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The Consumer Financial Protection Bureau (CFPB) proposed new guidance on Friday to clarify that cryptocurrency transactions, video game economies, and other emerging payment technologies are subject to federal rules protecting consumers from fraudulent transfers, hacks, and stolen funds. The move seeks to expand the application of the Electronic Fund Transfer Act (EFTA) and Regulation E to align with innovations in digital payments.

Expanding Consumer Protections to Emerging Payments

The CFPB’s proposed interpretive rule broadens the scope of "funds" covered under EFTA, extending protections to include stablecoins, cryptocurrencies, in-game currencies, and even stock used for retail purchases. It clarifies that consumers' rights to dispute unauthorized transactions apply to accounts beyond traditional savings or checking accounts, such as:

• Crypto wallets used for payments.
• Video game accounts used to buy virtual goods.
• Reward points accounts tied to credit cards for future purchases.

“These interpretations of ‘funds’ accord with Congress’s intent by ensuring consumers are protected and can benefit from innovative electronic fund transfer systems,” the CFPB stated.

Gaming Economies and Consumer Recourse

A CFPB blog accompanying the proposal highlighted the risks in evolving in-game economies, noting that many gamers face scams, theft, and fraud with little help from operators. The agency invited gamers to share their experiences with in-game transactions, virtual currency, and safeguards they believe are necessary.

"Gaming companies subject to the EFTA could violate federal consumer financial law if they fail to address gamers' account issues," the CFPB emphasized, calling for public comments by March 31.

Privacy and Data Collection Under Scrutiny

In addition to clarifying consumer protections, the CFPB is seeking feedback from companies on their practices related to the collection, use, and sharing of payment data. The agency expressed concern that many payment products collect excessive data beyond what’s needed to complete transactions.

Key areas of inquiry include:

• The effectiveness of current privacy protections.
• Consumers’ ability to opt out of data collection.
• Suggestions for stronger data safeguards.

Comments on privacy-related issues are open until April 11.

Industry Reactions

The proposed rules have elicited mixed reactions from the crypto industry. Bill Hughes, senior counsel at Consensys, and Peter Van Valkenburgh, executive director of Coin Center, expressed concerns about making wallet providers responsible for unauthorized transfers. Van Valkenburgh questioned whether the rules would apply to wallet providers that do not custody user funds.

“Practically speaking, we hope the incoming administration will freeze and ultimately withdraw this rulemaking,” Van Valkenburgh stated on X (formerly Twitter).

Broader Implications

CFPB Director Rohit Chopra, who has prioritized regulating tech-issued payment products, emphasized that the agency’s efforts aim to create a "consistent framework" for digital payments. The proposal aligns with a recent rule granting the CFPB authority to supervise large nonbank companies offering digital payment products.

The agency’s decisions will likely shape consumer protections in rapidly evolving digital payment ecosystems, particularly as cryptocurrencies, gaming economies, and tech-driven payment solutions continue to grow.