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Recent developments within the Consumer Financial Protection Bureau (CFPB) have brought significant changes, as acting director Russ Vought instructed the agency’s staff to suspend all supervisory and examination activities.
This decision, aimed at limiting the bureau’s regulatory powers, received praise from prominent figures in the cryptocurrency industry, including Coinbase (NASDAQ:COIN) CEO Brian Armstrong and Gemini CEO Tyler Winklevoss.
Vought, who has been influential in the Project 2025 policy initiative, also announced that the CFPB would not seek future funding from the Federal Reserve. This decision could eventually impact the bureau’s operations once its current funding, secured until 2025, is depleted. The CFPB has been a pivotal force in consumer protection, claiming to have returned $17.5 billion to consumers and addressing over 4 million complaints since its inception following the 2008 financial crisis.
Armstrong and Winklevoss publicly celebrated the agency’s reduced enforcement capacity, with Armstrong criticizing the CFPB’s constitutionality and its overlap with other regulatory bodies. Elon Musk also expressed support for the agency’s downsizing, having previously criticized the CFPB as redundant.
Despite the praise from some corners of the cryptocurrency sector, Coinbase itself has been a focal point of CFPB complaints. The bureau’s database reveals that Coinbase is mentioned in a significantly higher number of complaints compared to its competitors Gemini and Kraken, serving U.S. customers. Over 7,600 complaints have been lodged against Coinbase, dwarfing the figures for Gemini and Kraken.
Coinbase’s customer support practices have been a recurring subject of user dissatisfaction. The company’s subreddit, which is moderated by an official Coinbase account, has seen discussions about filing CFPB complaints and is currently restricted to approved users only, following a lockdown six days ago.
The Supreme Court has upheld the CFPB’s funding structure in a recent May 2024 decision, affirming its constitutionality. This mechanism shields the CFPB from Congressional budget constraints, but does not prevent internal decisions to limit funding requests, as demonstrated by Vought’s recent actions. As the situation unfolds, representatives from Coinbase and Gemini have yet to respond to requests for comment regarding the increase in CFPB complaints.
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