The U.S. Consumer Financial Protection Bureau is seeking public input to strengthen consumer protections in cryptocurrency transactions

ChainCatcher news, according to The Block, the Consumer Financial Protection Bureau (CFPB) is seeking public input on proposed rules aimed at providing more protections for consumers in cryptocurrency transactions to prevent fraud.

The CFPB has proposed an "interpretive rule" explaining how the Electronic Fund Transfer Act and other regulations apply to emerging "digital payment mechanisms," such as stablecoins. The Act was passed in 1978 to protect consumers participating in electronic fund transfers.

CFPB Director Rohit Chopra stated that consumers must be assured that their transactions will not be subject to harmful monitoring or erroneous influences when using new forms of digital payments. However, the outlook for the CFPB's rulemaking is unclear, as the agency has drawn the ire of the incoming Trump administration. Billionaire Elon Musk has stated that he would "abolish the CFPB."

The CFPB noted that consumer use of stablecoins may increase in the coming years, but some in the crypto industry have criticized the proposed rules. Coin Center Executive Director Peter Van Valkenburgh stated that it is unclear whether the proposed rules cover self-custody wallet service providers and pointed out that the agency does not distinguish between cryptocurrency services provided by trusted intermediaries and software tools.

Coin Center emphasized that if the CFPB intends to regulate self-custody wallets under Reg E and directly regulate the authors of self-custody software, then the proposed rule would exceed the CFPB's statutory authority and be unconstitutional. The deadline for public comments on the CFPB's proposed rules is March 31, 2025.