House Panel Chairman Calls on CFPB to Revise Strict Crypto Oversight Proposal
House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion Chairman French Hill (R-AR) strongly criticized the Consumer Financial Protection Bureau (CFPB) on Wednesday for its proposed federal oversight of digital asset payment systems. Hill urged the independent government agency to “go back to the drawing board” and reconsider its approach. Hill argued that the CFPB’s proposal would stifle innovation in the payments industry and limit consumer choice, thus reducing competition. Republican subcommittee members expressed concerns about the rule, suggesting it was an overreach and potentially invasive.
Hill emphasized the need for the CFPB to focus on consumer protection and support innovation instead of expanding its power. The proposed rule, introduced by the CFPB in November 2023, aims to supervise larger nonbank companies offering digital wallets, payment apps, and other peer-to-peer and electronic fund transfer services. CFPB Director Rohit Chopra stated that the rule would address regulatory arbitrage and ensure appropriate oversight of large technology firms and nonbank payments companies.
The digital payment sector is predicted to reach a valuation of $505 billion by 2032, with an annual growth rate of 19.7%. Democrats at the hearing argued that the rule would enhance consumer protection and make payment applications like Venmo and PayPal safer. However, some Democratic representatives also expressed concerns about the potential expansion of the CFPB’s role.
The discussion around the CFPB’s oversight of digital assets occurs within the broader context of the relationship between traditional finance and cryptocurrencies. The recent banking crisis in 2023 highlighted the need for clearer regulations in the digital asset space. Despite this ongoing conversation, the CFPB has not yet provided specific guidance on how it plans to regulate digital asset payment systems. The uncertainty surrounding the finalization of the proposal and its potential impact remains.