The Consumer Financial Protection Bureau (CFPB) in the United States is exploring the application of the Electronic Fund Transfer Act (EFTA) to cryptocurrency to protect consumers from fraudulent transfers. CFPB director Rohit Chopra mentioned at a payments conference that the agency is considering providing additional guidance on the applicability of the EFTA to "private digital dollars and other virtual currencies." The move comes amid a significant increase in crypto-platform hacks and ongoing legal proceedings related to fraudulent access to customer funds.
US Consumer Watchdog Considers Applying Electronic Fund Transfer Act to Crypto
The Consumer Financial Protection Bureau (CFPB) in the United States is exploring the application of the Electronic Fund Transfer Act (EFTA) to cryptocurrency to protect consumers from fraudulent transfers. CFPB director Rohit Chopra mentioned at a payments conference that the agency is considering providing additional guidance on the applicability of the EFTA to "private digital dollars and other virtual currencies." The move comes amid a significant increase in crypto-platform hacks and ongoing legal proceedings related to fraudulent access to customer funds.
Chopra highlighted that the CFPB is examining ways to reduce the harms of errors, hacks, and unauthorized transfers in the crypto space. The Electronic Fund Transfer Act (EFTA), passed in 1978, is a federal law designed to protect consumers when they transfer funds electronically, covering various electronic transfer methods such as debit cards, ATMs, and bank accounts. Its purpose is to limit consumer losses from unauthorized transfers.
The CFPB's move reflects a growing concern about consumer protection in the crypto industry, especially with the increasing number of platform hacks and incidents of fraud. The agency aims to clarify regulations and provide guidance to market participants on the application of EFTA to private digital currencies.
In addition to considering the application of EFTA, Chopra mentioned that the CFPB would issue orders to certain large technology firms to gather information on their business practices related to personal data usage and issuing private currency. The agency is also planning to examine non-banks that offer payment platforms.
Chopra suggested that the Treasury’s Financial Stability Oversight Council should classify some crypto activities as "systemically important payment clearing or settlement activity." This classification could provide other agencies with critical oversight and tools to ensure the stability of stablecoins.
(JESSE COGHLAN, COINTELEGRAPH, 2023)