The U.S. Consumer Financial Protection Bureau is looking for public input on proposed rules aimed at giving consumers more protections against fraud in crypto transactions.
The agency, tasked with overseeing consumer financial markets, proposed an "interpretive rule" on how the Electronic Fund Transfer Act and other regulations would apply to incoming "digital payment mechanisms" like stablecoins. That Act, passed in 1978, is a federal law that aims to protect consumers engaging in electronic fund transfers, such as ATMs back in the day.
“When people pay for their family expenses using new forms of digital payments, they must be confident that their transactions are not tainted by harmful surveillance or errors,” CFPB Director Rohit Chopra said in a statement.
The future is unclear for CFPB rulemaking given that the agency has reportedly caught the ire of the incoming Trump administration. For instance, Elon Musk, the billionaire co-lead of the newly created Department of Government Efficiency (named in an apparent nod to Musk's favorite cryptocurrency, DOGE) said he would "delete CFPB," in a post on X in November.
The CFPB, originally proposed in 2007 by Senator Elizabeth Warren, has homed in on a number of crypto use cases and called upon U.S. regulators to craft guidelines and apply existing laws to the industry. The agency noted that "consumer use of stablecoins will likely increase in the coming years," in a statement on Friday.
Some in the crypto industry criticized the CFPB's proposed rules on Friday. Peter Van Valkenburgh, executive director at Coin Center, said it is unclear whether the proposed rulemaking would encompass self-hosted (i.e. noncustodial) wallet service providers. The agency doesn't differentiate between "cryptocurrency services provided by trusted intermediaries" and software tools, he wrote.
"If the CFPB intends to cover self-custody wallets under Reg E and to subject the authors of self-custody software to direct regulation, then the proposed rule goes beyond the CFPB’s statutory authority and is also unconstitutional," Coin Center said in its post.
Comments on the CFPB's proposed rules are due on March 31, 2025.
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