Authorities in the United States are seeking to expand their oversight over big tech companies and other digital payment and wallet app providers. However, according to the country’s banking association, including digital assets under the scope of supervised assets is premature.
The Consumer Financial Protection Bureau (CFPB) proposed the expanded oversight last November. Digital payment apps, offered by big tech firms and startups, control an increasing share of the U.S. market, and CFPB believes they must be subject to the same privacy and consumer protection demands as banks and credit unions.
Specifically, CFPB wants to oversee digital payment platforms that handle more than 5 million transactions annually. It gave until January 8 for the public to submit its feedback.
American bankers have expressed support for the proposal, but they want digital assets exempted from the scope of the supervision.
In a letter of support, the American Bankers Association and the Consumer Bankers Association said they had “serious concerns” about how the CFPB proposed expanding the meaning of “funds” to include digital assets.
“The topic of digital asset supervision is larger than consumer protections for payments and should be subject to its own comprehensive public comment and debate process instead of being shoehorned into this rulemaking,” the two banking associations stated.
They want the CFPB to coordinate with other agencies with jurisdiction over digital assets before making any move. CFPB must answer questions like how it will determine if a transaction is domestic or for household purposes. It must also determine whether the new rule will affect non-hosted wallets.
The bankers’ letter sheds light on a more significant issue—who oversees digital assets in the U.S.? This question has been at the heart of heated debates between the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and legislators in the U.S. Congress. The SEC has taken the lead and is at the heart of seismic events like the legal battle with Ripple and the spot exchange traded fund (ETF) approval.
However, legislators have shown a bias toward making CFTC the industry watchdog, with chairman Rostin Benham taking repeated shots at the SEC’s failure in ‘crypto’ oversight.
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