Biden’s consumer watchdog is pushing for a stablecoin rule at the eleventh hour before Trump arrives

As cryptocurrency enthusiast Donald Trump prepares to take over the reins of government, the US Consumer Financial Protection Bureau has done just that Install new regulations This will have a significant impact on stablecoin issuers and wallet providers, although the future of the proposal remains in question.

The CFPB took the first procedural step to open a proposal for public comment on Friday that would establish a framework for an application Electronic Funds Transfer Law To virtual wallets and stablecoins – digital tokens linked to the value of a fixed asset, usually the US dollar. While this has major implications for the way US stablecoin companies and cryptocurrency wallet providers do business, it is only at a preliminary stage with Trump arriving in the White House with the authority to appoint a new head of the CFPB.

Unlike the heads of other agencies, such as those at the Securities and Exchange Commission and the Commodity Futures Trading Commission, CFPB Director Rohit Chopra It seems unlikely To step down voluntarily. Since the agency was created after the 2008 global financial collapse, its leaders have often taken a more aggressive stance than other regulators, and Republican lawmakers have actively sought to weaken the CFPB’s powers.

In 2020, the Supreme Court confirmed the president’s appointment He can fire the manager and replace him As he pleases – a power that Trump is expected to exercise.

This last-minute organizing effort must continue even after the arrival of a Trump-appointed leader before it can be finalized and taken into effect. Even if this were a final rule, a Republican-led Congress would have the opportunity to erase it through the authority of the Congressional Review Act.

If it survives, the proposed regulation — which is now open for a public comment period — would look to stablecoins as a payment mechanism. The proposal suggests that current law’s reference to “money” should include stablecoins, and arguably could also include other, more volatile cryptocurrencies such as Bitcoin. “Under this interpretation, the term ‘money’ would include stablecoins, as well as any other similarly situated assets that function either as a medium of exchange or as a means of payment for goods or services,” the proposal states. male.

In addition, she said the law’s access to financial “accounts” should include “virtual currency wallets that can be used to purchase goods and services or make person-to-person transfers,” especially if they are used for retail transactions rather than purchases. and selling securities or commodities.

Institutions offering such accounts will be subject to regulatory requirements for consumer disclosure, protection against unauthorized transactions and the ability to cancel improper transfers. These government demands may conflict with the way cryptocurrency operations are often set up – such as in decentralized finance (DeFi) – as personal platforms without external intervention, or with wallet technology provided for users to manage themselves.

Consumer advocacy group Better Markets praised the agency’s proposal on Friday.

“Today’s CFPB proposal expands EFTA protections to include non-bank digital payment mechanisms,” Dennis Kelleher, the group’s president, said in a statement. “Not only will this protect consumers, but it will also level the playing field between digital payment mechanisms whether they include a bank account, savings account, or other consumer asset account such as those used by cryptocurrency and video game companies.”

Jack Soloway of the Cato Institute, a policy analyst at the conservative think tank, responded Posted on social media site X The CFPB’s arguments for this rule are “embarrassingly conclusive,” even without dealing with decentralized ledgers and self-hosted wallets.

Bill Hughes, director of global regulatory affairs at Consensys, the Ethereum developer, also said Object to moving on Xsuggesting “add this to the list of ‘law by decree’ problems that need to be fixed.”