The Consumer Financial Protection Bureau (CFPB) on January 10 extended Electronic Funds Transfer Act (EFTA) protections to crypto wallets, creating new regulations that could make crypto wallets liable in the event of a hack. Interpretation rules were proposed.
The proposed rule, currently open for comment, clarifies how existing EFTA regulations will apply to new payment systems, including stablecoins and other digital payment mechanisms. It is intended to provide consumers with the same protections as traditional banking transactions and electronic funds transfers.
As a result, you have the right to contest unauthorized transfers and limit liability for errors. Wallet providers will be held responsible for losses caused by fraud, hacking, or unauthorized transactions.
Bad for wallet providers
ConsenSys attorney Bill Hughes said: expressed skepticism He called the rule an overreach disguised as consumer protection. He stressed that under the proposed regime, wallet providers would be liable for fraudulent transfers even in cases of user negligence.
he said:
“Did you get hacked because you tweeted a seed phrase, or did you believe that a Malaysian fashion model needed $5,000 to fly to see you? Don’t worry, your wallet might cover it.” yeah.”
Hughes also highlighted the operational burden on wallet providers as they must provide the same disclosures, periodic reports and terms and conditions as traditional financial institutions.
He argued that while the framework strengthens regulatory controls in the name of consumer protection, it could place emerging payment mechanisms at an unfair disadvantage.
Furthermore, Hughes argued that the alleged “incorporation of virtual currencies” under consumer protection will not stop unless someone does something.
The CFPB will accept public comments on the rule until March 31, 2025, indicating that it is open to feedback from all stakeholders, including wallet providers, crypto advocates, and consumers.
The Department will use comments to inform decision-making, but does not guarantee that the proposed rule will be modified or implemented.
mentioned in this article
