The United States Consumer Financial Protection Bureau (CFPB) has proposed a rule to allow it to supervise large non-bank digital wallet and app providers. The rule is part of a larger move by the agency that has seen it extend its supervision to consumer reporting, consumer debt collection, student loan servicing, international money transfers and automobile financing.
The rule would extend the supervisory role it already has in depository institutions such as banks and credit unions. The rule would apply to companies that handle more than 5 million transactions per year, such as PayPal, Apple, Amazon, Google and Meta. The agency said in a statement:
“Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities. The CFPB has found that this blurring can put consumers at risk.”
CFPB director Rohit Chopra said the rule “would crack down on one avenue for regulatory arbitrage.”
According to the agency, digital apps have at least as many users as credit and debit cards but lack protections such as deposit insurance and privacy and consumer rights guarantees. It already has enforcement authority over tech companies, but the rule would extend its supervisory role.
The proposed rule specifically targets crypto wallets by noting that the definitions of “funds” should be extended to crypto assets in line with other federal statutes. The rule is aimed at transfers of funds for retail purchases and the purchase or sale of securities or commodities.
The rule would mainly apply to the retail use of crypto, with the purchase or sale of crypto with fiat currency and the exchange of one type of crypto for another excluded.
The CFPB has been building up to this rule proposal for months. It released a warning in June that many mobile payment apps do not have deposit insurance. Chopra spoke critically about the role of Big Tech in the U.S. payments system in September and repeated those objections in a speech last month.