Breaking: US Consumer Finance Watchdog Sets Sights on Tech Giants and Crypto Payments!

"CFPB Proposes Oversight of Nonbank Payment Providers, Including Crypto Transactions, to Ensure Compliance with Financial Laws"

The U.S. Consumer Financial Protection Bureau (CFPB) has put forward a proposal to oversee large nonbank payment providers, including certain subsectors of crypto transactions, in order to ensure compliance with the same laws that traditional financial institutions adhere to. The proposal, released on Tuesday, aims to allow the CFPB to monitor parties involved in “general-use digital consumer payment applications,” such as fund transfer or wallet providers, if those funds are used for specific non-commercial purposes. The regulator’s definition of “funds” includes some digital asset transactions.

According to the proposal, the CFPB’s ability to monitor emerging risks is crucial as new product offerings blur the lines between banking and commerce. The document outlines various components for defining consumer payment applications, including the location of the consumer (in the U.S.), the occurrence of a payment, the recipient not being the first consumer, and the transactions being primarily for personal, family, or household purposes. The focus of the proposed rule appears to be on large technology companies that offer financial services.

Although the proposal does not explicitly mention these companies, footnotes in the document refer to Venmo (owned by PayPal) and Cash App (owned by Block) as examples of person-to-person payment apps that are widely used by Americans. The CFPB considers Bitcoin and other cryptocurrencies as digital assets, but the proposed rule would not cover the buying, selling, or conversion of cryptocurrencies into other cryptocurrencies.

The CFPB is now seeking feedback on various aspects of the proposal and has invited the general public to provide input by emailing the regulator or visiting regulations.gov. This move by the CFPB reflects its recognition of the evolving landscape of digital finance and its determination to ensure consumer protection in this rapidly changing sector.

In related news, U.S. Banking Watchdog Hsu expressed optimism about tokenization but warned of the prevalence of fraud in the crypto industry.

Martin Reid

Martin Reid

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