US Consumer Watchdog Considers Applying EFTA to Crypto for Fraud Prevention
Summary:
The Consumer Financial Protection Bureau (CFPB) is considering the application of the Electronic Fund Transfer Act (EFTA) to cryptocurrencies as a measure against fraudulent transactions. CFPB Director Rohit Chopra stated at a payments conference that the agency plans to issue guidance to stakeholders about the applicability of EFTA to digital and virtual currencies. This comes amid a major increase in cryptocurrency-related hacks globally and ongoing legal trials related to crypto fraud.
The principal US consumer financial watchdog is mulling over the imposition of the Electronic Fund Transfer Act (EFTA) in the realm of cryptocurrency, to mitigate the risks involved with fraudulent transactions. Rohit Chopra, the head of Consumer Financial Protection Bureau (CFPB), hinted at the possibility of this enforcement during a payments symposium on October 6, organized by the Brookings Institution think tank. He stated that the EFTA might be extended to "encapsulate private digital currencies and other types of virtual money."
Chopra elaborated on minimizing the impact of errors, hacks, and unauthorized transactions, asserting that the CFPB plans to issue clarifying guidance to the market stakeholders, addressing their inquiries concerning the relevance of the EFTA to private digital cash and different types of virtual money.
The EFTA, ratified in 1978, is a national legislation that safeguards consumers involved in electronic money movements, by employing debit cards, Automated Teller Machines, or bank accounts. It aims to confine consumer damages arising from unauthorized transactions and provides directives to financial organizations to inform consumers about their potential liability for unauthorized transactions. Chopra underscored that the CFPB's crypto-centric strategies will also encompass generating advice on how existing laws regarding electronic fund movement pertain to cryptocurrencies.
This consideration arises at a time when the worldwide surge in crypto-related hacks rates has grown by over 150% over the last year, and the initial legal proceedings against FTX co-founder Sam Bankman-Fried, implicated in fraudulent accessibility and misuse of client funds, enters its second week.
Chopra also accentuated that the CFPB will also relay orders to "specific tech giants" to gather insights on their business activities relating to the utilization of personal data and issuing private money. Moreover, the watchdog plans to probe non-financial organizations proposing payment platforms, sharing his viewpoint that the Treasury's Financial Stability Oversight Council needs to rank certain crypto tasks as a "systemically significant payment clearing or settlement activity". This move, he hinted, could equip other regulatory bodies to ensure that a stablecoin remains stable indeed.
Published At
10/9/2023 3:33:01 AM
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