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Nutter Bank Report: July 2025
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- Agencies Seek to Clarify Risk Management Considerations for Crypto-Asset Safekeeping
- FDIC Proposes Rule Changes to Streamline Branch Application Processing
- OCC No Longer Considering Disparate Impact in Fair Lending Examinations
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FDIC Proposes Replacement for Current Supervision Appeals Review Committee
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Other Developments: Regulatory Burden and Low-Income Housing Tax Credits
1. Agencies Seek to Clarify Risk Management Considerations for Crypto-Asset Safekeeping
In the wake of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), the federal banking agencies have issued joint guidance to provide clarity on supervisory expectations for banks that provide or are considering providing safekeeping for crypto-assets. The joint guidance published on July 14, titled Crypto-Asset Safekeeping by Banking Organizations, summarizes key risk management considerations for safekeeping activities for crypto-assets, including legal and compliance risks and third-party risk management. The joint guidance defines crypto-asset safekeeping as “controlling the cryptographic keys associated with the crypto-asset in a manner that complies with applicable laws and regulations.” According to the joint guidance, one of the primary risks associated with crypto-asset safekeeping is the possible compromise or loss of cryptographic keys or other sensitive information that could result in the unauthorized transfer of the crypto-assets out of the bank’s control. Therefore, the federal banking agencies expect banks engaged in crypto-asset safekeeping to demonstrate a risk management focus on their cybersecurity environment. Click for a copy of the joint guidance.
Nutter Notes: The joint guidance does not establish new regulatory requirements but applies existing risk-management principles to crypto-asset safekeeping activities and reminds banks engaged in such activities that they must do so in a safe and sound manner and in compliance with applicable laws and regulations. In addition, the President's Working Group on Digital Asset Markets released a report on July 30 containing recommendations for the federal banking agencies’ implementation of the GENIUS Act. Among other things, the report urges the federal banking agencies to “employ a technology-neutral approach” when incorporating crypto-assets into the bank regulatory framework. The report also recommends that banks be permitted to engage in permissible crypto-asset activities without prior regulatory approval or notice, provided that banks do so in a safe and sound manner. Click for a copy of the report. For more information on the GENIUS Act, see Nutter's July 21, 2025 Advisory.
2. FDIC Proposes Rule Changes to Streamline Branch Application Processing
The FDIC has issued a notice of proposed rulemaking that would amend current bank branching regulations to streamline the processes for the establishment and relocation of domestic bank branches and offices. The proposed rule released on July 15 would provide that domestic branch filings from banks eligible for expedited processing will be deemed approved three business days after submission to the FDIC. The proposed rule also would eliminate the FDIC’s discretion to remove domestic branch filings from expedited processing, eliminate public notice and public comment requirements, and eliminate filing requirements for de minimis branch facility changes. The proposed rule would apply to insured state non-member banks applying to establish a branch or relocate a main office or branch, and to insured branches of a foreign bank applying to relocate. Public comments on the proposed rule are due by September 16. Click for a copy of the proposed rule.
Nutter Notes: The Federal Deposit Insurance Act requires insured state non-member banks to obtain the FDIC’s prior written consent to establish and operate a new domestic branch or to relocate a main office or any domestic branch. The branch application processing timeline depends primarily upon whether the bank is eligible for expedited processing. All well- and adequately-capitalized banks are required to submit substantially the same information for a branch application regardless of the type of proposed change and regardless of whether the bank is eligible for expedited processing. The FDIC’s regulations require that branch applications be subject to public notice and comment, which in the FDIC’s experience can significantly prolong the length of time routine branch applications can take to process. The OCC and Federal Reserve require similar filings from national banks, federal savings associations, and state member banks for permission to establish and operate a new domestic branch or to relocate a main office or any domestic branch. Neither agency has yet announced a similar proposal to streamline branch application processing.
3. OCC No Longer Considering Disparate Impact in Fair Lending Examinations
The OCC has publicly announced that it has removed references to supervising national banks and federal savings associations for disparate impact liability from the Fair Lending booklet of the Comptroller’s Handbook. The announcement on July 14 indicates that the OCC also has begun removing references to disparate impact in other publications. Concurrently, the OCC has instructed its examiners that they should no longer examine national banks and federal savings associations for disparate impact. Disparate impact cases generally involve neutral bank policies which are found to have an unequal effect on a protected class such as race or gender. The OCC’s move is a direct response to Executive Order 14281, Restoring Equality of Opportunity and Meritocracy, issued on April 23, 2025, which called for federal agencies to eliminate the use of disparate impact liability in all contexts. The disparate impact standard held both bank and nonbank lenders accountable for discriminatory outcomes in residential mortgage lending even in the absence of evidence of any discriminatory intent. Click for a copy of the OCC’s announcement on disparate impact.
Nutter Notes: The OCC’s announcement clarifies that OCC examiners will continue to include regularly conducting fair lending risk assessments. Notably, the OCC said that this will include analyzing Home Mortgage Disclosure Act data for possible evidence of disparate treatment, along with conducting risk-based fair lending examinations, and taking appropriate action if evidence of disparate treatment is found. Disparate treatment occurs when a bank treats a loan applicant differently based on one or more of the protected classes. Even with this development, which could become the norm at the other federal agencies, banks and other financial institutions should continue to monitor for compliance with disparate impact as it remains good law and has been the recent subject of state level enforcement. On July 11, Massachusetts Attorney General Andrea Joy Campbell announced a $2.5 million settlement with a student loan lender that was based in part on alleged violations of fair lending laws based on a disparate impact theory. Click for a copy of the settlement announcement.
4. FDIC Proposes Replacement for Current Supervision Appeals Review Committee
The FDIC has issued a proposal that would amend the agency’s Guidelines for Appeals of Material Supervisory Determinations to replace the existing Supervision Appeals Review Committee (SARC) with an independent, standalone office within the FDIC, to be known as the Office of Supervisory Appeals. Under the proposal, the Office of Supervisory Appeals would be established as the final level of review of material supervisory determinations, independent of the FDIC Divisions that make supervisory determinations. According to the FDIC, the Office of Supervisory Appeals would be staffed by reviewing officials who have a deep understanding of banking and direct experience with the supervisory process and may include former government officials and industry professionals. Public comments on the proposal are due by September 16. Click for a copy of the proposal.
Nutter Notes: The FDIC has attempted to replace the SARC once before. In January 2021, the FDIC replaced the SARC with an independent, standalone office within the FDIC, also known as the Office of Supervisory Appeals. The Office of Supervisory Appeals at that time was granted delegated authority to consider and resolve appeals of material supervisory determinations and was staffed by reviewing officials with bank supervisory or examination experience. Under the new Biden administration at the time, the FDIC restored the SARC in May 2022 as the final level of review of material supervisory determinations made by the FDIC.
5. Other Developments: Regulatory Burden and Low-Income Housing Tax Credits
- Banking Agencies Seek Input on Outdated or Unnecessary Regulatory Requirements
The federal banking agencies jointly announced on July 21 their fourth notice requesting public comment to reduce regulatory burden. The agencies are now soliciting comments on their regulations for the following categories: Banking Operations, Capital, and the Community Reinvestment Act. Public responses to the request for information are due by October 23. Click for a copy of the request for information.
Nutter Notes: The federal banking agencies are required to periodically review their regulations to identify outdated or otherwise unnecessary regulatory requirements on insured depository institutions and their holding companies by the Economic Growth and Regulatory Paperwork Reduction Act of 1996. For this purpose, the agencies divided their regulations into 12 categories and have previously requested comment three times on nine other categories of regulations.
- LIHTC Enhancements Contained in the One Big Beautiful Bill Act
The federal tax and spending reconciliation legislation signed into law on July 4, called the One Big Beautiful Bill Act (OBBBA), includes provisions meant to boost affordable housing with permanent enhancements of the Low-Income Housing Tax Credit (LIHTC) program. Among other changes, the OBBBA permanently increases each state’s per capita allocation of housing credits by 12%, which will allow more affordable housing projects to receive the 9% LIHTC. Click for a copy of the text of the OBBBA.
Nutter Notes: A limited amount of the 9% LIHTCs are available each year based on allocations to each state through a formula determined by the IRS. Banks generally may invest in LIHTC-eligible affordable housing projects either through regulatory authority to make public welfare investments or authority to make tax equity finance transaction investments, subject to satisfaction of applicable regulatory requirements.
Nutter Bank Report
Nutter Bank Report is a monthly electronic publication of the Banking and Financial Services Group of the law firm of Nutter McClennen & Fish LLP. Chambers and Partners, the international law firm rating service, after interviewing our clients and our peers in the profession, has ranked Nutter’s Banking and Financial Services practice among the top banking practices in the nation. Visit the U.S. rankings at Chambers.com. The Nutter Bank Report is edited by Matthew D. Hanaghan. Assistance in the preparation of this issue was provided by Daniel W. Hartman and Megan S. Greco. The information in this publication is not legal advice. For further information, contact:
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Michael K. Krebs Tel: (617) 439-2288 |
Matthew D. Hanaghan Tel: (617) 439-2583 |
Daniel W. Hartman |
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Kate Henry Tel: (617) 439-2304 |
Timothy J. Rennie Tel: (617) 439-2141 |
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This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.
