US regulator bets on crypto as Big Tech moves into finance
The Consumer Financial Protection Bureau (CFPB) has crypto payments firmly in its sights as it moves to protect the interests of American consumers.
ONE Reuters The report says that the CFPB has plans to increase its attention on the cryptocurrency activities of Big Tech companies. The renewed interest comes on the heels of the oversight functions it will exercise over these multibillion-dollar companies.
Over the years, Big Tech has experimented with a move into financial services that Rohit Chopra, the CFPB’s director, claims could lead to an avalanche. Talking to Reutershe questioned the country’s preparedness for the extensive changes that may occur in the industry.
“Is America ready for Big Tech to move into financial services? We’ve already started to see the industry move into payments,” Chopra said. “It raises a lot of questions about the future of financial services.”
Top of the concerns for the regulator are the inherent risks associated with cryptocurrencies such as fraud and errors. Chopra says the CFPB will pay particular attention to “real-time payments” using cryptocurrencies.
Facebook’s Libra woke up the regulator with a jolt
Regulators took a passive stance on cryptocurrencies because in the early days it was considered a fringe asset. However, things quickly changed after Facebook made an ambitious move with Libra to offer financial services to its over 1 billion users.
“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.
Facebook’s Libra didn’t take off after stiff opposition from regulators, but it sparked a full-scale investigation into the data policies of Big Tech firms like Amazon and Google.
Chopra plays a difficult game
Chopra, as head of the CFPB, has been criticized for his handling of the Bureau. Business groups have accused him of being “ideologically driven, heavy-handed and unwilling to engage with the industry.”
Chopra has since denied the allegations, claiming to have met with “hundreds” of institutions seeking guidance on the best ways to approach issues.
Apart from putting crypto payments in the crosshairs, Chopra notes that the commission is also monitoring the entry of Big Tech firms into the Buy Now, Pay Later (BNPL) industry with a report underway.
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