As the digital asset industry continues to boom, there is growing concern about how best to navigate this new frontier. It seems that a beacon of hope may be on the horizon in the form of traditional finance measures repurposed for virtual assets. At the forefront of this initiative is the director of the Consumer Financial Protection Bureau (CFPB), Rohit Chopra, who recently shared the news at the Brookings payment conference.
According to Chopra, the CFPB is contemplating on rolling out the Electronic Fund Transfer Act (EFTA) to digital assets. The EFTA, a staple in the traditional banking sector, discloses the extent of liability before every electronic transaction. If applied to the crypto ecosystem, digital asset firms would need to make specific operational changes, especially regarding disclosures. It’s an approach that could minimize the high losses often experienced by users from unauthorized crypto transactions.
This idea doesn’t appear out of the blue. Recent times have witnessed an uptick in nefarious activities within the digital asset space. Therefore, while it might seem like a drastic measure, using the EFTA as a regulatory framework for digital assets is an attempt to create a safer environment for investors and users.
Furthermore, Chopra expressed that the CFPB is also looking into the role non-banks play in the crypto market, given that some offer payment platforms that should be safe and secure. In tandem, he urged the Treasury’s Financial Stability Oversight Council to label various crypto activities as systemically important.
But of course, realignment of this magnitude is often met with resistance. Case in point: the UK’s Financial Conduct Authority new crypto advertising regulations have resulted in some exchanges and issuers contemplating an exit from the UK market. Others, like Binance and OKX, have adjusted their policies to align with the new rules.
It’s evident that the push for user protection is not unique to the US. Around the world, crypto regulations are ratcheting up, with countries like Canada recently releasing guidance regarding the application for more regulation in the crypto market. However, as with any pioneering venture, the road to full compliance could be long and fraught with legal battles and pushback from industry executives.
Yet, at the core, the electronic banking structure could provide the blueprint to mould a robust regulatory framework to garner trust, establish stability, and protect global consumers in the world of digital assets.
Source: Cryptonews
