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Ethan G. Ostroff

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Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.

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The Office of the Comptroller of the Currency (OCC) has issued a Notice of Proposed Rulemaking aimed at clarifying the permissible activities of national trust banks. The proposal seeks to amend chartering regulations to explicitly state that national trust companies may engage in nonfiduciary activities, such as asset custody, without being required to obtain a full-service national bank charter. However, the proposed rule does not address what specific nonfiduciary activities are permissible, nor does it indicate whether a national trust company must engage in a minimum level of fiduciary activities.

On December 16, the Federal Deposit Insurance Corporation (FDIC) proposed a new rule that would create a formal, bank‑centric process for issuing payment stablecoins. The rule is designed to implement the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the GENIUS Act) and would apply to FDIC‑supervised institutions, state nonmember banks and state savings associations, that want to issue payment stablecoins through a subsidiary. With this proposed rule, the FDIC is seeking to “evaluate the safety and soundness of an applicant’s proposed activities based on consideration of statutory factors and support the responsible growth and use of digital assets and related technologies while minimizing the regulatory burden on applicants.”

On December 16, the Federal Reserve Board issued a Request for Information on a new special‑purpose “Payment Account” prototype, which is essentially a stripped‑down Federal Reserve Bank account designed for institutions focused on payments innovation. The goal with this specialized or “skinny” access is to give legally eligible, payments‑centric institutions a more predictable and lower‑risk path to access key Federal Reserve payment services, without changing who is legally eligible for Federal Reserve master accounts.

On November 20, U.S. Senate Agriculture Committee Chairman John Boozman (R‑AR) and Senator Cory Booker (D‑NJ) released a new bipartisan discussion draft to create a federal spot‑market regime for “digital commodities” under the Commodity Futures Trading Commission (CFTC). The proposal, which expands upon the CLARITY Act approved by the House in July, would give the CFTC exclusive jurisdiction over cash and spot trading in covered non‑security crypto tokens, establish registration frameworks for exchanges, brokers, and dealers, impose listing and public‑information standards, require qualified custody and strict segregation of customer assets, enhance retail protections, and clarify bankruptcy treatment of customer property.

Federal banking regulators previewed near-term rulemaking plans that will shape the fintech landscape. The Federal Deposit Insurance Corporation (FDIC) expects to issue a stablecoin licensing proposal “before the end of the year,” and the FDIC reiterated that “a deposit is a deposit” even when tokenized. Separately, the Federal Reserve is targeting the fourth quarter of 2026 for operational rollout of “skinny” master accounts to widen access to payment rails for eligible depository institutions.

Troutman Pepper Locke’s Securities Investigations + Enforcement Practice

Troutman Pepper Locke’s Securities Investigations and Enforcement team counsels and defends clients through all stages of securities enforcement proceedings. Our attorneys have served in key government agencies and regulatory bodies, and bring their insight to bear in each representation. The team includes a former branch chief of…

On September 30, 2025, the Office of the Chief Counsel of the Securities and Exchange Commission’s (SEC) Division of Investment Management (the Division) issued a no-action response (the No-Action Letter) stating that it would not recommend enforcement against registered investment advisers (RIAs) or certain regulated funds (i.e., registered investment companies and business development companies) for maintaining crypto assets and related cash and cash equivalents with certain state-chartered financial institutions (state trust companies) so long as particular conditions are met.[1] In doing so, the No-Action Letter permits regulated funds and RIAs to treat state trust companies as “banks” for purposes of the custody requirements of Investment Company Act of 1940, as amended (the 1940 Act), the Investment Advisers Act of 1940, as amended (the Advisers Act) and the rules thereunder.

On September 23, Acting Chairman of the Commodity Futures Trading Commission (CFTC) Caroline Pham announced the launch of an initiative focused on the use of tokenized collateral, including stablecoins, in derivatives markets. This initiative is part of the CFTC’s broader efforts to implement recommendations from the Report authored by the President’s Working Group on Digital Asset Markets.

On September 17, the New York State Department of Financial Services (DFS) issued new guidance on the use of blockchain analytics tools. This new guidance builds upon the blockchain guidance issued by DFS in 2022, and applies to all New York banking organizations and branches and agencies of foreign banking organizations that are licensed by the DFS (covered institutions).

On September 19, the U.S. Department of the Treasury issued an Advance Notice of Proposed Rulemaking (ANPRM) seeking public input on the implementation of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. This ANPRM builds upon the Request for Comment on Innovative Methods to Detect Illicit Activity Involving Digital Assets issued by Treasury on August 18, which remains open for comment until October 17, 2025.