CFPB Proposes Interpretive Rule to Expand Scope of Transactions Subject to Regulation E

On January 10th, the Consumer Financial Protection Bureau (CFPB) issued a proposed interpretive rule that would make stablecoin transactions and other non-bank consumer asset accounts subject to Regulation E.

The Electronic Fund Transfers Act and Regulation E apply to electronic fund transfers that authorize a financial institution to debit or credit funds from/to a consumer’s account. The proposed interpretive rule broadly defines the terms financial institution, funds, and account to make stablecoin, video game accounts, and virtual currency wallets subject to Regulation E.

First, the proposed interpretive rule relies on the well-established definition of financial institution under 12 CFR 1005.2 to affirm that nonbank entities that directly or indirectly hold consumer accounts fall within the scope of Regulation E.

Next, the proposed interpretive rule looks to previous judicial decisions and modern definitions to reason that the term funds encompasses much more than just US currency. It includes stablecoins and other similarly situated fungible assets that operate as a medium of exchange for paying for goods or services.

Finally, the proposed interpretive rule confirms through legislative history that Congress intended that the term account extend to more than just checking and savings accounts. It covers any asset account established primarily for a personal, family, or household purpose that allows a consumer to pay for goods or services, withdraw funds, or conduct person-to-person transfers.

Comments on the proposed interpretive rule must be received by March 31, 2025. It remains to be seen whether the new CFPB director under the Trump administration will pause this rulemaking or allow it to move forward.