The vast collection of Americans’ financial data by a dwindling number of large financial firms is one of the ways the United States could end up like China, warned Rohit Chopra, the head of the Consumer Finance Protection Bureau (CFPB).
Speaking at a panel discussion hosted by the Brookings Institute on Friday, Chopra argued for a new set of regulations that would require payment companies to provide more information about their use of personal data and private currencies, including digital currencies. Such disclosures are essential, he said, because private companies have amassed unprecedented power over Americans’ financial decisions.
“I fear that the US is lurching toward a consolidated market structure like the one that has emerged in China, blurring the lines between payments and commerce and creating the incentives for excessive surveillance and even financial censorship,” Chopra said in his prepared remarks.
The panel was part of a Friday event in Washington, D.C., titled “Making America’s Payment System Work for a Digital Century. Chopra was joined at the event by Federal Reserve Board member Christopher J. Waller. Much of the conversation returned to central bank digital currencies (CBDCs), which many critics have described as a tool of the surveillance state.
With companies such as Google and Apple collecting large amounts of financial data through their payment systems, Chopra warned that new rules were needed to avoid blurring the lines between their activities and those of the financial sector proper.
In China, some large technology companies such as Alibaba and WeChat operate separate payment services that Chopra said collect “an extraordinary amount of personal data” from Chinese users. According to the platform Enterprise Apps Today, Alipay has around 1.3 billion users and WeChat Pay has 250 million users as of 2022.
To rectify this, Chopra said the CFPB is considering a new rule that would allow it to directly oversee how non-bank financial platforms provide services to partners in the financial sector to limit oversight opportunities.
“The rule will seek to accelerate America’s transition to open, competitive, and decentralised banking while protecting against the misuse of our personal information,” Chopra said.
The CFPB chief also said that his agency is ready to take new action on digital currencies. Pointing to a US Treasury report on stablecoins from November 2021, Chopra said that the tokens posed risks of interest to his agency, particularly around surveillance and destabilising runs on the token.
To mitigate these, Chopra said the CFPB is considering requiring more information from tech companies about their business models, including their policies for issuing new digital currencies, and new examinations by his agency.
The CFPB implements and enforces federal consumer financial laws and ensures that markets for consumer financial products are fair, transparent, and competitive. Created by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act – passed in response to the 2008 financial crisis and subsequent recession – the independent bureau consolidates oversight previously handled by several different agencies.
