Chamber Releases

 

Understanding Digital Tokens: Considerations and Guidelines for Consumer Protection

 

Today, we are pleased to introduce Considerations and Guidelines for Consumer Protection as part of our Understanding Digital Tokens series of guidelines focused on the rapidly evolving token landscape, the laws and regulations that apply, and the trends, facts, and figures behind them. The consumer protection segment complements the “Considerations and Guidelines for Securities and Non-Securities Tokens” and “Market Overviews and Trends in Token Project Fundraising Events”, which were published last week.

(Read our recent blog post describing the importance of this series of reports.)

Consumer protection laws may apply to digital tokens in certain circumstances. In the consumer protection segment, we identify those circumstances most likely to result in the application of consumer protection laws to activities involving digital tokens. We also describe the source and scope of federal and state consumer protection authority and provide guidelines to help token sponsors and token trading platforms avoid running afoul of consumer protection laws. 

Federal and state consumer protection laws may apply to activities involving digital tokens.

Its complex to be sure when you consider the number of agencies in the United States alone that must be considered. For example, at the federal level alone:

      • the Federal Trade Commission (FTC) prohibits unfair or deceptive acts or practices (UDAP) in or affecting interstate commerce;
      • the Consumer Financial Protection Bureau (CFPB) has the authority to enforce and prohibit unfair, deceptive, or abusive acts and practices (UDAAP) engaged in by any person offering or providing a consumer financial product or service; and
      • the Department of Justice (DOJ) has a Consumer Protection Branch that coordinates with the FTC, CFPB, and other federal agencies to enforce consumer protection statutes.

At the state level, state Attorneys General have broad consumer protection authority to protect their citizens from unfair and deceptive acts and practices. State money-transmission licensing laws have consumer protection aspects that may apply in the context of transmission activities involving digital tokens.

We invite you to read the Consumer Protection segment to learn more about how these laws can be applied. In the coming weeks, we also intend to publish guidelines around cyber security and anti-money laundering. We will be supplementing our legal landscape on a rolling basis with the introduction of additional countries and the laws that apply to digital tokens.

Read more about the work of the Token Alliance and view the series of “Understanding Digital Tokens” reports that have already been released on our website.