House Financial Services Committee Members Demand More Time to Debate New Digital Payment Proposal

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Leading members of the U.S. House Financial Services Committee, Chairman Patrick McHenry, Subcommittee Chairman French Hill, and Representative Mike Flood, have requested an extension of the public comment period for the CFPB’s proposed rule on digital consumer payment applications. This request centers on the committee’s concerns over the rule’s potential impact on the digital asset industry and its demand for a more comprehensive stakeholder review.

US Lawmakers Challenge CFPB Over Digital Asset Rule, Seek Extended Discussion

Top members of the United States House Financial Services Committee and its Subcommittee on Digital Assets, Financial Technology and Inclusion have requested an extension of the public comment period for a proposed rule by the Consumer Financial Protection Bureau (CFPB). The rule, which aims to redefine the regulatory landscape for digital consumer payment applications, has drawn scrutiny for its potential impact on the digital asset sector.

#NEW: Chairman @PatrickMcHenry, Subcommittee Chairman @RepFrenchHill, and @USRepMikeFlood sent a letter to @CFPB Director Rohit Chopra urging his agency to revisit its larger participants digital consumer payment proposed rule.

Read more https://t.co/CYczuI681vpic.twitter.com/W2kYVmQEM4

— Financial Services GOP (@FinancialCmte) January 30, 2024

In a letter dated Jan. 30, addressed to CFPB Director Rohit Chopra, Committee Chairman Patrick McHenry, along with Subcommittee Chairman French Hill and Representative Mike Flood, expressed concerns over the proposed rule titled “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications.” The lawmakers argued that the rule lacks sufficient justification, provides unclear guidance for third-party service providers, and could have unintended consequences on the digital asset ecosystem.

The letter focused on several key issues. Firstly, the proposed rule was criticized for expanding the Bureau’s regulatory reach into the payments industry without adequate justification or analysis of its impact on competition and consumer welfare. Secondly, the rule’s coverage of third-party service providers remains ambiguous, leading to potential regulatory uncertainty. Lastly, the proposed inclusion of digital assets within the scope of “funds” under the Dodd-Frank Act was seen as a move that could destabilize the digital asset industry by introducing regulatory uncertainty around digital asset transactions.

Given these concerns, the representatives urged the CFPB to reopen the comment period for an additional 60 days. This extension, they argued, would allow for more comprehensive feedback from a broader range of stakeholders before any further action is taken on the rule.

The letter also pointed out the significance of peer-to-peer transactions in the digital asset ecosystem, particularly through “self-hosted wallets.” The lawmakers cautioned that the proposed rule’s broad definition might introduce regulatory risks to digital asset wallet providers, especially those that do not maintain ongoing relationships with consumers.

If the CFPB’s proposed rule goes into effect, how might it impact the crypto industry? Share your thoughts and opinions about this subject in the comments section below.