CFPB Proposes Rule to Regulate Cryptocurrency Wallets Under Existing Electronic Fund Transfer Laws
The Consumer Financial Protection Bureau (CFPB) announces a proposed rule aimed at regulating cryptocurrency wallets under the framework of existing electronic fund transfer laws. This initiative, part of a broader effort, is to enhance consumer protections within emerging payment systems.
The proposed rule targets “virtual currency wallets that can be used to buy goods and services or make person-to-person transfers.” However, it has sparked debate due to its lack of distinction between two distinct types of wallets:
- Custodial Wallets: Managed by companies that secure funds on behalf of consumers.
- Self-Custody Wallets: Software tools allowing individuals to independently secure and manage their cryptocurrency.
Critics argue that grouping these two types of wallets under the same regulatory umbrella overlooks their significant differences in functionality, risks, and purpose. Custodial wallets involve ongoing services and consumer agreements, while self-custody wallets serve as independent tools for users to manage their own assets.
Concerns have also been raised about potential implications for privacy and regulatory overreach if self-custody wallets are included in the proposed rule. The CFPB’s interpretation of key terms under the Electronic Funds Transfer Act (EFTA), such as “account” and “financial institution,” will be critical in shaping the rule’s impact.
Public comments on the proposed rule are open until March, offering stakeholders an opportunity to provide input and voice their concerns.
For more information on the proposed rule and how to submit public comments, visit link: Consumer Financial Protection Bureau (CFPB)
