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Crypto Asset Survey & Consumer Alert on Interest Accounts

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This week’s Monthly Bulletin from the California Department of Financial Protection and Innovation (DFPI) was published, with two items credit union professionals should take note of:

Cryptocurrency Asset-Related Products & Services Survey
On July 28, the DFPI sent a voluntary survey to all DFPI-licensed banks, credit unions, and trust companies relating to the use of blockchain technologies and the offering of cryptocurrency asset-related financial products and services. The survey asks licensees about their current uses of blockchain technologies and offerings of crypto asset-related financial products and services, if any, as well as any initiatives under consideration.

The survey also asks licensees to identify areas that should be addressed in guidance the DFPI intends to issue by March 31, 2023, as directed by Gov. Gavin Newsom’s executive order related to crypto assets and blockchain technologies. You can read more about the executive order here.

The survey is another effort aimed at advancing the executive order’s directive for the DFPI to “engage in a public process to develop a comprehensive regulatory approach to crypto assets harmonized with the direction of federal regulations and guidance.” As covered in last month’s DFPI bulletin, the agency issued an invitation for public comments on its regulatory approach to crypto assets on May 31, 2022.

The survey requests responses from licensees by Aug. 26. The survey was emailed to each institutions’ designated email address in accordance with Financial Code § 331.5. The email contains a secure link to each individual institution’s survey.

If you have content questions about the survey, please email DFPI Senior Counsel for the Office of Financial Technology Innovation Adam Wright at adam.wright@dfpi.ca.gov. For technical questions, email to survey@dfpi.ca.gov.

Consumer Alert Issued on Crypto-Interest Accounts
The DFPI is investigating multiple companies nationwide that offer customers interest-bearing cryptocurrency asset accounts (crypto-interest accounts). A crypto-interest account allows customers to lend crypto assets to the company and, in exchange, receive interest paid in crypto assets. Due to market conditions, some of these companies are preventing customers from withdrawing from and transferring between their accounts.

The DFPI has issued a consumer alert to warn California consumers and investors that many crypto-interest account providers may not have adequately disclosed risks customers face when they deposit crypto assets onto these platforms. Consumers are encouraged to exercise extreme caution before responding to any solicitation offering investment or financial services.

California customers of crypto-interest account providers that have slowed or paused withdrawals or transfers of crypto assets are encouraged to contact the DFPI at Ask.DFPI@dfpi.ca.gov or call toll-free at 866-275-2677. To file a formal complaint, visit the DFPI File a Complaint Webpage.

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