Summary
Republican leaders in the House Financial Services Committee have raised concerns about a proposed rule from the Consumer Financial Protection Bureau (CFPB) that they say has an unclear impact on digital assets. The rule, titled ‘Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications,’ does not specify whether it applies to specific digital asset entities, according to a letter sent by lawmakers to CFPB Director Rohit Chopra. The Republican leaders called on the CFPB to provide more justification for the rule and its potential impact, and suggested that the agency should not move forward with finalizing the rule without sufficient justification. The proposed rule, which was introduced in November, would allow the CFPB to supervise nonbank companies that provide services such as digital wallets and payment apps. The rule would require nonbank financial companies handling more than five million transactions annually to comply with the same regulations as large banks and credit unions. The CFPB said that fiat-to-crypto and crypto-to-crypto transactions on exchanges would not be covered by the rule. However, the lawmakers expressed uncertainty about whether digital asset exchanges would be exempt from the rule altogether or only in certain instances, which could potentially discourage these exchanges from expanding their services to include peer-to-peer transactions. The Crypto Council for Innovation and Coin Center have also expressed concerns about the proposed rule, with the Crypto Council for Innovation warning that it could lead to increased regulatory fragmentation. The CFPB is currently reviewing the lawmakers’ letter.
Key Points
1. Republican leadership in the House Financial Services Committee wants the Consumer Financial Protection Bureau (CFPB) to reconsider its proposed rule on digital assets, citing an unclear impact on these assets.
2. The lawmakers expressed concerns about the rule’s application to specific digital asset entities and urged the CFPB to provide sufficient justification for the proposed rule.
3. The CFPB’s proposed rule would give the agency the authority to supervise larger nonbank companies that offer digital wallets and payment apps, but lawmakers and industry players have raised concerns about regulatory uncertainty and potential limitations on the functionality of the digital asset industry.