#CFPB Proposes to Regulate Stablecoins#

The Consumer Financial Protection Bureau (CFPB) is proposing to regulate stablecoins, a move that would have significant implications for stablecoin issuers and wallet providers. The proposal would apply the Electronic Fund Transfer Act to virtual wallets and stablecoins, treating stablecoins as a payment mechanism. The proposal suggests that the term “funds” in existing law should include stablecoins, and arguably could also include other more volatile cryptocurrencies such as Bitcoin. The proposal also states that the law’s coverage of financial “accounts” should include “virtual currency wallets that can be used to purchase goods and services or make person-to-person transfers.” Institutions providing such accounts would be subject to regulatory requirements, including consumer disclosures, protections against unauthorized transactions, and the ability to reverse improper transfers. The proposal is currently in a public comment period, and its ultimate fate will depend on the Trump-appointed leadership and the Republican-controlled Congress. Some experts believe the proposal is too aggressive and could negatively impact the cryptocurrency industry, while some consumer advocacy groups support the proposal, arguing that it will protect consumers.