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## The United States Consumer Financial Protection Bureau Proposed Rule for Supervising Large Non-Bank Digital Wallet and App Providers

The United States Consumer Financial Protection Bureau (CFPB) has recently proposed a rule to extend its supervision to include large non-bank digital wallet and app providers. This significant move is part of a larger effort by the agency to broaden its supervisory role within the consumer financial market. The CFPB has already expanded its supervision to encompass consumer reporting, consumer debt collection, student loan servicing, international money transfers, and automobile financing.

### Extending Supervisory Role

If this proposed rule is implemented, the CFPB would be empowered to supervise companies that handle more than 5 million transactions per year, including major players such as PayPal, Apple, Amazon, Google, and Meta. The agency has highlighted the importance of this expansion, stating, ÔÇ£Big Tech and other companies operating in consumer finance markets blur the traditional lines that have separated banking and payments from commercial activities. The CFPB has found that this blurring can put consumers at risk.ÔÇØ

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## Addressing Regulatory Arbitrage

CFPB director Rohit Chopra emphasized that the proposed rule aims to crack down on regulatory arbitrage, signaling a firm stance on ensuring fair and transparent practices within the consumer finance market. The agency has underscored the need for extending protections to digital apps, which currently lack safeguards such as deposit insurance and privacy and consumer rights guarantees.

The rule would not only expand the CFPB’s enforcement authority over tech companies but also specifically target crypto wallets. It seeks to align the definitions of ÔÇ£fundsÔÇØ to include crypto assets, in line with other federal statutes. The focus is on transfers of funds for retail purchases and the purchase or sale of securities or commodities, with particular attention to the retail use of crypto.

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## Building Up to the Rule Proposal

The CFPB’s proposed rule is the culmination of a series of warnings and critical examinations of the role of Big Tech in the U.S. payments system. From issuing warnings about the absence of deposit insurance in mobile payment apps to expressing concerns about the dominance of Big Tech in the payments landscape, the agency has been building a case for this regulatory expansion.

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As digital wallet and app providers navigate the evolving regulatory landscape and strive to align with the CFPB’s proposed rule, the AI legalese decoder can offer vital support. By providing real-time analysis and interpretations of regulatory updates, the AI legalese decoder enables companies to adapt quickly and effectively to changing legal requirements, minimizing compliance-related risks and optimizing operational adherence.

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