US Consumer Watchdog to Scrutinize Crypto Payments, Big Tech Moves to CFO

WASHINGTON, July 27 (Reuters) – The top U.S. consumer watchdog plans to scrutinize the use of cryptocurrencies for real-time payments and increase oversight of Big Tech companies as they expand into the traditional financial sector, its director told Reuters.

The Consumer Financial Protection Bureau (CFPB) will also publish a report this fall on “buy-now, pay-later” or BNPL products, and expects to propose a rule to increase competition in consumer financing around early next year, Rohit Chopra said in a interview.

“Is America ready for Big Tech to move into financial services? We’re already starting to see the industry move into payments. We’re starting to see how there’s interest in other areas,” Chopra said, citing corporate brand credit and prepaid cards . “It raises a lot of questions about really the future of financial services,” particularly data protection, he said.

Cryptocurrencies have come under scrutiny in recent months after the market crashed and brought down some crypto companies.

Big online companies could drive widespread use of cryptocurrencies for real-time payments, which will be a “heavy” focus for the agency, Chopra said, adding that the agency is concerned about the risk of hacks, errors and fraud.

“Regulators all got a wake-up call when Facebook proposed its Libra project, which could potentially be a currency that quickly scaled across Facebook’s network,” Chopra said.

That prompted the agency last year to ask Facebook , Amazon.com ( AMZN.O ), Apple ( AAPL.O ) and Alphabet’s Google ( GOOGL.O ), among others, to provide information about how they collect and use consumer payment data , he said.

Facebook eventually abandoned its Libra project due to regulatory opposition.

Chopra, a longtime consumer advocate, was tapped by US President Joe Biden to lead the CFPB last year. Before that, he was a Democratic commissioner at the Federal Trade Commission, where he targeted Big Tech companies over competition concerns.

Major online companies are also driving the use of BNPL financing products. The CFPB in December sought data from BNPL companies to better understand their practices, and will publish its findings later this year, Chopra said. read more

While BNPL offers alternatives to other credit products, Chopra said there is a lack of transparency because the loans are typically not included in consumer credit reports, which mortgage and auto lenders have complained about, he said.

“You should expect in that report to see quite a bit of data on industry trends, to identify places where … there might be some risks to consumers,” he said.

The agency has also worked on an “open banking” rule that could increase Americans’ access to financial services. It has been delayed due to privacy concerns, Reuters reported. read more

The agency is considering the rule’s implications for data protection and competition, and expects to issue a draft after receiving feedback from small businesses later this year, Chopra said.

He is under pressure from progressives in the Democratic Party to revive the CFPB, which they say pulled back from enforcement and tough policymaking under former Republican President Donald Trump.

However, business groups have accused Chopra of being ideologically driven, heavy-handed and unwilling to engage with the industry, criticisms he rejected.

“We’ve met with hundreds of banks and credit unions and really provided a lot more guidance on how we expect to exercise existing authorities,” he said.

Reporting by Katanga Johnson and Michelle Price in Washington; Editing by Bill Berkrot

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