{"id":11759,"date":"2026-04-25T14:33:59","date_gmt":"2026-04-25T14:33:59","guid":{"rendered":"https:\/\/globalnewstoday.uk\/index.php\/2026\/04\/25\/bpinsights-april-25-2026-bank-policy-institute\/"},"modified":"2026-04-25T14:33:59","modified_gmt":"2026-04-25T14:33:59","slug":"bpinsights-april-25-2026-bank-policy-institute","status":"publish","type":"post","link":"https:\/\/globalnewstoday.uk\/index.php\/2026\/04\/25\/bpinsights-april-25-2026-bank-policy-institute\/","title":{"rendered":"BPInsights: April 25, 2026 – Bank Policy Institute"},"content":{"rendered":"

The U.S. financial system exists in two parallel tracks. On one side, banks are investing countless resources to protect the financial system from illicit activity \u2014 flagging suspicious transactions, executing stringent due diligence and working closely with law enforcement and national security agencies. On the other side, crypto \u2014 the global currency of human traffickers, terrorists, drug cartels and fraud \u2014 is flowing freely across wallets and borders, without the same obligations to prevent crime and protect the system. In pending market structure legislation, Congress has an opportunity to close the chasm between these two sides. Lawmakers must take it. 
Why It Matters.\u202f<\/strong>Crypto funds global criminal networks. Its anonymity and the availability of “mixers” and “tumblers” to obfuscate its origins make it the perfect conduit for circumventing sanctions, financing\u202fterrorism and defrauding consumers. 
Stablecoin Legislation.<\/strong>\u202fStablecoins, notably Tether, now account for a majority of illicit transaction volume. Forthcoming stablecoin legislation must confront this problem. The GENIUS Act imposes some AML obligations on U.S. stablecoin issuers, but that coverage is incomplete and does not apply overseas. Congress is considering now whether to extend AML\/CFT obligations to all \u201cdigital asset service providers\u201d covered by the GENIUS Act, including exchanges and custodial wallet providers, not just a narrow subset of actors.\u202f 
Some disasters come out of nowhere \u2014 others are clear many miles away. As predicted in a\u202fprevious BPI analysis<\/a>,\u202fDeFi\u202flending platforms are unprepared to compensate crypto lenders’ losses when loans are made against collateral that loses value. The results demonstrate an alarming truth about the crypto ecosystem: Unlike banking, in which deposit insurance, liquidity and capital requirements keep customers safe in a failure, there’s no fallback when systems break.  \u202f 
What Happened:<\/strong>\u202fOn April 18, 2026, crypto hackers\u202fstole<\/a>\u202fan\u202festimated<\/a>\u202f$290 million from major decentralized finance (DeFi) lending platforms, exposing some lenders to potential losses. The largest\u202fDeFi\u202flending platform, Aave, experienced mass withdrawals to the point where some lenders, including stablecoin lenders, were unable to withdraw their funds. The\u202fincident\u202fnot only exposed lenders to significant potential losses\u2014it also highlights the inherent risks of\u202fDeFi\u202flending, some of which BPI\u202fpointed out<\/a>\u202flast year\u202fin a note that flagged Aave in particular.  \u202f 
Don’t Just Trust \u2014\u202fVerify.<\/strong>\u202fDeFi\u202flending platforms rely on information from third parties that tell the platform what collateral is worth and whether it exists at all. This information may be inaccurate. Trusting poorly verified\u202fthird-party information exposes customers to losses if loans are made against collateral whose value is misrepresented (or potentially worthless).  \u202f 
Run Risk.<\/strong>\u202fDeFi\u202flending platforms lack sufficient insurance to compensate lenders’ losses, as warned by\u202fprevious BPI analysis<\/a>\u202fthat highlighted Aave’s apparently inadequate insurance fund.\u202fHaving inadequate capital means that\u202fDeFi\u202fplatforms are vulnerable to bank run dynamics.
Mixers Muddy the Waters.\u202f<\/strong>Crypto\u202fmixers help enable criminals to act undetected in the ecosystem by obscuring the identities of wallet holders and crypto users.  \u202f 
Bottom Line.<\/strong>\u202fThese risks persist as a result of inadequate regulatory and supervisory standards and will put more customers at risk\u202fin the future if left unaddressed. Policymakers should consider these significant risks as they draft rules governing the crypto ecosystem. Learn more here<\/a>.
The House Homeland Security Committee this week held a hearing titled “Online Scams, Crypto Fraud, and Digital Extortion: An Examination of How Transnational Criminal Networks Target Americans,” featuring witnesses from TRM Labs, USTelecom and cybersecurity research centers. Separately, the House Financial Services Committee held a hearing on Wednesday titled “Evaluating the Effectiveness of U.S. Sanctions Programs.” Here are some highlights: 
Kevin Warsh, the nominee to replace Federal Reserve Chair Jerome Powell, received questions from the Senate Banking Committee at a nomination hearing on Tuesday. The timing of Warsh’s confirmation hinges on whether Sen. Thom Tillis (R-NC) continues to withhold support for the nominee pending resolution of the Justice Department’s probe into Powell. The DOJ announced Friday it is closing the investigation while the Fed’s Inspector General undertakes a review of the underlying building cost overruns, though Pirro has indicated she may still pursue charges depending on the IG’s findings. Here are a few highlights of the Warsh hearing. 
The U.S. Department of Justice said<\/u><\/a> Friday that it is closing its criminal investigation of Federal Reserve Chair Jerome Powell \u2014 though it’s not clear the move will fully resolve the matter. U.S. Attorney Jeanine Pirro said she has directed the Fed’s Inspector General to investigate the building cost overruns underlying the inquiry, which had centered on Powell’s testimony to Congress about Fed building renovation costs. “I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” Pirro said<\/u><\/a> in an X post. “Accordingly, I have directed my office to close our investigation as the IG undertakes this inquiry.” Pirro has indicated she may still pursue charges depending on the outcome of the IG report. Whether this announcement will clear the way for the Senate Banking Committee to proceed with Senate confirmation of Kevin Warsh, the nominee to replace Powell, depends on the support of Sen. Tillis (R-NC) and his view of the resolution.
The OCC\u2019s proposed changes to its framework for banks\u2019 appeals of supervisory decisions would restore confidence, bolster accountability and improve transparency in the appeals process, the Bank Policy Institute, Independent Community Bankers of America and American Association of Bank Directors said in a comment letter<\/a> filed this week.
“The appeals process is a fundamental feature of supervision, but it doesn\u2019t work if banks lack confidence in the system\u2019s impartiality and fear retaliation. The OCC\u2019s proposed changes would strengthen accountability and improve fairness in the appeals process.”
To learn more, click here<\/a>.
Who gets access \u2013 and who has liability \u2013 when it comes to bank customers\u2019 financial data? The much-debated answer to this question is the subject of a CFPB rule, known as Section 1033 after the provision of the Dodd-Frank law that authorized it, and it has sparked a legal challenge from BPI and other organizations. BPI General Counsel and Chief Operating Officer John Court discussed this topic with Financial Technology Association CEO Penny Lee in a newly released episode of the Mr. Open Banking podcast<\/a>. (The episode was recorded in October, but aired in April 2026.) Here are a few highlights. 
The Federal Reserve, OCC and FDIC late last week issued revised model risk management guidance and rescinded the prior guidance, clarifying that \u201cmodel risk management should be tailored commensurately to the size, complexity, and model risk profile of a banking organization.\u201d The revised guidance highlights factors that influence model risk and the features of effective model development and model use; model validation and monitoring; and governance and controls. It also discusses considerations specific to vendor and other third-party products, including validation of these products. The guidance does not set forth enforceable standards or prescriptive requirements, and non-compliance will not result in supervisory criticism, the agencies noted. The revised guidance also notably scopes out Gen AI and Agentic AI models from its scope. The agencies indicated they will issue a request for information in the near future to address model risk management, in particular banks\u2019 use of AI, including Gen AI and agentic AI and AI-based models. 
Here\u2019s the latest in crypto. 
Federal Reserve Governor Christopher Waller this week called for<\/a> a shift in the Federal Reserve Banks\u2019 operations and governance, with more centralized key functions and less deliberation among regional reserve banks. More agility is needed to manage risks amid fast-moving technological changes, Waller said. \u201cDecisions about HR administration, IT architecture, procurement strategy, and facilities standards need to be made at the system level and not decided district by district,\u201d Waller said in remarks prepared for an event Tuesday at the Brookings Institution in Washington. \u201cThat requires not just delegation of authority but a genuine shift away from consensus-based operational decisionmaking.\u201d He called for incorporating technology into the Fed\u2019s risk management strategy. \u201cThe pace of technological change today means that the Fed does not have the time to sit back and ruminate about changes,\u201d Waller said. \u201cIf we are going to ride this wave, and not be drowned by it, we need greater agility to capture efficiencies and manage risks, such as cybersecurity and incorporating AI into our system processes.\u201d
Here\u2019s the latest in international banking policy. 
Bank of America this week announced<\/a> it has awarded Harry Chapin Food Bank grants to support two initiatives aimed at ending hunger in Southwest Florida. A $200,000 grant will support construction of the food bank\u2019s new Hunger Action Center through the nonprofit\u2019s ongoing $30 million Feeding the Future capital campaign. 
The new distribution center and warehouse, set to be completed later this year in Fort Myers, is expected to increase the food bank\u2019s food distribution capabilities from 45 million to 80 million pounds annually of dry, refrigerated and frozen foods. <\/p>\n

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The views expressed do not necessarily reflect those of the Bank Policy Institute\u2019s member banks, and are not intended to be, and should not be construed as, legal advice of any kind.
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The U.S. financial system exists in two parallel tracks. On one side, banks are investing countless resources to protect the financial system from illicit activity \u2014 flagging suspicious transactions, executing stringent due diligence and working closely with law enforcement and national security agencies. On the other side, crypto \u2014 the global currency of human traffickers, terrorists, drug cartels and […]<\/p>\n","protected":false},"author":1,"featured_media":11760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":{"0":"post-11759","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-politics"},"_links":{"self":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/11759","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/comments?post=11759"}],"version-history":[{"count":0,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/posts\/11759\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media\/11760"}],"wp:attachment":[{"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/media?parent=11759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/categories?post=11759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globalnewstoday.uk\/index.php\/wp-json\/wp\/v2\/tags?post=11759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}