The United States Consumer Financial Protection Bureau (CFPB) has put forth a proposal that would enable it to oversee major non-bank digital wallet and app providers.
This move forms part of a broader effort by the agency to extend its supervision to various sectors, including consumer reporting, debt collection, and loan servicing.
If implemented, this rule would expand the CFPB’s existing supervisory role, which currently encompasses depository institutions like banks and credit unions.
Rohit Chopra, the director of CFPB, remarked that the rule would act as a deterrent against regulatory manipulation.
He addressed it on X (formerly Twitter):
The agency emphasised the following in a statement:
“Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities. The CFPB has found that this blurring can put consumers at risk.”
CFPB Regulatory Integrity
The agency highlighted that digital applications enjoy user numbers similar to those of credit and debit cards.
However, they lack key safeguards like deposit insurance, as well as privacy and consumer rights assurances.
Although the agency already holds enforcement authority over technology companies, the proposed rule would expand its supervisory reach.
In particular, the proposed rule focuses on crypto wallets, stipulating that the definition of “funds” should be broadened to encompass crypto assets in alignment with other federal statutes.
Its primary focus lies in the transfer of funds for retail transactions and the trading of securities or commodities.
The rule primarily targets the retail use of crypto, excluding the exchange of crypto for fiat currency and the swapping of one crypto type for another.
CFPB Preparatory Actions
The CFPB has been preparing for this rule proposal over the past few months, having issued a warning in June concerning the absence of deposit insurance in various mobile payment apps.
Rohit Chopra has been vocal about his concerns regarding the involvement of major technology firms in the U.S. payments system, having expressed similar reservations in speeches delivered in September and last month.