As cryptocurrency fan Donald Trump prepares to take the reins of government, the US Consumer Financial Protection Bureau has unveiled new regulations that would have a significant impact on stablecoin issuers and wallet providers , although the future of the proposal remains uncertain.
The CFPB took the first procedural step to open a proposal to public comment on Friday that would establish a framework for applying the Electronic Funds Transfer Act to virtual wallets and stablecoins — digital tokens pegged to the value of a stable asset, commonly EEs. US dollar While this has strong implications for how American stablecoin companies and crypto wallet providers would do business, it is in a preliminary stage as Trump is about to enter the White House with the power to appoint a new head of the CFPB.
Unlike other agency heads, such as those at the Securities and Exchange Commission and the Commodity Futures Trading Commission, CFPB Director Rohit Chopra appears unlikely to resign voluntarily. Since the agency’s creation after the 2008 global financial crisis, its leaders have often taken a more aggressive stance than other regulators, and Republican lawmakers have actively sought to weaken the CFPB’s powers.
In 2020, the Supreme Court confirmed that the president can fire and replace the director at will, a power Trump is expected to exercise.
This last-minute regulatory effort would have to survive the arrival of a Trump-appointed leader before it could be finalized and put into effect. Even if it were a final rule, the Republican-led Congress would have the opportunity to erase it with its authority from the Congressional Review Act.
Should it survive, the proposed regulation, now open for a public comment period, considers stablecoins as a payment mechanism. The existing law’s reference to “funds” should include stablecoins, the proposal suggests, and could arguably also include other more volatile cryptocurrencies like bitcoin. “Under this interpretation, the term ‘funds’ would include stablecoins, as well as any other similarly situated fungible assets that operate as a medium of exchange or as a means of payment for goods or services,” the proposal states.
Additionally, he said the law’s reach to financial “accounts” should include “virtual currency wallets that can be used to purchase goods and services or make person-to-person transfers,” specifically if they are used for retail transactions and not purchases. . and sale of securities or raw materials.
Institutions that provide such accounts would be subject to regulatory requirements to make disclosures to consumers and provide protection against unauthorized transactions and the ability to cancel improper transfers. Such government demands could go against the way crypto operations are often set up – as in decentralized finance (DeFi) – as peer-to-peer platforms without outside interference, or with wallet technology provided for users to access. manage themselves.
The consumer advocacy group Better Markets applauded the agency’s proposal on Friday.
“Today’s CFPB proposal extends EFTA protections to non-bank digital payment mechanisms,” Dennis Kelleher, the group’s president, said in a statement. “That would not only protect consumers, but would also level the playing field between digital payment mechanisms, whether they involve a checking or savings bank account or another consumer asset account like those used by credit card companies. cryptocurrencies and video games”.
Jack Solowey, a policy analyst at the Cato Institute at the conservative think tank, responded in a post on the social media site decentralized and self-hosted wallets.
Bill Hughes, director of global regulatory affairs at Consensys, the Ethereum development company, also criticized the move on
