Our Take: financial services regulatory update – September 19, 2025

September 19, 2025

Change remains a constant in financial services regulation

Read "our take" on the latest developments and what they mean.

OCC reverses consolidation of supervision

What happened? On September 18^th, the OCC announced that it would split the Bank Supervision and Examination group into three separate groups and make other organizational changes. This followed a previous consolidation announced in April of the Midsize and Community Bank Supervision and Large Bank Supervision functions.

What is the new structure? The OCC’s supervision activities will be divided into three distinct groups:

Large and Global Financial Institutions with over $500 billion in assets or with a foreign parent;
Regional and Midsize Financial Institutions with between $30 and $500 billion in assets; and
Community Banks with up to $30 billion in assets.

Comptroller Jonathan Gould said that over time he expects these divisions “to generally align with our tailored regulatory framework.” Previously, the Midsize Bank portfolio included “national banks and federal savings associations with total assets generally in excess of $15 billion” and the Large Bank Supervision group covered “the largest national banks, federal savings associations, and federal branches and agencies under OCC supervision.” The announcement further stated that the Office of the Chief National Bank Examiner will be split into five divisions: Supervision Systems and Analytical Support; Credit Risk; Compliance and Operational Risk; Economics; and Capital, Market Risk and Asset Management.

What’s next? The new structure will be effective October 1^st, which is also when the OCC is expected to issue a supervision operating plan for FY 2026.

Our Take

More clarity and commitment to tailoring

The September meeting underscored a coordinated supervisory reset, with regulators working to embed a more transparent approach into regulations, guidance and ratings frameworks. The OCC’s reassessment of requirements like recovery planning, heightened standards and examinations not related to material financial risks are particularly significant and could materially alter exam schedules and expectations for a wide range of institutions. By narrowing supervision to material financial risks, banks may gain relief from some of the most resource-intensive exam burdens, freeing capacity to reassess and direct resources toward non-financial risk management activities that best align with their strategy and business model. Complementing this shift, the Fed’s move away from horizontal exams and the FDIC’s adjustments to the appeals process and enforcement order terminations reflect a direct response to longstanding industry criticism that supervision has been opaque, overly procedural and slow to resolve. Taken together, these changes suggest that regulators are not just signaling a shift in tone but laying the groundwork for durable reforms that align their focus to material financial risk, while enhancing transparency and predictability.

What’s the bottom line? Asset thresholds are back in focus. Supervision is leading, but policy changes may not be far behind.

Digital assets: Treasury begins GENIUS implementation and more

What happened? The following recent notable events happened regarding digital assets:

On September 18^th, Treasury released an advance notice of proposed rulemaking (ANPR) requesting input on the implementation of the GENIUS Act, which provides a regulatory framework for stablecoins.
On September 17^th, the SEC approved listing standards for exchange-traded products (ETPs) that hold spot commodities, including digital assets. The standards include eligibility criteria and disclosure requirements. Exchanges will be able to list products that adhere to these standards without first submitting a rule filing seeking permission.
On September 17^th, the NYDFS released guidance explaining that firms engaged in digital asset activity should consider using blockchain analytics tools for purposes such as screening customer wallets, transaction monitoring, verifying the source of incoming funds and detecting the risk of third parties with which a customer has engaged.

What information does Treasury’s ANPR request? The ANPR requests feedback in the following six areas:

Stablecoin issuers and service providers, including 1) whether to clarify the scope of the GENIUS Act’s prohibiton on stablecoins paying interest or yield; 2) whether more guidance on reserve requirements are necessary; 3) criteria for finding that a nonbank would not present a material safety and soundness risk; and 4) whether Treasury should grant any safe harbors or de minimis exceptions to permit certain issuers outside of the GENIUS Act’s scope (see Our Take here for more information).
Illicit finance. The ANPR asks what unique features associated with stablecoins should be considered when issuing AML and sanctions regulations, including whether any regulations or guidance around the use of technology would be helpful.
Foreign issuers. Treasury requests information on considerations for determining whether a foreign regulatory regime is “substantially similar” to that of the GENIUS Act and what information it should require from foreign stablecoin issuers.
Taxation. The ANPR asks what extent tax guidance on the classification of payment stablecoins would be helpful.
Insurance. The ANPR seeks input on the types and amounts of insurance coverage that should be purchased by stablecoin issuers and considerations around the possibility of insurers acting as stablecoin issuers or digital asset service providers.
Other topics. Treasury asks whether any regulations or guidance would be necessary to address risks associated with bankruptcy, conflict of interest, or any other topics not covered in the ANPR.

What’s next? Comments on Treasury’s ANPR will be due 30 days following its publication in the Federal Register.

Our Take

GENIUS Act implementation is nigh

While Treasury’s ANPR is just the first step toward implementing the GENIUS Act, the relatively brief 30-day comment period and aggressive Administration focus on digital assets means that we expect to see rules and guidance appear on an expedited timeline. Most of the themes are common-sense, practical implementation questions that are likely to find consensus, with two particularly notable exceptions:

There is significant pressure from the industry for the regulators to close potential workarounds to the GENIUS Act’s prohibition on interest by explicitly extending the prohibition to exchanges and other affiliates. The ultimate decision by the regulators remains to be seen, but in the meantime banks should model how deposit migration into stablecoin-linked accounts could affect funding, testing scenarios for impacts on deposit beta, wholesale reliance, and liquidity across rate environments.
The banking industry, existing issuers and certain community groups will support strict criteria for nonbanks, especially those not engaged in financial services, to issue stablecoins. Considering the GENIUS Act requires that such firms must obtain unanimous approval from the to-be-established Stablecoin Certification Review Committee, there will be a steep hill to climb to meet high risk management and compliance expectations for approval. However, the details around approval to be established by the regulators could determine the extent to which certain big tech firms, large retail businesses and other companies will be able to compete in this marketplace.

Crypto continues moving toward the mainstream

The SEC’s approval of listing standards for crypto ETPs continues the Administration’s approach toward digital assets and innovation, echoing similar actions such as the banking agencies rescinding expectations that banks seek pre-approval before engaging in digital asset activity. As this move will accelerate fund launches and crypto asset purchases, issuers should make sure their disclosure workflows can meet the demands of the listing standards, including reporting of daily holdings, premium and discount metrics, and NAV methodology. They should also evaluate whether their liquidity risk programs should be updated for collateralized commodities, derivatives exposures or digital asset strategies involving staking. Broker-dealers should make sure that customer-facing staff are aware of the unique risks associated with these products and incorporate these considerations into customer suitability and conflict of interest policies, especially considering recent Administration efforts to allow retirement funds to offer digital assets.

What’s the bottom line? Treasury is moving fast to implement the GENIUS Act’s stablecoin regulatory framework and the SEC is continuing to open the door for digital asset products.

For more on GENIUS Act implementation as well as what’s next in Congressional and regulatory agency efforts to bring crypto clarity, see PwC’s Digital Assets Leader Matt Blumenfeld’s recent conversation with Delta Strategy Group’s Kevin Batteh and BGR’s Keaghan Ames. The conversation shares insider perspectives on the behind-the-scenes debate and negotiations as digital asset policy continues to evolve.

On our radar

These notable developments hit our radar recently:

Miran sworn in as Fed Governor, participates in FOMC rate decision. On September 16th, Stephen Miran was sworn in as a member of the Federal Reserve Board of Governors. Miran fills the seat vacated by Adriana Kugler, who resigned effective August 8th, 2025. His term runs through January 31, 2026, completing the remainder of Kugler’s original appointment. The following day, on September 17th, the FOMC voted to lower the target range for the federal funds rate by 25 basis points. The Committee cited slowing economic activity, softening job gains, and elevated inflation as contributing factors. Miran dissented and called for a 50 basis point reduction.

Courts split on Fed’s swipe fee rule. On September 15th, a federal judge in Kentucky upheld the Federal Reserve’s Regulation II, which caps debit card interchange fees at 21 cents per transaction, rejecting a challenge from a local merchant. This ruling follows an August decision from a North Dakota court that vacated the same rule. The conflicting rulings create a potential circuit split, with appeals expected in the Sixth and Eighth Circuits.

Eighth Circuit dismisses lawsuit challenging FDIC NSF fee guidance. On September 17th, the Eighth Circuit Court of Appeals ruled that banks cannot seek judicial review of FDIC FI Letter 32-2023, which addresses supervisory concerns over multiple non-sufficient funds (NSF) fees for re-presented transactions. The court found that the letter is non-binding supervisory guidance, not a final agency action, and therefore not subject to review under the Administrative Procedure Act.

Treasury outlines AML/BSA reform priorities. On September 17^th at the ACAMS Assembly Conference, Treasury Under Secretary John Hurley emphasized the need to shift from process-based supervision to outcomes-based metrics aligned with law enforcement priorities. He said Treasury plans to streamline continuing activity reviews, reduce documentation burdens, and support broader innovation including AI, blockchain analysis, and digital identity.

SEC issues statement on mandatory arbitration provisions. On September 17^th, the SEC issued a policy statement clarifying that the inclusion of mandatory arbitration provisions for investor claims will not affect decisions to accelerate registration statements. Instead, staff will focus solely on the adequacy of disclosure. The move marks a shift from prior uncertainty, where such provisions could delay acceleration due to concerns around enforceability and the investor protection standard.

SEC and CFTC extend Form PF compliance date. On September 17^th, the SEC and CFTC extended the compliance deadline for amended Form PF requirements to October 1st, 2026. Form PF is a confidential reporting tool used by regulators to monitor systemic risk in the private fund industry. The amendments, finalized in early 2024, would expand reporting for large hedge funds and private equity advisers, including new event-driven disclosures and shorter timelines. The delay follows a Presidential Memorandum calling for further review of the rule’s scope and impact.

House subcommittee holds hearing on AI in financial services. On September 18^th, the House Financial Services Subcommittee on Digital Assets, Financial Technology, and AI held a hearing on artificial intelligence in financial services. Witnesses highlighted regulatory uncertainty as a core barrier to scaling AI use cases, especially in credit underwriting and customer interactions. Panelists pointed to risks around opaque model outputs, inadequate third-party controls, and the potential for proxy data to reinforce bias. Lawmakers considered principles-based frameworks and enhanced oversight of model governance as areas for future action.