#CFPB to Regulate Stablecoins#

The Consumer Financial Protection Bureau (CFPB) is proposing to regulate stablecoins, a move that would have significant implications for stablecoin issuers and wallet providers. The proposal would apply the Electronic Fund Transfer Act to virtual wallets and stablecoins, treating them as a payment mechanism. The proposal suggests that “funds” as mentioned in existing law should include stablecoins and potentially other more volatile cryptocurrencies, such as Bitcoin. Additionally, the legislation 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.” Institutions providing such accounts would be subject to regulatory requirements, needing to disclose information to consumers, provide protection against unauthorized transactions, and the ability to reverse improper transfers. The proposal is currently in a public comment period, and its finalization and implementation depend on the Trump-appointed leadership and may face scrutiny from the Republican-led Congress. Some consumer advocacy groups have applauded 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 does not adequately consider decentralized ledgers and self-custody wallets.