USA Proposes New Rules to Protect Crypto Users from Fraud

The U.S. Consumer Financial Protection Bureau (CFPB) has proposed new rules to enhance protections for cryptocurrency users, requiring providers to reimburse victims of fraud or theft.

Announced on January 10, the framework aims to extend existing financial regulations to crypto accounts, treating them similarly to traditional bank accounts.

The proposal includes redefining “funds” to cover cryptocurrencies and other assets used as mediums of exchange. Wallet providers would also need to inform users about their rights, transaction fees, and dispute resolution options, while providing regular updates on account changes. Public feedback is open until March 31 before final decisions are made.

While the proposal seeks to address rising security risks, including the $3 billion lost to crypto hacks in 2024, it has faced criticism. Experts argue that its broad scope creates uncertainty, especially for non-custodial wallet developers. Legal professionals like Jai Massari and Drew Hinkes have called for clearer guidelines, warning that vague definitions and impractical requirements, such as provisional credits, could hinder adoption.

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Some see the rules as overreach. Bill Hughes from Consensys criticized the CFPB’s approach, suggesting it could stifle innovation unless reined in by future U.S. leadership. Despite the pushback, the proposal reflects increasing regulatory attention on balancing consumer protection with the complexities of the crypto space.

Alexander Stefanov