HFS Chair McHenry Challenges Proposed Rule Expanding CFPB Authority over Digital Payments

House Financial Services Chair Patrick McHenry challenged a CFPB proposed rule to expand its regulatory authority into the market for digital consumer payments.

In a letter sent to CFPB Director Rohit Chopra, and joined by French Hill, Chair of the Subcommittee On Digital Assets, Mr. McHenry asked the agency to provide justification for the proposed rule, titled: Defining Larger Participants of a Market for General-Use Digital Consumer Payment Applications. As previously covered, the CFPB said that under the proposal, a nonbank would be subject to regulation if it (i) offered general-use digital consumer payment applications with an annual volume of at least five million consumer payment transactions and (ii) is not a "small business concern" as defined in the Small Business Administration's size standards.

Mr. McHenry said that the proposed rule creates uncertainty concerning the definition of, and the extent to which the Bureau intends to oversee "service providers." Further, he highlights that the rule, as written, is unclear as to "what specific entities within the digital asset ecosystem" the rule would apply.

The Chair requested a detailed analysis of its scope and impact and urged the agency to reopen the comment period.