Crypto Firms Enter Scope of US Consumer Financial Protection Bureau

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Crypto Firms Enter Scope of US Consumer Financial Protection Bureau

Тhe Consumer Financial Protection Bureau (CFPB), has initiated a regulatory program to support fintech companies introduce new types of products and services, CFPB head Mick Mulvaney said on Wednesday. The team responsible for the new “regulatory sandbox” is led by Paul Watkins, who worked as a lawyer in the Arizona attorney general’s office, where he led a similar blockchain and crypto-oriented regulatory sandbox at the state level.

Regulatory sandboxes are adopted by certain regulatory agencies to keep up with the innovation. Generally, the framework is established by a regulator to let small-scale and live testing of innovations by private companies in a special environment that is closely monitored by the regulator.

Mulvaney, who was quoted by the Wall Street Journal, revealed that he anticipates that CFPB’s new innovation office will assess cryptocurrencies and other blockchain-based products. The office will also look into private currencies, microlending, and various credit-scoring approaching. He commented:

“You can make a strong argument...that new technology actually offers new and innovative ways to protect consumers.”

“You are moving light years beyond the complaint hotline to where you can really see things happening in real time,” he said, speaking about CFPB’s consumer complaint portal.

As a former Republican lawmaker, Mulvaney has been a critic of the bureau that he leads now, which was previously headed by the Democrats. Since its launch in 2011, the bureau has been heavily criticized by Republicans and some representatives of the financial markets for sticking to strict regulation. Once Mulvaney took the helm, he started to introduce drastic changes. Now the ones who complain are the Democrats and consumer groups, who don’t like the fact that the bureau is limiting consumer protection, supporting banks and payday lenders.

It remains to be seen what impact the CFPB’s initiative will have. Last month, William Hinman, the head of the Division of Corporate Finance at the Securities and Exchange Commission (SEC), said that Bitcoin and Ethereum – the two largest cryptocurrencies out there – won’t be regulated as securities. This was a bullish signal for crypto investors, given that securities are regulated tightly.


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