A controversial move by the outgoing Biden administration has sparked outrage among crypto policy leaders. The Consumer Financial Protection Bureau is seeking to hold crypto wallet developers accountable for any fraudulent or erroneous transactions that affect users. The proposed interpretive rule would classify digital asset wallets as financial institutions offering electronic funds transfers, giving the Bureau the authority to regulate them.
Critics argue that this move could have serious implications for wallet providers like MetaMask and Phantom, potentially holding them responsible for unauthorized transactions. Bill Hughes, senior counsel at Consensys, mocked the proposal, comparing it to holding a hammer manufacturer liable for the misuse of a hammer. Joey Krug from Founders Fund echoed this sentiment, emphasizing the impracticality of such a rule.
The deep connections between the Consumer Financial Protection Bureau and Elizabeth Warren have not gone unnoticed by the crypto community. Warren, who proposed the creation of the Bureau in 2007, has a longstanding ally in Rohit Chopra, the current director. However, with the Supreme Court ruling that the president can dismiss the Bureau’s director without cause, the fate of Chopra’s efforts to regulate crypto wallet providers remains uncertain.
Despite the backlash against the proposed rule, many in the crypto industry are confident that it will not survive the transition to the Trump administration. With Trump’s pro-crypto stance and the Republican party’s disdain for the Consumer Financial Protection Bureau, it is likely that Chopra’s attempts to rein in wallet providers will be short-lived. The future of crypto regulation in the US hangs in the balance as the political landscape continues to shift.