CFPB Proposes Expanded Oversight on Non-Bank Digital Wallet and App Providers
Summary:
The U.S. Consumer Financial Protection Bureau (CFPB) is planning to introduce a regulation that will expand its supervisory role to large non-bank entities like digital wallet and app providers, including companies like PayPal, Apple, Amazon, Google, and Meta. This move aims to offer equivalent consumer protections across the sector, bringing non-bank businesses under the same regulations as traditional banking institutions. The proposed rule also emphasizes the need to regulate crypto wallets, in line with other federal laws.
The U.S. Consumer Financial Protection Bureau (CFPB) is considering a new regulation that would extend its oversight to major digital wallet and app providers that are not banks. This proposed rule is a stride in the agency's ongoing efforts to expand its jurisdiction, which now includes consumer reports, debt collection, student loan services, global money transfers and car financing. Entities like PayPal, Apple, Amazon, Google and Meta, who manage over 5 million transactions yearly, will be covered by the stipulation if approved.
This extension of the CFPB's current supervisory role over banking institutions will impact non-bank businesses that have blurred the traditional distinction between banking, payments and commercial activities - a development that can be harmful to consumers, according to the CFPB.
Rohit Chopra, the director of CFPB, comments that the regulation aims to curb potential risks in the sector. Despite the fact that digital apps have a similar user base to credit and debit cards, current regulations do not offer them the same deposit insurance, privacy, and consumer rights protections.
The proposed rule has a particular interest in crypto wallets, indicating a need to broaden the understanding of "funds" to include crypto assets, following other federal laws. This is specially targeted at controlling the consumer payment system, which now increasingly involves key tech companies and popular applications. The proposed rule, however, is primarily concerned with the retail use of cryptocurrencies and will not account for the purchase or sale of cryptocurrencies with traditional paper money or the swapping of one form of crypto for another.
The CFPB has been laying the groundwork for this proposed rule for several months now, having issued a warning in June about the lack of deposit insurance for many mobile payment apps. Rohit Chopra has been vocal about his concerns regarding the influence of Big Tech on the U.S. payments landscape.
In related news, blockchain technology has been recognized for its benefits by President Biden, who is also supporting its adoption.
Published At
11/7/2023 8:09:22 PM
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