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US Proposes Refund Rule for Cryptocurrency Hacking Victims
The Consumer Financial Protection Bureau (CFPB) has proposed a new rule that would require US-based cryptocurrency companies to refund customers who lose funds due to hacks or unauthorized transactions.
Protecting Consumer Interests in the Digital Age
The proposal aims to extend consumer protections currently in place for traditional bank accounts to digital wallets used for cryptocurrencies. This move would redefine “funds” to include assets that act as money or are used to pay for goods and services, such as stablecoins and other fungible tokens used for payments.
Unlike traditional bank accounts, cryptocurrency wallets are not universally protected against losses resulting from hacking or fraud. The CFPB’s proposal would change that, requiring service providers to compensate customers for stolen funds.
Tackling the Rise of Crypto Hacks
The proposal comes amid a surge in cryptocurrency hacking incidents. According to reports, 303 crypto hacks occurred in 2024, resulting in $2.2 billion in stolen funds. North Korean groups were responsible for over $1.6 billion of these losses, doubling their theft from the previous year.
Cryptocurrency users can take steps to protect themselves from hacking incidents:
- Use strong passwords and enable two-factor authentication
- Regularly update software and security patches
- Monitor accounts for suspicious activity
- Use reputable cryptocurrency exchanges and wallets
A Shift in Regulatory Landscape
The CFPB’s proposal marks one of the final crypto-related initiatives from the Biden administration. However, its future remains uncertain as the incoming Trump administration, which has shown strong support for the crypto industry, prepares to take office.
Some experts have expressed concerns about the potential impact of the new administration on the CFPB’s proposal.
The incoming administration’s views on cryptocurrency regulation could significantly influence the outcome of this proposal.
Public comments on the CFPB proposal are open until March 31, after which the bureau will decide whether to issue a final rule.
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