Today in TechREG: CFPB Takes Steps to Implement Open Banking Principles; US Banking Regulator Says Crypto Dependent on ‘Hype’

Today in TechREG, the Consumer Financial Protection Bureau (CFPB) announced the creation of a new office in the agency to promote competition and innovation. When CFPB Director Rohit Chopra testified on Capitol Hill in April that he wanted to promote open banking principles and to deal with the “increasing threat” of Big Tech, the question of how to implement these plans remained open. This new office may be the answer to this question. Plus, two more banking regulators, one in the United States and one in the United Kingdom warned about cryptocurrency assets and questioned the value of some cryptos like bitcoin.

CFPB Takes First Steps for Open Banking, Big Tech Scrutiny

The CFPB announced Tuesday (May 24) that it is opening the Office of Competition and Innovation as part of a new approach to help spur innovation in financial services by promoting competition and identifying stumbling blocks for new market entrants. While the new office may have a supporting role to the CFPB to promote competition and innovation in a broad sense, the agency’s press release only mentioned open banking and the role of Big Tech as the main reasons to create this office.

Crypto Economy Is Dependent on ‘Hype,’ Says OCC’s Comptroller

Acting Comptroller of the Office of the Comptroller of the Currency (OCC) Michael Hsu told an audience at a crypto event Tuesday that the recent events with TerraUSD and other stablecoins are clear evidence that the crypto economy is dependent on hype. Hsu blamed the high-yield rewards offered by some crypto products and the hype created around them for the harm caused to consumers. Hype is essential for the crypto economy, Hsu argued. In an analogy with social media, he said, “it seems that hype and yield are to crypto as user engagement is to social media.”

Bank of England’s Governor Unconvinced About Bitcoin

Bank of England Governor Andrew Bailey warned about bitcoin and cryptocurrency in the Jobs of the Future podcast. While admitting that blockchain, the underlying technology of cryptocurrencies, is important, Bailey said he is unconvinced about bitcoin as a means of payment.

“In terms of payments, I don’t think it will be crypto in the sort of bitcoin sense of the term,” he said. “I don’t think that is really a practical means of payment.”

FTC Finalizes Order Against Electronic Payment Systems

The Federal Trade Commission (FTC) has finalized an order against Electronic Payment Systems for allegedly opening credit card processing merchant accounts for fictitious companies on behalf of Money Now Funding, a business opportunity scam that the FTC previously sued, according to a press release. By ignoring warning signs that the merchants were fake, Electronic Payment Systems assisted Money Now Funding in laundering millions of dollars of consumers’ credit card payments to the scammers from 2012 to 2013.

The FTC is ordering Electronic Payment Systems, and its owners John Dorsey and Thomas McCann, to make several substantial changes to their processes that will ensure they do not further harm consumers moving forward.