Biden Pushes Controversial Crypto Regulation in His Final Days as U.S. President

In a contentious development during President Joe Biden’s final days in office, the Consumer Financial Protection Bureau (CFPB) has introduced a proposal targeting cryptocurrency wallet providers like MetaMask and Phantom.

The rule seeks to classify digital wallet providers as financial institutions under the Electronic Funds Transfer Act, potentially making them liable for fraudulent or unauthorized transactions.

CFPB Director Rohit Chopra emphasized the need for consumer protection in the growing digital payments space, stating that users should trust their transactions are secure and free from errors. However, the proposal is widely expected to face resistance and may be shelved once the Trump administration, known for its more crypto-friendly stance, assumes power.

Critics in the crypto industry have likened the move to unfairly penalizing tool manufacturers for misuse of their products. Joey Krug of Founders Fund compared it to holding a hammer maker responsible for how the tool is used. Many also view this as an extension of Senator Elizabeth Warren’s broader agenda against cryptocurrencies. Warren, a longstanding critic of the digital asset space, played a key role in the creation of the CFPB and has influenced its direction over the years.

With the Trump administration poised to take office, analysts believe the proposed rule will have little chance of survival. The administration is expected to dismiss Chopra, a Warren ally, and pivot the CFPB away from heavy-handed regulation of digital assets. Historically, Republicans have criticized the CFPB, and the upcoming administration has signaled a more supportive approach to the crypto industry, in stark contrast to Biden’s cautious policies.