In a recent update, the US consumer watchdog Consumer Financial Protection Bureau (CFPB) revealed plans to introduce new legislation to safeguard individuals and businesses from fraudulent crypto activities. The report indicated that CFPB was still contemplating ways to implement the Electronic Fund Transfer Act (EFTA) to ensure the consumer engages in safe and secure crypto transactions.
CFPB Plans to Implement EFTA
A statement from Rohit Chopra, a top executive at CFPB, revealed that the agency plans to integrate the EFTA in transactions involving digital dollars and other digital currencies. An EFTA system was first launched in 1978 under the leadership of Jimmy Carter, the 39th president of the US.
The EFTA outlines the rights and responsibilities of an individual engaging in electronic money transfers. The launching of the EFTA aims to promote financial inclusivity and stimulate economic growth in a country. Currently, Canada has adopted the EFTA system to safeguard consumers from exploitative business activities.
Consumer Regulators Seeks to Address Financial Fraud
Speaking exclusively at the “Making America’s Currency Work for a Digital Century” event at the Brookings Institution, Chopra explained the importance of introducing the EFTA in the financial sector.
The CFPB official stated that the EFTA will minimize transaction errors and prevent financial fraud. Chopra noted that the features of the EFTA and the requirement will restrict unauthorized transfers. The executive stated that the CFPB plans to host a public consultation to gather valuable input from the community about the implementation of EFTA in the US.
In his address, Chopra confirmed the CFPB plans to implement friendly regulations that promote the crypto industry’s growth. The executive confessed that the CFPB intends to engage in dialogue to examine the electronic fund transfer laws that perfectly fit the needs of the crypto industry.
However, implementing the EFTA system will force the key players in the financial sector to meet the fundamental requirements. Under EFTA laws, financial institutions must disclose critical information concerning the unauthorized funds transfer. This practice is known as liability disclosure, which occurs before users engage in electronic transfers.
CFPB Set to Implement New Legislation on Crypto Assets
Besides the proposed liability disclosure, the CFPB plans to impose provision on high-profile tech firms. The CFPB executive intends to implement measures requiring firms to reveal whether their business practices, including confidential information and the issuance of private currencies, conform with the existing consumer protection laws.
Chopra added that the CFPB plans to assess the operation of non-banking institutions to provide users with payment solutions. However, to attain the desired goals, Chopra noted that the CFPB will engage the Treasury’s Financial Stability Oversight Council (TFSOC) to group some crypto activities accordingly. The executive urged the TFSOC to observe Title VIII of the Dodd-Frank Act (former Consumer Financial Protection Act of 2010) while supervising crypto activities.
Chopra suggests that some crypto-related activities should be grouped under settlement activities. He argued that the classification of crypto activities will support the regulators to monitor the performance of certain digital assets, including examining the stability of stablecoin.