The Consumer Financial Protection Bureau (CFPB) chief revealed that the organization is thinking about applying e-banking legislation to digital assets.
Rohit Chopra stated that the agency may use the Electronic Fund Transfer Act (EFTA) to safeguard consumers and investors in the crypto ecosystem on October 6 at the Bookings Payment Conference.
He claims that the CFPB is considering using conventional financial standards for digital assets in order to establish a secure environment for users.
The CFPB is considering giving more guidance to market players to help them understand how the Electronic Fund Transfer Act applies to private digital dollars and other virtual currencies, in order to reduce the harm caused by errors, hacks, and unauthorized transfers.
This follows a recent uptick in bad actors’ activity in the market for digital assets.
If the EFTA is applied to cryptocurrencies, Digital asset companies will need to adjust some aspects of how they operate, including disclosures and other matters.
EFTA to limit user losses
Before every electronic transaction, banks and other related financial institutions are required to disclose the full amount of their liability.
This will aid in minimizing the considerable losses consumers have endured as a result of illicit cryptocurrency transfers in recent years.
In relation to the agency’s focus on “Making America’s Payment System Work for a Digital Century,” he said that it will look at the role non-banks play in the cryptocurrency industry because some of them provide payment platforms that should be safe and secure.
He suggested that the Financial Stability Oversight Council of the Treasury flag some crypto activities as being of systemic importance in order to give organizations and parties the tools they need to make sure that “a stablecoin is actually stable.”
Finally, before issuing private cryptocurrency, digital asset businesses and issuers will disclose specific information on the company’s usage of customer information and data in an effort to go forward with firms to detect any fraud.
By using debit cards, automated teller machines, mobile phones, or other sources to make online transfers, consumers are protected against losses by the EFTA, which is used in traditional finance.
The creation of new rules targeted at user safety has been a recurring aspect of the digital asset market this year in all jurisdictions.
The UK’s Financial Conduct Authority has unveiled a new set of crypto advertising standards that require businesses to make sure their clients are adequately informed and to clearly disclose any risks associated with marketing and other strategies.
Since the judgment, some cryptocurrency exchanges and issuers have debated exiting the UK market, while Binance and OKX have modified their practices to comply with the new regulations.
The Association of Securities Regulators in Canada recently issued recommendations on the application, pushing for stronger market regulation and offering a template for stablecoin issuers.
The United States market is still at a crossroads on regulations, with a variety of court battles between authorities and industry executives, even as important rules shape up in the UK, Europe, and Canada.