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Financial Services Law Insights and Observations

House subcommittee asks CFPB for data on crypto-related fraud

Federal Issues Digital Assets CFPB Consumer Finance Cryptocurrency Fintech U.S. House

Federal Issues

On October 14, the House Subcommittee on Economic and Consumer Policy sent a letter to CFPB Director Rohit Chopra requesting information and documents on the Bureau’s efforts to combat cryptocurrency-related fraud. In the letter, Representative Raja Krishnamoorthi (D-IL) expressed concerns that Congress “may need” to pass legislation to help “bring stability to the digital asset industry.” He also argued that “a lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions," and the consumers and investors' limited understanding has made “cryptocurrency a preferred transaction method for scammers.” Among other things, the letter asked the Bureau to provide information by October 28 concerning (i) its efforts to combat crypto-related scams and fraud and inform consumers about the risks related to investments in cryptocurrencies; (ii) its authority to identify and investigate potentially fraudulent digital assets or accounts used on cryptocurrency exchanges associated with illicit activities; (iii) its regulatory authority concerning cryptocurrencies; and (vi) documents setting out the existing framework for interagency cooperation on the regulation of cryptocurrencies. Krishnamoorthi also requested that the Bureau provide answers by October 21 to several questions, such as “what tools, including but not limited to code audits, disclosure requirements, or consumer alerts, could provide consumers with additional information to better assess the risks associated with a digital asset?” and “should cryptocurrency holdings be treated as commodities, securities, or both?”