The CFPB issued an advisory on virtual currencies, warning consumers of significant risks such as volatile exchange rates, the lack of consumer protections, increased costs over credit card or cash, the potential for hacking and fraud, and the lack of any backing from a central bank or FDIC insurance. The advisory further warned that while virtual currency ATMs are beginning to proliferate, they do not have many of the safeguards that consumers expect from regular banking ATMs, and may come with fees as high as seven percent and exchange rates $50 more expensive than available elsewhere. In conjunction with the consumer advisory, the CFPB announced that it will begin accepting complaints about virtual currencies, which may signal future regulation in the area.
This consumer advisory follows similar warnings from regulators such as the SEC, California’s Department of Business Oversight, Connecticut’s Department of Banking, as well as a report from the GAO that recommended greater virtual currency oversight from the CFPB. This is likely the first step towards the widely anticipated proposed guidance on virtual currencies from the CFPB.
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