TechFlow news — According to The Block, the U.S. Consumer Financial Protection Bureau (CFPB) is seeking public comment on a proposed rule aimed at providing greater consumer protections in cryptocurrency transactions to guard against fraud.
The CFPB has issued an "interpretive rule" explaining how the Electronic Fund Transfer Act and other regulations apply to emerging "digital payment methods," such as stablecoins. The Act, passed in 1978, was designed to protect consumers engaging in electronic fund transfers.
CFPB Director Rohit Chopra stated that consumers must be confident their transactions won't suffer from harmful surveillance or errors when using new forms of digital payments. However, the CFPB's rulemaking prospects are uncertain, as the agency has drawn criticism from the incoming Trump administration. Billionaire Elon Musk has said he would "delete the CFPB."
The CFPB noted that consumer use of stablecoins may increase in the coming years, but some figures in the crypto industry have criticized the proposed rule. Coin Center Executive Director Peter Van Valkenburgh said it remains unclear whether the proposed rule covers self-hosted wallet service providers, and pointed out that the agency does not distinguish between cryptocurrency services provided by trusted intermediaries and software tools.
Coin Center emphasized that if the CFPB intends to regulate self-hosted wallets under Regulation E and directly regulate developers of self-hosted wallet software, the proposed rule would exceed the CFPB’s statutory authority and be unconstitutional. Public comments on the CFPB’s proposed rule are due by March 31, 2025.
