Exploring EFTA for Crypto Protection
Consumer Financial Protection Bureau (CFPB) Director, Rohit Chopra, announced at the Brookings Institution payments conference a potential application of the Electronic Fund Transfer Act (EFTA) to regulate crypto transactions.
Background on EFTA
A deep dive into the 1978 federal law designed to safeguard consumers during electronic fund transfers, covering various electronic mediums like debit cards, ATMs, and bank accounts.
Mitigating Risks of Errors and Hacks
Chopra emphasized the need for additional guidance to address concerns related to private digital dollars and virtual currencies. The move aims to minimize harms arising from errors, hacks, and unauthorized transfers.
Surge in Crypto-Platform Hacks
Against a backdrop of a 150% year-on-year increase in crypto-platform hacks, the CFPB’s decision gains significance. Recent high-profile cases, including the criminal trial of FTX co-founder Sam Bankman-Fried, highlight the urgency for regulatory intervention.
Orders for Tech Giants and Examination of Non-Banks
CFPB plans to issue orders to large technology firms for insights into their business practices concerning personal data and private currency. The agency is also set to scrutinize non-banking entities offering payment platforms.
Systemic Importance of Crypto Activities
Chopra proposes that the Treasury’s Financial Stability Oversight Council classify certain crypto activities as “systemically important payment clearing or settlement activity.” This move aims to enhance oversight and stability in the crypto space.
As the CFPB explores the potential application of EFTA to crypto transactions, the crypto industry awaits further guidance. The surge in platform hacks and ongoing legal battles underscore the need for robust consumer protection measures in the rapidly evolving digital financial landscape.