#CFPB to Regulate Stablecoins#

The Consumer Financial Protection Bureau (CFPB) is proposing a new regulation that would have significant implications for stablecoin issuers and wallet providers. The proposal would establish a framework for applying the Electronic Fund Transfer Act to virtual wallets and stablecoins. The proposal argues that the term "funds" as used in existing law should include stablecoins, as well as other similar alternative assets that can be used as a medium of exchange and to pay for goods or services. Additionally, the proposal states that the law's coverage of financial "accounts" should include "virtual currency wallets that can be used to purchase goods and services or make person-to-person transfers." The proposal suggests that institutions providing such accounts would be subject to regulatory requirements, including consumer disclosures, protections against unauthorized transactions, and the ability to reverse improper transfers. The proposal is currently in a public comment period, and its finalization and implementation will depend on the Trump-appointed leadership and could face challenges from the Republican-led Congress. Some consumer advocacy groups have praised the proposal, arguing that it would protect consumers and create a level playing field for digital payment mechanisms. However, some cryptocurrency industry figures have expressed dissatisfaction with the proposal, arguing that it is overly broad and lacks consideration for decentralized ledgers and self-custodial wallets.