CBA: Most consumers want more oversight for crypto, fintech firms
Nearly 90% of Americans are concerned that crypto and fintech companies are not held to the same regulatory standards as traditional banks, according to the results of a Consumer Bankers Association survey released Tuesday.
The concern increases with age, with 46% of Baby Boomers and 42% of Gen Xers concerned about a lack of federal oversight of crypto and fintech firms. Fewer millennials and Gen Zers—24% and 18%, respectively—are concerned; and college graduates (42%) are more likely to be concerned than non-educated (30%).
“These findings show that consumers want and need policymakers to ensure that major financial service providers operate within the well-regulated, well-supervised financial system,” CBA President and CEO Lindsey Johnson said in a statement. “Doing so will give hard-working Americans the opportunity to safely benefit from innovations in the highly competitive financial market, with necessary regulatory transparency, oversight and consumer protections.”
The survey, which collected online responses from more than 1,000 adults between December 2 and December 4, was conducted as a storm brewed in the crypto world.
Weeks before, crypto exchange FTX filed for bankruptcy despite founder and then-CEO Sam Bankman-Fried’s claim of solvency.
Investigation results were released days after Reuters reported that federal prosecutors were looking at crypto exchange Binance and its founder Changpeng Zhao for potential money laundering charges, and a day after the arrest of Bankman-Fried on charges including bank fraud.
CBA also found that 56% of respondents want Congress and the Consumer Financial Protection Bureau to implement more safeguards to protect users from “harm and abuse,” compared to 24% who believe enough is being done.
Earlier this month, the US House Select Subcommittee on the Coronavirus Crisis found that some fintech companies failed to stop “obvious and preventable fraud” in administering Paycheck Protection Program (PPP) loans, thereby “resulting in the unnecessary loss of taxpayer dollars” .
For two fintechs, Blueacorn and Womply, their failure to “implement systems capable of consistently detecting and preventing fraudulent and otherwise ineligible PPP applications” led to a suspension from working with the Small Business Administration “in any capacity.”
Overall, consumers view banks in a more favorable light than crypto and fintech firms. Net favorability for both FDIC-insured traditional banks and credit unions came in at +60 in CBA’s survey, with fintech’s net favorability at +32 and underwater cryptos at -7.
Compared to crypto and fintech companies, FDIC-insured banks have a 13:1 advantage in consumer confidence.
