U.S. agency proposes rule requiring refunds after crypto hacks

by

As a crypto investor, I’ve learned about a proposed regulation by the Consumer Financial Protection Bureau. This rule suggests that American cryptocurrency firms should reimburse their users if they suffer losses due to hacks or unapproved transactions. Essentially, this means added security and peace of mind for us investors, knowing that our funds could potentially be protected in such unfortunate circumstances.

The proposal is designed to expand the existing safeguards for conventional bank accounts to cover digital wallets used with cryptocurrencies, as reported by Financial Times.

The Consumer Financial Protection Bureau’s (CFPB) rule aims to widen the jurisdiction of the Electronic Fund Transfer Act, encompassing digital currencies like stablecoins – a type of cryptocurrency that is intended to keep its value consistent – and other exchangeable tokens used for transactions.

Adopting this change would broaden the definition of “funds,” encompassing resources that function like money or can be utilized for purchasing products and services.

Digital currency storage units, commonly known as wallets, enable individuals to save and carry out transactions using virtual money. Contrasting traditional banking, these wallets do not come with automatic protection from losses caused by cyber theft or deceitful activities.

The CFPB’s plan suggests a shift where service providers would need to reimburse customers for any lost funds due to theft.

Crypto hacks 

The suggestion arises during an increase in thefts from cryptocurrency accounts. According to the blockchain research company Chainalysis, there were 303 such incidents in the year 2024, leading to a loss of approximately $2.2 billion in digital assets.

Last year’s cybertheft losses were approximately $1.6 billion, with North Korean hacker collectives allegedly being twice as successful as they were in the prior year, increasing their ill-gotten gains.

The CFPB’s proposal is a significant move in the area of cryptocurrencies during the Biden administration. Yet, its continuation is questionable since the Trump administration, known for its pro-crypto stance, is gearing up to assume power.

Multiple advisors to former President Trump, such as Elon Musk and Vivek Ramaswamy, have openly spoken out against the Consumer Financial Protection Bureau (CFPB), advocating for either its diminishment or dissolution.

The CFPB’s proposal accepts public feedback until March 31st. Following this deadline, they will make a decision about releasing a final regulation.

Read More

2025-01-10 18:59