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News

Consumer Financial Protection Bureau Proposes Refund Rule for Crypto Wallet Hacks

2 mins mins

Key Points:

  • The Consumer Financial Protection Bureau has proposed a rule requiring crypto service providers to refund customers for losses due to hacks.
  • Blockchain security firms reported over $2 billion in crypto thefts in 2024.
The Consumer Financial Protection Bureau (CFPB) has unveiled a proposal to extend consumer protections for cryptocurrency wallets, requiring service providers to refund customers in cases of hacks or unauthorized transactions.
Consumer Financial Protection Bureau Proposes Refund Rule for Crypto Wallet Hacks

Read more: CFPB Jurisdiction Over Crypto Strongly Is Now Criticized By Coinbase

Consumer Financial Protection Bureau Proposes Refund Mandate for Hacked Crypto Wallets

In a notice issued on January 10, the Consumer Financial Protection Bureau proposed that emerging payment mechanisms, including crypto wallets, be subject to similar protections as fiat currency accounts.

The initiative seeks to align digital wallet safeguards with those of traditional bank accounts under the Electronic Fund Transfer Act (EFTA).

New Rule Seeks to Strengthen Consumer Protections in Cryptocurrency

The rule aims to ensure that consumers using stablecoins or other digital assets as payment methods are safeguarded against fraud and errors. If enacted, the regulation would redefine “funds” to encompass any asset used for payments, obligating crypto wallet providers to compensate users for losses due to hacks.

The move follows reports of escalating crypto-related illicit activities. Blockchain security firm PeckShield estimated that over $2 billion in crypto assets were stolen in 2024.

CertiK, another security firm, highlighted phishing schemes as the costliest attack vector. Additionally, data from Chainalysis revealed that hacks caused $2.2 billion in losses last year, a 20% increase from 2023, although the pace of such incidents slowed in the second half of 2024.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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Harold

11 January 2025, 05:02:00 GMT +0000

With a passion for untangling the complexities of the financial world, I’ve spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. “The financial markets are a fascinating puzzle,” I often say, “and I love helping people make sense of them.” That’s what drives me to bring clear and insightful financial journalism to the readers of Coincu.