Federal regulator proposes additional oversight for nonbank financial tools
Nonbank providers of digital financial services - such as digital wallets and payment apps - may soon be subject to the same oversight and scrutiny as banks and credit unions.
The Consumer Financial Protection Bureau (CFPB) is proposing new rules that would provide additional oversight to these entities - providers such as Cash App, PayPal, Venmo, and others.
"Payment systems are critical infrastructure for our economy. These activities used to be conducted almost exclusively by supervised banks,” said CFPB Director Rohit Chopra. "Today's rule would crack down on one avenue for regulatory arbitrage by ensuring large technology firms and other nonbank payments companies are subjected to appropriate oversight."
The proposed rule would require nonbank providers of digital financial services to comply with existing bank rules for customer privacy, funds transfer policies, and unfair and deceptive practices.
The proposal is designed to provide a level playing field and to ensure consumers have the same expectation of data privacy among a range of financial services providers.