US Consumer Regulator Sets Sights on Crypto as Big Tech Moves Into Finance

The Consumer Financial Protection Bureau (CFPB) has crypto payments firmly in its sights as it moves to protect the interests of American consumers. 

A Reuters report says the CFPB has plans to heighten its attention on the cryptocurrency activities of Big Tech companies. The renewed interest comes on the heels of the oversight functions it will exercise over these multi-billion dollar companies. 

Over the years, Big Tech has been experimenting with a transition into financial services which Rohit Chopra, CFPB’s director, claims could lead to an avalanche. Speaking to Reuters, he questioned the country’s preparedness for the sweeping changes that could happen in the industry.

“Is America ready for Big Tech entering financial services? We already have started to see how the industry is entering payments,” Chopra said. “That raises a lot of questions about really the future of financial services.”

Top of the concerns for the regulator is the inherent risks associated with cryptocurrencies like fraud and errors. Chopra says the CFPB will be paying specific attention to “real-time payments” using cryptocurrencies.

Facebook’s Libra woke regulator with a jolt

Regulators adopted a passive stance towards cryptocurrencies because, in the early days, it was considered a fringe asset. However, things quickly changed after Facebook made an ambitious move with Libra to offer financial services to its over 1 billion users.

“The regulators all had a wake-up call when Facebook proposed its Libra project, which potentially could be a currency that rapidly scaled across Facebook’s networks,” said Chopra.

Facebook’s Libra did not take off after stern opposition from regulators, but it triggered a full-scale investigation into the data policies of Big Tech firms like Amazon and Google.

Chopra is playing a difficult game

Chopra, as head of the CFPB, has been criticized for his handling of the Bureau. Corporate groups have accused him of being “ideologically driven, heavy-handed, and unwilling to engage with the industry.”

Chopra has since denied the allegations, claiming to have met with “hundreds” of institutions to seek guidance on the best ways to approach issues. 

Apart from putting crypto payments in its crosshairs, Chopra notes that the Commission is also monitoring the foray of Big Tech firms into the Buy Now, Pay Later (BNPL) industry with a report in the works.