The US Consumer Financial Protection Agency Considers Applying the EFTA to Crypto
The Consumer Financial Protection Bureau (CFPB), the top agency in the United States responsible for consumer financial protection, is exploring the possibility of applying the Electronic Fund Transfer Act (EFTA) to cryptocurrencies. The aim is to protect consumers from fraudulent transfers involving digital currencies. CFPB director Rohit Chopra announced this during a payments conference held by the Brookings Institution think tank on October 6.
Understanding the EFTA
The EFTA is a federal law passed in 1978 that safeguards consumers when they transfer funds electronically through methods such as debit cards, ATMs, or bank accounts. Its purpose is to minimize consumer losses resulting from unauthorized transfers. Financial institutions are required to inform consumers about their liability for unauthorized transfers and disclose this information before any electronic transfer takes place.
Rising Crypto Hacks Prompt Action
The CFPB’s move comes as there has been a significant increase in crypto-platform hacks, with a year-on-year rise of over 150%. It also coincides with the ongoing criminal trial of Sam Bankman-Fried, co-founder of FTX, who is accused of fraudulently accessing and using customer funds. Additionally, FTX suffered a hack amounting to over $400 million shortly after filing for bankruptcy.
Additional Measures Being Considered
In addition to exploring the application of the EFTA to cryptocurrencies, the CFPB plans to issue orders to large technology firms to gather information about their business practices regarding personal data usage and private currency issuance. The agency also intends to examine non-banks that offer payment platforms. Furthermore, Chopra suggests that certain crypto activities should be classified as “systemically important payment clearing or settlement activity” by the Treasury’s Financial Stability Oversight Council, providing other agencies with oversight and tools to ensure the stability of stablecoins.
Hot Take: CFPB Takes Steps to Protect Consumers in the Crypto Space
The Consumer Financial Protection Bureau (CFPB) in the United States is actively considering applying the Electronic Fund Transfer Act (EFTA) to cryptocurrencies. This move aims to safeguard consumers from fraudulent transfers involving digital currencies. The EFTA, a federal law passed in 1978, protects consumers during electronic fund transfers and limits losses resulting from unauthorized transfers.
The CFPB’s decision comes at a time when crypto-platform hacks have seen a significant increase of over 150% year-on-year. It also coincides with the ongoing trial of FTX co-founder Sam Bankman-Fried, who is accused of fraudulent access and use of customer funds. In addition to applying the EFTA, the CFPB plans to issue orders to large technology firms for information on their business practices related to personal data and private currency issuance. The agency also intends to examine non-bank payment platforms and suggests classifying certain crypto activities as systemically important payment clearing or settlement activities.
By
By
By
By
By