The CFPB has proposed a rule that could require crypto asset service providers to reimburse users for funds stolen through illicit activities, including hacks.
CFPB Proposed Rule
On January 10, the CFPB proposed a rule that could allow accounts or wallets using 'emerging payment mechanisms' set up for personal use to be subject to similar protections as fiat bank accounts. The proposal suggests applying the rights under the Electronic Fund Transfer Act to protect consumers transacting in stablecoins or any other 'similarly-situated fungible assets' that operate as a medium of exchange or means of payment.
Increase in Crypto Theft
In January, blockchain security firms began releasing comprehensive reports on losses due to crypto-related illicit activities in 2024. PeckShield reported over $2 billion in crypto stolen in hacks, while CertiK noted that phishing schemes were the 'most costly attack vector' related to crypto losses in 2024.
Impact on Crypto Companies
The proposed CFPB rule, if enacted, could place a significant financial burden on crypto firms. Companies based in the US might be required to hold millions or billions of dollars in reserve in case users’ funds are compromised.
The proposed rule by the CFPB could significantly alter the landscape of consumer protection in cryptocurrencies, providing a more robust safeguard against unlawful activities if enacted.
