The Consumer Financial Protection Bureau (CFPB), under the Biden administration, has made a last-minute move to propose holding crypto wallet developers accountable for fraud or transaction errors affecting users. However, with Donald Trump set to take office later this month, the proposal is likely to be overturned.
The CFPB announced a proposed rule that would classify digital asset wallet providers—like MetaMask and Phantom—as financial institutions offering electronic funds transfers. This change would make these companies legally responsible for fraudulent or unauthorized transactions.
Created to protect consumers after the 2008 financial crisis, the CFPB claims it has the authority to make this regulatory adjustment. Still, it is allowing a two-month public comment period on the proposal as a formality.
“Consumers should feel secure using digital payments to cover family expenses without worrying about errors or harmful practices,” said CFPB Director Rohit Chopra in a statement.
🚨🚨🚨Biden Administration 11:59 PM interpretive rule drop:
TLDR: in order to protect consumers and to avoid a competitive advantage to new forms of electronic fund transfers over traditional ones, the Electronic Funds Transfer Act (EFTA) should be reinterpreted to apply to… pic.twitter.com/RjLT2PZ9zX
— Bill Hughes : wchughes.eth 🦊 (@BillHughesDC) January 10, 2025
Crypto Leaders Slam CFPB Proposal
Crypto industry leaders were quick to criticize the CFPB’s proposed rule.
Bill Hughes, senior counsel at Consensys—the company behind MetaMask—mocked the idea in a post on X, saying, “Got hacked because you believed a fashion model in Malaysia needed $5,000 to visit you? Don’t worry, your wallet provider might have to cover it.”
Joey Krug, a partner at Founders Fund, a venture firm founded by Peter Thiel, likened the proposal to holding toolmakers responsible for misuse. “This is like blaming a hammer manufacturer (which often gives hammers away for free) for how someone uses the hammer,” Krug wrote in response.
Unconstitutional. https://t.co/WCArNtfNql
— Joey Krug (@joeykrug) January 10, 2025
CFPB Rule Faces Uncertain Future Under Trump
Many in the crypto community viewed the CFPB’s proposal as frustrating but unsurprising, given the agency’s ties to Elizabeth Warren, one of the industry’s most vocal critics.
Also Read: What is a Cryptocurrency Wallet?
Warren, who is widely disliked in crypto circles, first proposed creating the CFPB in 2007 while she was a Harvard professor. Rohit Chopra, the Bureau’s current director, is a close ally of Warren and was appointed to his role by President Joe Biden in 2020.
Despite their frustration, crypto leaders don’t seem overly worried about the rule’s long-term impact. In 2020, the U.S. Supreme Court ruled that the president can fire the CFPB director at will. With the Trump administration, which has a strongly pro-crypto stance, set to take over—and Republicans historically opposed to the CFPB’s very existence—Chopra’s leadership and his push to regulate crypto wallets seem unlikely to last.
Also Read: What is Phantom Wallet, and its Use Cases?
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