CFPB's Proposed Rules Governing Prepaid Cards Include "Virtual Currency"

Last March, the Consumer Financial Protection Bureau sort comment regarding potential disclosures to be used on the packaging of prepaid cards such as gift cards and prepaid debit cards. The CFPB have now released their proposed disclosures which, after a brief period of comment, they hope to standardise.

The CFPB published three documents; a 713 page preamble, a 47 page document of the proposed rules and official interpretations totalling 110 pages.

The preamble makes reference to a warning released by the CFPB in August 2014 in which consumers are told about the risks associated with virtual currencies such as Bitcoin and states that the proposed rules could have potential application to virtual currency and related products and services, such as wallets.

Under the heading "Scope of Proposed Definition and Application to Virtual Wallets and Virtual Currency Products", the preamble states:

"The Bureau seeks comment on the scope of its proposed definition for the term prepaid account. In particular and as noted above, the Bureau is aware of an increasing number of mobile financial products, each with different features, capabilities, and consumer protections. Determining how this proposed rule might apply to those products may be difficult in light of the quick evolution of these products and their features. Although the Bureau anticipates that this proposal, if effective today, would apply to relatively few mobile banking products (see, e.g., proposed comments 2(b)(3)(i)-4 and 2(b)(3)(i)-5), it seeks comment on whether it has appropriately predicted the scope of products this rule would apply to and whether there are products it excludes that should be included or vice versa.

With respect to mobile financial products and services, the Bureau anticipates that this proposed rule would apply to certain mobile wallets. The Bureau also recognizes that the proposed rule may have potential application to virtual currency and related products and services. As a general matter, however, the Bureau's analysis of mobile financial products and services, as well as and virtual currencies and related products and services, including the applicability of existing regulations and this proposed regulation to such products and services, is ongoing. The proposed rule does not specifically resolve these issues."

The Wall Street Journal's MoneyBeat show called the proposed rules sensible and claimed it might enable the United States government to provide consumers with protection for their bitcoin wallets although they did not discuss or even propose how the USG might achieve such an impossible feat.

The preamble, proposed rules and official interpretations are available as a PDF via the CFPB website.

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