The Consumer Financial Protection Bureau recently withdrew its interpretive rule on the Electronic Fund Transfer Act and its related Regulation E that would have brought serious implications to self-hosted wallets and blockchain gaming platforms.
TDC’s Gaming Workstream, in effort with our partners at the Blockchain Game Alliance, submitted comments to the CFPB in March outlining how the rule, which miscategorized self-hosted wallets as “financial accounts” operated by “financial institutions” was technically incorrect and would place onerous and undue regulatory burdens on self-hosted wallet providers and gaming platforms. If this miscategorization had been implemented, self-hosted wallet providers and blockchain gaming platforms would have been subject to significant KYC requirements and counterparty transaction data collection and reporting practices.
Self-hosted wallets don’t collect counterparty information, and blockchain gaming platforms — which standardize a “bring your own wallet” approach — do not collect or have access to this data either. In practice, the rule misunderstood how this setup and the technology behind self-custody function and would have applied rules meant specifically for financial intermediaries to non-intermediated technology providers, giving wallet providers and gaming platforms no way to comply. We are pleased to see the CFPB now recognizes this key distinction.
If you have any questions, please reach out to policy@digitalchamber.org