USA LAW AND PRACTICE Contributed by: Margo H.K. Tank, Michael Fluhr, Era Anagnosti, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Kathleen Birrane and Chezelle McDade, DLA Piper LLP
• regtech – the leveraging of AI and other technologi - cal tools to assist in compliance monitoring and automation; and • derivatives and prediction markets – fintechs that have expanded into the institutional and retail mar - kets for derivatives, including in prediction markets. 2.2 Regulatory Regime Federal Regulators The US federal government actively regulates most financial products and services. A non-exhaustive list of federal regulators includes: • Consumer Financial Protection Bureau (CFPB) (virtually all financial products and services for consumers; however, see 2.10 Significant Enforce - ment Actions ); • Federal Reserve Board of Governors (FRB); • Federal Deposit Insurance Corporation (FDIC); • Treasury, including: (a) Financial Crimes Enforcement Network (Fin - CEN); (b) Federal Financial Institutions Examination Council (FFIEC); (c) Office of the Comptroller of the Currency (OCC); (d) Office of Foreign Asset Control (OFAC); and (e) Internal Revenue Service (IRS). • Securities and Exchange Commission (SEC); and • Commodities Futures Trading Commission (CFTC). With respect to laws and regulations within the juris - dictions of the federal agencies noted above, a non- exhaustive list of statutes and regulations addressing financial products and services includes: • Electronic Fund Transfer Act (EFTA) and Regulation E; • Fair Credit Reporting Act (FCRA) and Regulation V; • Truth in Savings Act and Regulation DD; • Truth-in-Lending Act (TILA) and Regulation Z; • Bank Secrecy Act (BSA) and/or the USA PATRIOT Act; • Securities Act of 1933 and related regulations; • International Emergency Economic Powers Act (IEEPA); • Securities and Exchange Act of 1934 and related regulations (Exchange Act);
• Investment Company Act of 1940 and related regu - lations (ICA); • the Commodities Exchange Act (CEA); and • The GENIUS Act. State-Level Regulation Individual states and the District of Columbia can establish their own statutes and regulations that address licensing or chartering of banks, non-banks, brokers and dealers, and product regulation. These state rules are not the same in all jurisdictions and sometimes conflict with each other. Relevant regula - tors may include state banking departments, consum - er protection agencies, money transmitter regulators, and securities commissions. States also adopted a commercial law framework known as the Uniform Commercial Code (UCC) that addresses electronic payments and lending, and the custody and transfer of letters of credit, “financial assets” in digital form, electronic chattel paper, and “controllable electronic records”. Transferable records (ie, electronic negotiable promis - sory notes) are governed by the federal Electronic Sig - natures in Global and National Commerce Act (ESIGN) or the applicable state Uniform Electronic Transac - tions Act (UETA). See 6. Marketplaces, Exchanges and Trading Plat- forms and 10. Blockchain . 2.3 Compensation Models Direct consumer compensation models for fintechs in the USA include those based on subscriptions, transactions, payment processing, advisory, funds transfers, trading, funds acceleration, management, or commissions. Direct fees may be required to be disclosed based upon the regulations applicable to the underlying transaction. Certain fintech services are offered to consumers without fees. Consumer resistance to fees for certain services, such as peer-to-peer (P2P) payments, has been significant in the USA. “Freemium” or tiered pric - ing models often include a basic level of service with - out direct cost and a premium level available for a fee.
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