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Matthew Bornfreund

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Matthew provides comprehensive guidance to clients on a wide range of regulatory, transactional, and compliance matters, helping them to advance their operational goals and launch new products and services. His clients include domestic and international traditional and nontraditional banks, as well as fintechs, private equity funds, and payment services firms.

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Guest contributors: Ashley Harris, Thomas Scott, and Isabelle Corbett Sterling, BakerHostetler

This is the final article in our three-part series focused on a key question: as bank-fintech partnerships continue to play a vital role in driving financial services, how does the industry make this system safer and better?

In this final part of our series, we propose a DLT-based account ledgering model designed to prevent failures like Synapse while offering broader benefits. Previously, we examined Synapse’s collapse, the misplaced trust in its ledgers, and potential regulatory responses,[1] including concerns about the Federal Deposit Insurance Corporation’s (FDIC) proposed recordkeeping rule (Records NPR).[2]

On March 28, the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) (together, the federal banking agencies) announced their intent to rescind the 2023 Community Reinvestment Act (CRA) final rule and reinstate the previous CRA framework. This decision comes in light of pending litigation in the Fifth Circuit by various banking trade associations contesting the rules by alleging regulatory overreach. The agencies stated they will continue to work together to promote a consistent regulatory approach to implementation of the CRA.

Last Friday, the Federal Deposit Insurance Corporation (FDIC) announced the rescission of Financial Institution Letter (FIL-16-2022) and issued new guidance clarifying the process for FDIC-supervised institutions to engage in crypto-related activities. The new Financial Institution Letter (FIL-7-2025) represents a 180 degree turn from the prior Chairman’s position, which required prior notification and relevant information by banks seeking to engage in crypto-related activities.

On March 20, the Office of the Comptroller of the Currency (OCC) announced that it will no longer examine its regulated institutions for reputation risk. According to the OCC’s “Categories of Risk,” reputation risk is the risk to earnings or capital arising from negative public opinion, which can affect an institution’s ability to establish new relationships or services or to continue servicing existing relationships. The decision to stop examining banks for reputation risk comes in the wake of the introduction of the Financial Integrity and Regulation Management (FIRM) Act, which aimed to eliminate reputational risk as a component of the supervision of depository institutions.

On March 17, the Office of the Comptroller of the Currency (OCC) announced that it has granted conditional approval for SmartBiz Loans to transform the business model of CenTrust Bank, N.A., located in Northbrook, Illinois. This approval follows SmartBiz Loans’ acquisition of CenTrust Bank, N.A., which has since been renamed SmartBiz Bank, N.A. The approval allows SmartBiz Bank, N.A. to expand its small business lending activities on a nationwide scale.

On March 7, the Office of the Comptroller of the Currency (OCC) issued a significant update regarding the involvement of national banks and federal savings associations in cryptocurrency activities. Interpretive Letter 1183 reaffirms the permissibility of various crypto-asset activities and aims to streamline the regulatory process for banks engaging in these activities.

On January 16, U.S. Representative Andy Barr (R-KY) introduced H.R. 478, the “Promoting New Bank Formation Act,” which was referred to the Committee on Financial Services. This bill aims to support the establishment and growth of new financial institutions, particularly in rural areas, by easing regulatory requirements.

Troutman Pepper Locke attorneys Alexandra Steinberg Barrage, Matthew Bornfreund, and James Stevens, along with Michele Alt of Klaros Group and other leading banking and financial services professionals, released an open letter to the incoming administration outlining concrete ways the FDIC, OCC, and Federal Reserve Board (Agencies) could encourage new and innovative bank formation.

On January 20, Travis Hill became the Acting Chairman of the Federal Deposit Insurance Corporation (FDIC). Following his remarks on FDIC policy issues on January 10 at the American Bankers Association, in his first statement as Acting Chairman, Hill highlighted various priorities and mentioned new initiatives, emphasizing a commitment to regulatory reform, innovation, and a focus on core financial risks.

On January 10, the Consumer Financial Protection Bureau (Bureau) issued a notice of proposed interpretive rule (Proposed Rule). The deadline for comments is March 31, 2025. The Proposed Rule would apply the Electronic Fund Transfer Act (EFTA)—which protects consumers against errors and fraud—to new types of digital payment mechanisms, including stablecoins and other digital currencies.