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Heavy-handed Digital Regulation Could Hinder US Startup Development Warns CCIA

The Computer & Communications Industry Association (CCIA) has responded to the Consumer Financial Protection Bureu‘s request for comments on a proposal to define and regulate larger participants in the general-use digital consumer payment marketplace. 

The rule was first proposed in November 2023, to provide greater regulation for fintechs and nonbank financial service (FS) providers. The proposed market would cover providers of funds transfer and wallet functionalities through digital applications for consumers’ general use in making payments to other persons for personal, family, or household purposes. Larger participants of this market would be subject to the CFPB’s supervisory authority under the Consumer Financial Protection Act (CFPA).

The rule was announced just days after the Financial Stability Oversight Council put forward its Guidance on Nonbank Financial Company Determinations. Both this and the Bureau’s request are strong indications of a desire for greater regulation over emerging FS in the US.

Providing comments

In response to the Bureau’s request, the CCIA offered comments on the financial tech sector providing digital payment options, noting how they provide consumers “expanded access to credit and financial services, speed, convenience, security, and reduced cost of services.”

CCIA’s filing notes that the Dodd-Frank Act requires the CFPB to “consider the potential benefits and costs to consumers and covered persons,” but points out that the current regulatory proposal “fails to clearly identify a specific risk it seeks to address and merely identifies the possibility of ‘new risks’ from ‘new product offerings’ without explicitly stating what those risks might be.”

Krisztian Katona, vice president of global competition and regulatory policy at CCIA
Krisztian Katona, vice president of global competition and regulatory policy at CCIA

Krisztian Katona, vice president of global competition and regulatory policy at CCIA said: “It’s worth keeping in mind as the CFPB considers further regulations on digital services that consumer feedback seems to point towards a general satisfaction with payment services, which suggests the absence of a market failure in the sector.

“We would urge regulators to tailor new regulations to specific problems they want to fix as broad, overly burdensome or heavy-handed digital regulation could significantly hinder new startups in this industry,  and harm US innovation and economic growth.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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