The Consumer Financial Protection Bureau (CFPB), a United States financial regulator, has finalized its rules governing the “Larger Participants” criteria for digital payment platforms and excluded the transfer of crypto assets from the rule.
According to the final rule, digital wallets such as Apple Pay and centralized “peer-to-peer” payment services will still be subject to the rule, which only covers transactions denominated in US dollars. The government agency wrote:
“The Final Rule limits the definition of 'annual covered consumer payment transaction volume' to transactions denominated in U.S. dollars. With this clarification, and a corresponding edit to paragraph (b)(3)(i), the larger-participant test in this Final Rule excludes transfers of digital assets — including crypto-assets such as Bitcoin and stablecoins.”
Industry participants such as research-based investment firm Paradigm and pro-crypto nonprofit groups successfully pushed back against the CFPB’s initial iteration of the rule, which included digital asset transactions.
Cover page of the final CFPB rule. Source: CFPB
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The CFPB focuses on digital payment services
CFPB began focusing on digital payment services like Apple Pay, Google Pay and “peer-to-peer” payment platforms like Venmo in September 2023. At the time, the agency cited the potential monopolistic concerns of Big Tech firms pushing out smaller companies in the space.
At the time, Rohit Chopra, director of the CFPB, also cited the monetization of consumer data made available to these companies as another area of concern.
Following the initial announcement, the CFPB proposed supervising crypto wallet providers; however, the oversight extension faced pushback from the crypto industry and lawmakers.
US lawmakers sent a letter to the CFPB in January 2024 pushing back on the rule due to the potential impact on cryptocurrencies. “Peer-to-peer transactions through ‘self-hosted wallets’ is a core component for the digital asset ecosystem, as it eliminates third-party risk,” the lawmakers wrote.
Despite the opposition, the CFPB appeared to double down in April 2024 by targeting blockchain video games due to the ability of in-game asset tokens to trade outside of the gaming ecosystem on electronic exchanges.
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