REGULATORY DEVELOPMENTS
OCC GRANTS NATIONAL TRUST BANK CHARTER TO OTHER CRYPTOCURRENCY COMPANY
On April 23, the OCC granted preliminary conditional approval to Paxos, the third cryptocurrency company to be granted approval to charter a national trust bank. A national trust bank is a type of non-custodial national bank whose activities are limited to fiduciary activities. They appeal to cryptocurrency companies because FDIC insurance is not required and because the federal charter takes precedence over various state laws that state chartered trust banks or trust companies have to contend with. . Paxos’ request indicated that it would: engage in child care; act as payment, exchange or other agent; provide KYC as a service; ensure the safekeeping and management of stable currency reserves in USD; and offer other cryptocurrency services. This charter action follows and quotes an OCC interpretive letter issued earlier this year, authorizing national trust banks to engage in activities permitted for a state trust bank or trust company under state law in the state where the national bank is situated, such as acting as a custodian, even if these state-authorized activities are not. necessarily considered fiduciary by federal law.
The CFPB DELAYS THE MANDATORY COMPLIANCE DATE FOR THE GENERAL FINAL RULE OF QUALIFIED MORTGAGES
On April 27, the CFPB issued a final rule extending the mandatory compliance date of the General Qualifying Mortgage Rule (QM) from July 1, 2021 to October 1, 2022 in order to “help ensure that consumers continue to have access to responsible and affordable mortgage credit and to preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects. Although the final QM rule has already entered into force on March 1, 2021, the postponement of the mandatory compliance date offers creditors seeking to grant general QM loans the opportunity to comply with either the revised definition of the general QM based loan. on prices, i.e. the initial monthly total. Debt to Total Monthly Income (DTI) General definition of the QM loan as of October 1, 2022. The delay also gives lenders more time to use the loan. GSE (Government-Sponsored Enterprise) Patch before its availability becomes potentially limited after July 1, 2021 due to recent revisions to the preferred share purchase agreements entered into by the Treasury Department and the Federal Housing Finance Agency.
“It is by judging that the activities that we have identified in the business plan are those that can be carried out by a national trust, that we have the right team in place and the right controls and plan in place to control our risks. and operate as a national trust company. “
– Dan Burstein, General Counsel at Paxos
AGENCIES ARE INVITED TO COMMENTS ON THE PROPOSED RULE FOR INCOME TAX ALLOCATION AGREEMENTS
On April 22, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation and the OCC invited proposed rule which updates and codifies existing guidelines on income tax attribution agreements involving deposit-taking institutions and their affiliates. Under the proposed rule, banks that file income tax returns as part of a consolidated tax reporting group would be required to enter into tax allocation agreements with their holding companies and other members of their consolidated group. The proposed rule also describes the provisions to be included in these tax allocation agreements and specifies their regulatory treatment in terms of reporting. Comments must be received within 60 days of the publication of the proposed rule in the Federal Register.
NYSE PROPOSES AN AMENDMENT TO LIMIT THE INVESTMENTS OF CLOSED CLOSING FUND IN PRIVATE FUNDS
On April 20, the United States Securities and Exchange Commission notified the NYSE’s proposal amendment in section 102.04 of the NYSE Listed Company Manual to establish limits on investments in unregistered investment vehicles (private funds) by closed-end listed funds. The proposed amendment would prevent the initial listing of a closed-end fund if, at the time of listing, the closed-end fund invests overall more than 15% of the net assets of the fund in private funds or invests more than 5%. %. of the fund’s net assets in a single private fund. In addition, the amendment would require that a listed closed-end fund investing or intending to invest in private funds adopt fundamental policies which provide that the fund: (i) may not make additional investments in private funds if, immediately after investment, Private funds would represent more than 15 percent of the net assets of that fund or the investment in an individual private fund would represent more than 5 percent of the net assets of that fund ; and (ii) take specific action in the event that these limits are exceeded, including notifying the NSYE and the board of directors of the fund. The proposed amendment would require the fund management to provide a report to the fund board within one business day of the event with an explanation of the scope and causes of the event and a plan to reduce the fund’s investments in private funds to comply with the limits of section 102.04. If a fund exceeds limits for 30 days after the event, the fund’s board of directors, comprising a majority of independent directors, must assess whether the plan presented to it continues to be in the best interest of the fund.
The proposed amendment would include a new definition of “private funds” to mean: (1) in the case of a US domestic entity, a limited partnership, limited liability company, trust, corporation or similar entity incorporated or unincorporated, which would be an investment company under section 3 (a) of the Investment Companies Act 1940 (the Investment Companies Act) but for the exception provided for in this definition by Sections 3 (c) (1) or 3 (c) (7) of the Investment Company Act and (2) in the case of a foreign entity, an entity which is only authorized to offer its securities ” in the United States as part of a private offer in accordance with section 7 (d) and 3 (c) (1) or 3 (c) (7) of the Investment Companies Act and the interpretations of the SEC under it. The proposed definition of private funds excludes all funds that are issuers of Secured Debt Securities (CDOs) or Secured Loan Bonds (CLOs). Comments on the proposed change must be submitted no later than May 17, 2021.
US RESCUE PLAN: HOW TO NAVIGATE THE NEW CONTINUATION COVER STANDARDS FOR COBRA
On March 11, President Biden signed the American Rescue Plan Act of 2021 (ARPA), the latest COVID-19 relief bill, into law. Under ARPA, employers will generally be required to advance the cost of continuation coverage required under the Consolidated Omnibus Budget Reconciliation Act (COBRA continuation coverage) for eligible individuals from April 1, 2021 to September 30, 2021, with the right to recover the amounts advanced. through tax credits. Read it customer alert to learn more about eligibility, tax credits, notices and upcoming tips.