The US CFPB has proposed regulating digital application providers, including crypto wallets

The US Consumer Financial Protection Bureau (CFPB) has proposed regulations that would allow it to regulate big bank digital wallet and app providers. The rule is part of a larger move that has seen the agency oversee consumer reporting, consumer debt collection, student loan servicing, international money transfers and automobile financing.

The regulation extends the role of supervisors already in place in depository institutions such as banks and credit unions. The regulation applies to companies such as PayPal, Apple, Amazon, Google and Meta that handle more than 5 million transactions a year. The agency said in a statement.

“Big Tech and other companies operating in the consumer finance market blur the traditional lines that separate banking and payments from commercial activities. The CFPB recognizes that this blurring can put consumers at risk.”

According to CFPB Director Rohit Chopra, the rule “targets arbitration as one of the regulatory avenues.

According to the agency, digital applications have at least as many users as credit and debit cards, but currently lack protections such as deposit insurance and guarantees of privacy and consumer rights. It already has enforcement powers over tech companies, but the rule will extend its regulatory role.

Related: US consumer watchdog mulls applying e-banking rules to crypto

The proposed legislation specifically targets crypto wallets, noting that the definition of “funds” should be expanded to include crypto assets in line with other federal laws. The regulation is aimed at remittances for retail purchases and the purchase or sale of goods or commodities.

Big tech companies and popular apps now dominate more and more of the consumer payment system. Today, the @CFPB proposed a rule that would allow big players to undergo the same inspections currently required of banks. https://t.co/iimpU6nq9Q

— Rohit Chopra (@chopracfpb) November 7, 2023

The regulation mainly applies to the retail use of crypto, as it excludes buying or selling crypto with fiat currency, as well as exchanging one type of crypto for another.

The CFPB has been finalizing this rule proposal for months. It issued a warning in June that many mobile payment apps lack deposit insurance. Chopra spoke critically of Big Tech's role in the U.S. payments system in September and repeated those objections in a speech last month.

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