US Considers Applying Electronic Fund Transfer Act on Crypto Accounts

The US Consumer Financial Protection Bureau (CFPB) is exploring the application of the Electronic Fund Transfer Act (EFTA) to cryptocurrency platforms as a means to improve consumer protections, especially in the context of recent platform hacks like Axie Infinity, Crypto.com, and FTX.

The EFTA mandates that electronic fund facilitators inform users about their responsibilities concerning unauthorized transfers.

CFPB Director Rohit Chopra announced this investigation during a conference, underscoring the importance of understanding how influential tech entities handle user data and engage with private digital currencies in light of the crypto industry’s vulnerability to unauthorized transfers.

To address these concerns, the CFPB is considering the issuance of comprehensive guidelines to clarify the EFTA’s applicability and obligations for digital currencies and their operators. Additionally, Chopra stressed the need to enhance financial stability within the crypto ecosystem, potentially involving the Financial Stability Oversight Council in overseeing certain cryptocurrency-related activities, especially stablecoins, to ensure their stability.

Concurrently, the CFPB is on the verge of introducing a well-crafted rule concerning personal financial data rights, aiming to promote transparency in banking practices and protect user data.

A potentially transformative perspective emerged when SDNY Judge Denise Cote suggested that cryptocurrencies could be regarded as “funds.” If adopted, this interpretation would subject cryptocurrency platforms to EFTA protections, reinforcing consumer safeguards but also increasing compliance demands for exchanges. As the CFPB navigates the evolving crypto landscape, industry participants and consumers eagerly await more detailed policy guidance.

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