Not Just Fun and Games? CFPB Seeks Comments on Proposed Interpretive Rule to Place New Forms of Digital Payments, Including In-Game Currencies and Credit Card Rewards, under the EFTA
Not Just Fun and Games? CFPB Seeks Comments on Proposed Interpretive Rule to Place New Forms of Digital Payments, Including In-Game Currencies and Credit Card Rewards, under the EFTA
On January 15, 2025, days before the start of the Trump administration, the Consumer Financial Protection Bureau (CFPB) published a proposed interpretive rule (Proposed Rule) seeking public comment on how the Electronic Fund Transfer Act (EFTA) and its implementing regulation (Regulation E) apply to new forms of digital payment mechanisms, such as stablecoins, digital currencies, in-game currencies used in video games, and credit card rewards points. In its press release and blog post released in conjunction with the Proposed Rule, the CFPB focused on providing “a consistent framework for the applicability of EFTA and Regulation E with respect to a range of emerging payment mechanisms” and to help avoid “inconsistent application of EFTA and Regulation E.”
Although the term “funds” is not defined in the EFTA, the Proposed Rule outlines the CFPB’s interpretation that “funds”’ includes “assets that act or are used like money, in the sense that they are accepted as a medium of exchange, a measure of value, or a means of payment.” The CFPB provides that this definition includes stablecoins and other fungible assets and assets that fluctuate in value, such as cryptocurrencies.
The CFPB’s interpretation of funds echoes that of other agencies seeking to regulate digital currencies. For example, Financial Crimes Enforcement Network (FinCEN), the federal agency responsible for anti-money laundering and countering the financing of terrorism (AML/CFT) requirements, has previously proposed defining the term “convertible virtual currency,” or CVC, to mean a medium of exchange that either has an equivalent value as currency or acts as a substitute for currency but lacks legal tender status. FinCEN has interpreted AML/CFT requirements, including money transmission regulation to apply to CVC transactions since 2013, and as part of the AML Act of 2020, the Bank Secrecy Act was updated to include CVC in the statute’s definition of “money.”
Unlike the term “funds,” the term “account” is defined under the EFTA and means “a demand deposit, savings deposit, or other asset account . . . as described in regulations of the [CFPB], established primarily for personal, family, or household purposes,” subject to limited exceptions. The Proposed Rule provides that the term “other consumer asset accounts” includes prepaid accounts and other asset accounts that have features of deposit or savings accounts, such as the ability to pay for goods or services from multiple merchants, the ability to withdraw funds or obtain cash, or the capability to conduct person‑to-person transfers.
Depending on the specific facts and circumstances, the CFPB believes that the term “accounts” under EFTA could include “other consumer asset accounts” such as:
The Proposed Rule notes that “gaming platforms served as early adopters of technologies that inevitably become more broadly adopted” and builds on prior CFPB actions in the digital payments and video game sectors. These include its April 2024 report on risks to consumers posed by video game marketplaces, including frauds and scams, and its December 2024 final rule to supervise large providers of digital wallets and payment apps.
The gaming industry has evolved rapidly in recent years. In-game assets, including in-game currency and virtual items, have become an increasingly important part of the gaming experience. As in-game virtual worlds have grown on an international scale, in-game payments have similarly advanced from one-time purchases or “microtransactions” to in-game worlds with their own virtual payment environments. According to the CFPB’s April 2024 report, gaming companies are using gaming assets and proprietary marketplaces to replicate everyday activities online, including financial payments.
In the blog post accompanying the Proposed Rule, the CFPB outlines some of the most common complaints that it has received from gamers including problems converting dollars to in-game currency and issues with unauthorized transactions, account hacks and takeovers, theft, scams, and other losses of assets. In addition, the CFPB specifically asked the gaming community for comments, complaints, and stories relating to gamers’ experiences with video game currencies.
The Proposed Rule would consider credit card rewards points accounts that allow consumers to buy points that can be used to purchase goods from multiple merchants to be “accounts” for purposes of the EFTA. Unlike in-game currencies and virtual currencies, such credit card rewards points accounts may be offered by regulated financial institutions. Under the Proposed Rule, the CFPB seeks to classify these credit card rewards points accounts, a more established industry offering, with emerging payment mechanisms such as in-game currencies and virtual currencies.
The CFPB’s Proposed Rule follows its December 2024 issuance of guidance on the Design, Marketing, and Administration of Credit Card Rewards Programs, underscoring the CFPB’s attention to the enforcement of federal consumer financial law on credit card rewards programs.
Under the Proposed Rule, market participants, including video game developers, stablecoin providers, or credit card rewards programs operators, offering new types of payment mechanisms to facilitate electronic fund transfers should understand whether their account meets the definition of “account” or “other consumer asset account” under the EFTA. Video game developers, credit card rewards programs operators, and other market participants offering covered accounts must comply with a number of consumer protection requirements, including:
The Proposed Rule reiterates that the EFTA does not apply to the purchase or sale of a stock or bond. However, the CFPB does express its view that the EFTA could apply if funds in an investment account are used to purchase goods or services from a retailer.
The change in administration leaves the status of this Proposed Rule, and the series of other CFPB actions taken during the final weeks of the prior administration, uncertain. The Trump administration has instituted a regulatory freeze and required agency review of any recent action. The Trump-appointed director of the CFPB will therefore need to consider whether to revise, withdraw, or decline to finalize the Proposed Rule.
While the Proposed Rule and associated blog post signal an intended expansion of the CFPB’s jurisdiction as it relates to emerging payment mechanisms and related products and services, it is unclear whether the CFPB under new leadership will take the same view.