#CFPB to Regulate Stablecoins#

The Consumer Financial Protection Bureau (CFPB) is proposing a regulation for stablecoins that would have a significant impact on stablecoin issuers and wallet providers. The proposal would establish a framework for applying the Electronic Fund Transfer Act (EFTA) to virtual wallets and stablecoins, treating stablecoins as a payment mechanism. The proposal suggests that “funds” as mentioned in existing law should include stablecoins, and arguably also other more volatile cryptocurrencies such as Bitcoin. Additionally, the act 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 provide consumer disclosures, protection against unauthorized transactions, and the ability to reverse improper transfers. The proposal is currently in a public comment period, and its ultimate fate depends on the stance of the Trump administration and the attitude of the Republican-controlled Congress. Some consumer advocacy groups have praised the proposal, arguing that it would protect consumers and provide a level playing field for digital payment mechanisms. However, some cryptocurrency industry figures have expressed dissatisfaction with the proposal, arguing that it is too aggressive and could stifle innovation.