The Consumer Financial Protection Bureau (CFPB) has created a new rule to oversee fintech payment apps, but it will not regulate self-hosted crypto wallets. This decision is seen as good news for decentralized finance (DeFi). The rule is aimed at large nonbank payment platforms processing over 50 million annual US dollar transactions, which will protect consumer data, reduce fraud, and prevent illegal account closures.
However, the CFPB clarified that it will not regulate self-hosted crypto wallets or stablecoins. This decision is considered beneficial to avoid legal battles and hinder the development of decentralized Web3 infrastructure. The CFPB’s decision reflects its cautious approach to regulating the rapidly evolving crypto space, while still promoting consumer protection and innovation.
The rule focuses on traditional fintech apps, which will now face federal supervision similar to banks and credit unions. The CFPB’s decision to limit its scope to dollar-denominated transactions shows its intent to gradually adapt to the complexities of the digital currency market.
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