Author: Jesse Coghlan, Cointelegraph; Translated by: Song Xue, Golden Finance
The United States’ top consumer financial protection agency is considering applying the Electronic Funds Transfer Act (EFTA) to cryptocurrencies in an effort to protect consumers from fraudulent cryptocurrency transfers.
Speaking at the Brookings Institution think tank’s payments conference on Oct. 6, Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said the agency is considering applying EFTA to “private digital dollars and other virtual currencies.”
“To reduce the harms of errors, hacks, and unauthorized money transfers, the CFPB is exploring providing additional guidance to market participants to answer their questions about the applicability of the Electronic Funds Transfer Act to private digital dollars and other virtual currencies,” Chopra said.
Passed in 1978, the European Free Trade Association (EFTA) is a federal law designed to protect consumers’ money when it is transferred electronically (whether by debit card, ATM or bank account) and is intended to limit consumer losses from unauthorized transfers.
Chopra said the CFPB's cryptocurrency-related plans include providing guidance on how existing electronic funds transfer laws apply to cryptocurrencies. Source: YouTube
These regulations require financial institutions to inform consumers if and when they may be held liable for unauthorized transfers. The liability disclosure should be communicated before the first electronic transfer occurs from a user's account.
The agency’s move comes as hacks on crypto platforms have increased more than 150% year-over-year and as the first criminal trial of FTX co-founder Sam Bankman-Fried, who is accused of fraudulently accessing and using customer funds, enters its second week.
The exchange also suffered a hack worth more than $400 million in the weeks following its bankruptcy.
Chopra added that the CFPB will also issue orders to “certain large technology companies” to obtain information about their business practices with respect to their use of personal data and issuance of private currencies.
In addition, the agency will also study and review non-bank institutions that provide payment platforms.
Chopra also suggested that the Treasury Department’s Financial Stability Oversight Council should classify some cryptocurrency activities as “systemically important payment clearing or settlement activities.”
“For example, this could provide critical oversight and tools for other institutions to ensure that stablecoins are, in fact, stable.”
