​PayPal introduces $50 000 coverage for consumer crypto payments

What’s new? The PayPal payment system has introduced $50 000 in consumer crypto payment coverage that meets the requirements of Regulation E (Reg E) of the US Consumer Financial Protection Bureau (CFPB). Analyst Zach Wong reported this, citing a speech by PayPal SVP Jose Fernandez da Ponte at the Consensus 2023 conference. Wong called the voluntary introduction of Reg E into PayPal’s policy “an important development in the state of crypto consumer payments regulation,” as the CFPB usually enforces such requirements.

Wong’s blog

What else does the blog say? Wong noted that the CFPB has not yet enacted Reg E for crypto payments at this time. However, he believes that in a straightforward reading of the bureau’s requirements, digital assets cannot be classified other than “funds.” Consequently, Reg E will inevitably apply to crypto payments or require any amendments.

Reg E requires, among other things, that financial institutions reimburse consumers for losses caused by unauthorized transfers in cryptocurrencies. The level of coverage is determined by how quickly a customer reports an incident.

Reg E does not set a maximum amount of reimbursement, so banks set limits and delays on transactions or require additional approvals/verification to move large amounts of money to limit their potential liability. Wong noted that some crypto companies may do the same.

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PayPal announced at the crypto summit that the feature, which allows the company’s customers to make regular transfers on the crypto network from 2022, is now also available to users of the Venmo payment system. In doing so, a PayPal spokesperson noted that the firm already offers $50 000 in coverage for electronic payments. Wong stressed that this “is the first instance of any company committing to refund consumer losses for unauthorized transfers.”

Earlier, PayPal paused the process of developing its own stablecoin amid heightened scrutiny of cryptocurrencies by regulators, as well as an investigation into the project’s key partner, fintech company Paxos.