The US Consumer Financial Protection Bureau (CFPB) announced that it would put the use of Bitcoin and other cryptocurrencies for real-time payments under the microscope following numerous issues that have hounded the digital assets scene over the past several months.

According to CFPB director Rohit Chopra, the Bureau also intends to step up its scrutiny of several major tech companies expanding their services into the traditional financial sector. He added that the country has seen how Big Tech firms are getting into the financial arena, particularly concerning online payment via branded credit or debit cards and prepaid cards. It has prompted numerous questions about where financial services are headed in the near future.

Dangerous Ground

However, following the recent crypto winter, which saw the downfall of several cryptocurrency companies, the CFPB feels that it has to keep an eye on companies poised to push for broader acceptance of cryptocurrencies for even basic transactions. 

The Bureau believes pushing crypto-centric transactions into the mainstream will make users more vulnerable to hacking, system errors, and even fraud.

Chopra said that one key event that shook relevant regulatory agencies was when Meta proposed the creation of Libra, a digital currency it had hoped to scale for use in its social media networks which include Facebook and messaging platform WhatsApp. The proposal led to a request to Facebook, Google, Apple, and Amazon to disclose relevant information on how each of these companies gathered and used consumer payment data. As a result, Meta eventually jettisoned the Libra project.

What About “Buy Now, Pay Later” Schemes?

Come fall of this year, the Bureau is also set to release a report on “buy now, pay later” (BNPL) products. In December of last year, the CFPB asked BNPL companies to share significant data with them to better understand their practices.

Chopra said that this was because there is a lack of transparency where BNPL products are concerned, as loans are normally excluded from consumer credit reports. The exclusion has long been a cause for concern for many mortgage and automotive lenders.

The impending launch of Apple’s own BNPL product Apple Pay Later – seen as a milestone in Big Tech’s entry into the financial sector – has likewise been called out. Chopra has called the tech giant’s plan into question. Last July 26th, he raised concerns that the company’s foray into financial services could reduce market competition and slow the pace of innovation in the industry.

Open Banking for All

In the meantime, the CFPB is also working on an open banking rule to give more Americans access to financial services. However, the implementation of the rule has been delayed by concerns regarding user privacy in terms of data protection.

The Bureau is currently awaiting feedback from small- and medium-scale enterprises and will issue a working draft later this year.