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U.S. Consumer Finance Watchdog Wants to Oversee Major Tech, Some Crypto Payments
A proposed rule would let the CFPB supervise nonbank payment providers and transactions between people, including some crypto transactions.
Updated Nov 8, 2023, 4:32 p.m. Published Nov 7, 2023, 9:53 p.m.
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The U.S. Consumer Financial Protection Bureau (CFPB) wants to oversee large nonbank payment providers to ensure they're complying with the same laws that more traditional financial institutions abide by – and some subsectors of crypto transactions are included.
Tuesday's proposal would, if adopted, let the CFPB look after parties involved in "general-use digital consumer payment applications," the document said, including fund transfer or wallet providers if those funds are used by individuals for certain non-commercial purposes. Some digital asset transactions would be included in how the regulator defines "funds," the document said.
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"The CFPB’s ability to monitor for emerging risks is critical as new product offerings blur the traditional lines of banking and commerce," the proposal said.
The document went on to list different components for how it defines consumer payment applications, including where the consumer is located (in the U.S.), that there is indeed a payment happening, that it's to someone who is not the first consumer and that the transactions "must be primarily for personal, family or household purposes."
The bulk of the rule seems focused on large technology companies that provide financial services. While the proposal doesn't explicitly name these companies, footnotes reference Venmo (owned by PayPal) and Cash App (owned by Block) as examples of person-to-person payment apps that a majority of Americans have used.
Bitcoin and other types of cryptocurrencies qualify as digital assets for the purposes of the CFPB, the document said, but the proposed rule would not cover people buying or selling cryptocurrencies, or converting them into other cryptocurrencies.
The CFPB is publishing a request for feedback on various parts of the proposal, asking the general public to email the regulator or go to regulations.gov.
Read more: U.S. Banking Watchdog Hsu Says Tokenization Promising, But Crypto Full of Fraud
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