PayPal will sue the US Consumer Financial Protection Bureau because of the new rules requiring stricter reporting for the digital wallets as we are reading further in the blockchain latest news.
The leader in online wallet payments PayPal will sue the CFPB at the same time when the agency announced a campaign to regulate the so-called prepaid cards to make sure no money laundering is committed. The lawsuit claims that the United States District Court for the District of Columbia, that the rules for prepaid cards have been incorrectly applied to the digital wallets which usually run on an entirely different principle.
The rules for the prepaid cards were updated back in April and ran under the ‘’Prepaid Accounts under the Electronic Fund Transfer Act.’’ Besides that, PayPal claims that the rules should not apply to digital wallets that transact totally differently and the regulation will lead to a long reporting and unnecessary limitation for the users. The regulatory regime is ill-suited to PayPal’s digital wallets and will likely mislead or even confuse the consumers. The rule says that PayPal should make disclosures concerning the fees that PayPal does not charge.
The digital wallets allow the users to link their bank accounts and cards and also use them in a much faster way in a web environment. PayPal accounts also provide the possibility to store additional funds which according to the CFPB will create a similar case to prepaid cards. PayPal also complained that the reporting that was required by the regulators was incomplete and confused most of the users.
Right now, it is still uncertain whether the lawsuit will have repercussions for the actual wallets that are related to crypto coins and tokens. Currently, the wallets are not used in a transfer of money but the crypto companies offering cards could expect to see their activities monitored more closely. The prepaid cards offer an opportunity to store a limited amount of funds and to potentially avoid the money-laundering laws. PayPal can also be used in a similar manner but there are restrictive limitations for the funds sent.
The new rules restrict the usage of funds through digital wallets and now PayPal faces competition from other payment platforms such as Robinhood and Abra which combines fintech solutions with access to crypto.
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