of the OCC's ability to try banking enforcement cases in-house. In an amicus brief, BPI and AABD expressed support for a rehearing petition by Saul Ortega and David L. Rogers Jr., defendants in OCC proceedings who argue that the agency violated their constitutional rights to a jury trial. The court had ruled that the right to a jury trial did not apply to this case, citing an exception to that right as part of the Civil War-era U.S. regulatory framework, but BPI and AABD argued that its analysis "overlooked important historical context."

• Key Quotes. The Fifth Circuit panel "incorrectly concluded that the regulation of banking had, from the beginning, been entrusted to the federal political branches"; in fact, for much of the first century of U.S. history, state-chartered banks were the norm, the brief said. The court also erred when it "did not distinguish between two different schemes of regulation: the regulation of federally chartered national banks under the National Bank Act, and the regulation of all insured depository institutions under the Federal Deposit Insurance Act (FDIA). The statute at issue here … applies to all insured banks: national banks regulated by the Office of the Comptroller of the Currency (OCC), and state banks regulated by state regulators, the Federal Reserve System (Federal Reserve), and the Federal Deposit Insurance Corporation (FDIC)."
• Why It Matters. This case has garnered attention because it involves the applicability of Seventh Amendment jury trial rights to banks and bankers following the groundbreaking 2024 Supreme Court opinion in SEC v. Jarkesy, which fundamentally altered the landscape of government enforcement actions and administrative adjudication.

CFPB Clarifies Credit Reporting Preemption, Rescinds Nonbank Registry Rule

The CFPB took several actions this week. Here's a quick overview:

• Credit Reporting Preemption. The bureau issued a final interpretive rule clarifying that the Fair Credit Reporting Act (FCRA) generally preempts state laws that touch on broad areas of credit reporting. This measure builds on the May 2025 rescission of a 2022 interpretive rule that had allowed for substantial state regulation of consumer reports and reporting agencies.
• Adjudication Final Rule. The CFPB issued a final rule amending its rules for adjudication proceedings to reverse Chopra-era amendments that had concentrated power in the Director. It rescinded 2022 and 2023 amendments that allowed the Director to rule on a dispositive motion, refer the motion to the hearing officer or rule on the motion in part and refer it in part.
• Nonbank Registry and T&Cs. The bureau issued a final rule rescinding a previous requirement for certain nonbanks subject to certain final public orders to report the existence of those orders and related information to a Bureau registry. The CFPB withdrew the measure, citing significant regulatory burden and duplication of existing reporting mechanisms. The CFPB also withdrew a proposal to require most nonbanks under CFPB supervision to register information about their use of certain terms and conditions in form contracts.

Traversing the Pond

Here's the latest in international banking.

• Basel Monitoring Update. The latest monitoring report from the Basel Committee on Banking Supervision showed that final Basel III reforms are set to raise minimum capital requirements for large global banks by 2.1 percent as of the end of 2024, up 21 basis points from mid-year. The increase is largely driven by the output floor, according to the report. Basel III risk-based capital ratios are increasing, while leverage ratios and net stable funding ratios remain stable for large internationally active banks, the report said.
• M&A Obstacles. EU Commissioner for Financial Services Maria Luis Albuquerque expressed concern about obstacles to European bank mergers in a recent Italian media interview. "I think that actually not facilitating what could be the emergence of European banks at the scale and the level we need to compete with our real competitors is always a shame," Albuquerque said. The remarks came in the context of challenges in UniCredit's bid to take over Commerzbank.
• Merz Calls for European Stock Exchange. German Chancellor Friedrich Merz recently called for the creation of a pan-European stock exchange to facilitate equities trading across the bloc. The move would aim to reduce fragmentation in capital markets.
• Simplification Report. The European Commission published its 2026 work program recently, along with its first overview report on simplification. The simplification report is the first of the new annual monitoring reports Commissioners are mandated to prepare to track progress on the simplification agenda. In addition, Commissioner Albuquerque published the first annual progress report outlining her department's progress on "simplification, implementation and enforcement."
• EBA Stress Testing Consultation. The European Banking Authority launched a public consultation on its draft revised Guidelines on the Supervisory Review and Evaluation Process and supervisory stress testing under the Capital Requirements Directive, addressed to national supervisory authorities. The consultation runs until Jan. 26, 2026, with final guidelines expected to apply from Jan. 1, 2027.

Huntington to Acquire Cadence Bank

Huntington Bancshares Inc. this week announced an agreement to acquire Cadence Bank, a $53 billion regional bank headquartered in Houston and Tupelo, MS. The acquisition will expand Huntington's footprint in the U.S. South.