House Subcommittee Requests Crypto-Related Fraud Data From CFPB
On October 14, 2022, the Chairman of the House Subcommittee on Economic and Consumer Policy (the “Subcommittee”), Raja Krishnamoorthi (D-IL) sent a letter to Consumer Finance Protection Bureau (“CFPB” or the “Bureau”) Director Rohit Chopra requesting information and documents on the Bureau’s efforts to combat cryptocurrency-related fraud.
Krishnamoorthi’s leading concern is that “[c]ryptocurrencies have become scammers’ favored means of payment as well as their preferred bait for unsuspecting victims.” Scams have reportedly manifested in many forms and have resulted in substantial losses with $1 billion in cryptocurrency assets being “lost to fraud” in 2022.
Beyond her concern for fraud, Krishnamoorthi also cited the “stories of skyrocketing prices and overnight riches” without any centralized efforts to protect consumers and investors as a basis for her request. She poses that the “patchwork” of private sector resources to inform consumer investment decisions is too narrowly distributed and altogether insufficient in comparison to the efforts the federal government could produce.
As such, the Subcommittee requested Chopra to produce, by October 28, 2022, all policies, guidance, or other official documents:
“regarding CFPB’s efforts to combat crypto-related scams and fraud and inform consumers about the risks related to investments in cryptocurrencies, excluding documents related to specific investigations or enforcement actions conducted by the agency”;
“regarding CFPB’s authority to identify and investigate potentially fraudulent digital assets or accounts used on cryptocurrency exchanges associated with illicit activities”;
“setting out CFPB’s regulatory authority concerning cryptocurrencies, cryptocurrency exchanges, or cryptorelated fraud and abuse”; and
“setting out the existing framework for interagency cooperation on the regulation of cryptocurrencies, cryptocurrency exchanges, and other digital assets”.
The Subcommittee also requested Chopra to issue responses to the following questions:
“What tools, including but not limited to code audits, disclosure requirements, or consumer alerts, could provide consumers with additional information to better assess the risks associated with a digital asset?”
“What regulatory processes could be put in place to ensure that digital assets made available for sale or investment contain sufficient consumer and investor protections? Does CFPB have existing plans to put those regulatory processes in place? If yes, what is the timeline for implementing them?”
“Should cryptocurrency holdings be treated as commodities, securities, or both? Please explain.”
“Besides CFPB, which other executive branch agencies or institutions play a role to play in regulating cryptocurrencies and addressing cryptocurrency-related scams and frauds? Please explain.”
“What is the existing framework for interagency cooperation on the regulation of cryptocurrencies, cryptocurrency exchanges, and other digital assets? What formal policies, guidance, or other documents coordinating such cooperation?”
No response has been recorded as of October 28, 2022.