- More U.S. regulators, such as the CFPB, now seek to exert authority over cryptocurrency.
- The CFPB has moved to expand its examination authority over large payment companies.
- A legal expert argued that the CFPB’s proposal would offer unprecedented access to non-bank institutions’ financial records.
The U.S. Consumer Financial Protection Bureau (CFPB) has joined the list of U.S. regulators that seek to claim a share of crypto oversight responsibilities. In a recent statement, the CFPB communicated its intent to propose a regulation to delineate a market for digital consumer payment applications designed for general use.
According to the statement, the proposed market would encompass entities offering fund transfer and wallet features through digital applications. It specifically targets entities facilitating consumer payments to other individuals for personal, family, or household purposes. It is worth mentioning that the proposed rule asserts that fund transfers, even if not electronic fund transfers under Regulation E, constitute a part of consumer payment transactions.
The Consumer Financial Protection Bureau (CFPB) interprets the term “funds” in the Consumer Financial Protection Act (CFPA) broadly to include digital assets, like crypto-assets, with monetary value. The Bureau added that the interpretation extends to transferring digital assets for purposes qualifying as a consumer payment transaction.
In response, Attorney Joshua Garcia argued that where the CFPB’s recently submitted proposal remains unchanged, the Bureau could gain increased authority over crypto companies, including those already regulated as “money transmitters.”
Moreover, Garcia stated that under the proposed regulations, federal examiners would attain unprecedented access to non-bank institutions’ financial records, chat logs, and books, encompassing money transmitters who accept and transmit digital assets.
The lawyer also pointed out that major corporations entering the crypto arena navigate through a regulatory landscape involving many agencies, including the SEC and the CFTC. And now, CFPB’s signal into the crypto space adds to the complexity.
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