Lawmakers recently debated the Consumer Financial Protection Bureau’s proposal to potentially regulate payment applications, including those related to cryptocurrencies. The proposal, titled “Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications,” aims to oversee nonbank financial companies processing over five million transactions annually, similar to the regulations imposed on banks and credit unions.

During the hearing, members of the House Financial Services subcommittee raised concerns about the CFPB potentially overstepping its authority. For instance, Rep. Mike Flood, R-Neb, questioned the legality of the CFPB asserting jurisdiction over cryptocurrencies with limited legal basis. On the other hand, Democrats like Rep. Stephen Lynch, D-Mass, argued in favor of CFPB oversight due to the volatile nature of cryptocurrencies, leading to substantial investment losses.

The rule in question specifically references cryptocurrencies multiple times and has faced criticism for potentially expanding the CFPB’s influence into areas like crypto transactions and self-hosted wallets without clear jurisdiction. Witnesses and lawmakers, including House Financial Services Committee Chair Patrick McHenry, R-N.C., and Rep. French Hill, R-Ark., have expressed concerns about the rule’s ambiguous implications for digital assets.

As discussions on regulatory clarity for cryptocurrency companies continue, Rep. Warren Davidson, R-Ohio, highlighted the difficulties in obtaining clear guidance from regulatory bodies. Law professor Christopher Odinet advocated for bringing cryptocurrencies under CFPB supervision, citing the collapse of the crypto exchange giant FTX as an example of the need for better understanding of these transactions and consumer asset handling.

For more insights on cryptocurrency regulations, stay tuned for updates on Global Crypto News.

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