The Consumer Financial Protection Bureau (CFPB) stated on April 25 that it was invoking a seldom used provision of the Dodd-Frank Act, which created the bureau in the aftermath of the financial crisis of 2007-2008.
The rule gives the Consumer Financial Protection Bureau (CFPB) broad authority to oversee “nonbanks” that provide consumer-facing financial services based on potential risk. Any nonbanks are excluded from this definition “whose operations the Consumer Financial Protection Bureau has reason to believe pose a risk to consumers.” This authority does not apply to any specific financial product or service for consumers. “
The CFPB wrote in its release that nonbanks do not have a bank, thrift, or credit union charter; many today operate nationally and designate themselves as “fintechs,” the CFPB wrote in its release, indicating its interest in developing technology.
The CFPB underlined in its procedural rule that it already possesses the authorities it is invoking, which means it does not need to wait for the customary timelines required by the Administrative Procedures Act.
As a result, the rule will take effect within the next 30 days. The CFPB did not respond to a request for comment from The Block when asked if it had already begun conducting supervisory inquiries into businesses based on this rule.
Despite the fact that the announcement does not expressly mention crypto, the CFPB’s interest in the industry, as well as interest in its engagement in crypto, has been growing. Senator Elizabeth Warren told Bloomberg in October that the CFPB should use existing statutory authorities to tighten down on cryptocurrency.
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