CFPB’s Role in Crypto Regulation Diminishes as Trump Administration Shifts Focus

As the landscape of crypto regulation evolves, the Consumer Financial Protection Bureau (CFPB) appears to be stepping back, with other regulatory bodies taking a more prominent role.

Legal expert Ethan Ostroff from the Troutman Pepper Locke law firm believes that under the current administration, the CFPB’s influence in the crypto sector will likely decrease. Instead, agencies like the Securities and Exchange Commission (SEC) and state-level regulators are expected to take the lead.

Ostroff notes that state regulators, empowered by the Consumer Financial Protection Act (CFPA), could assume some of the CFPB’s responsibilities. He specifically points to the New York Department of Financial Services (NYDFS) and the California Department of Financial Protection and Innovation (DFPI) as likely to step up in regulating digital assets. Still, he cautions that the CFPB will continue to handle certain areas of consumer protection due to its legally defined responsibilities.

Despite the anticipated shift, Ostroff clarifies that dismantling the CFPB entirely is not on the agenda. Even with the Trump administration’s cost-cutting initiatives, the agency remains protected by statutory requirements that only Congress can alter.

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In line with the Trump administration’s efforts to reduce government expenditures, the CFPB has been put under scrutiny. Led by the Department of Government Efficiency (DOGE), this initiative aims to curb federal spending and reduce debt. Shortly after taking charge of the CFPB in February 2025, Russell Vought introduced significant budget cuts and scaled back the bureau’s operations.

These moves have drawn criticism from some political figures. Senator Elizabeth Warren, who played a major role in founding the CFPB in 2007, has voiced her disapproval. She accused Elon Musk, who is associated with the Trump administration’s efficiency team, of attempting to dismantle consumer protections. Warren labeled the cuts as part of a broader strategy to weaken financial safeguards and gain control over the financial system.

However, Warren also pointed out that the administration cannot dissolve the CFPB without Congressional approval, as the agency’s structure is legally protected. Despite the changes, the CFPB’s fundamental functions remain intact, safeguarded by existing laws.

Kostadin Dimitrov