The U.S. Consumer Financial Protection Bureau (CFPB) was formed in 2011 after the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed. Its function is to protect consumers from deceptive market practices.
It released a report regarding remittance transfers under the Electronic Fund Transfer Act. The government agency noted in the report that it has been monitoring the nascent developments in the remittance market, which includes the growth of cryptocurrency asset firms such as Ripple.
The report shows that the CFPB thinks Ripple and XRP have what it takes to enhance transparency in the remittance industry. While monitoring the market, the agency realized three things. The first thing is the progressive growth and the expansion in functionality of the Society for Worldwide Interbank Financial Telecommunication (SWIFT)’s “global payment innovation” (gpi) tracking product, capable of increasing the amount of upfront information available to sending institutions, and expanding the major payment card networks’ capacity to support cross-border payments.
Second, it noted the progressive growth of fintech nonbank remittance transfer providers and more expansion into partnerships and other relationships with banks and credit unions, which allow such entities to tap into the closed network payment systems that nonbank remittance transfer providers have developed.
Third, it noted the progressive growth and expanding partnerships of cryptocurrency firms, like Ripple, which offer both a payments messaging platform to support cross-border money transfers and a cryptocurrency, XRP, capable of effecting settlement of those transfers.
In a tweet by Stuart Alderoty of Ripple, he noted that the agency thinks that the company’s products are capable of allowing banks and credit unions to determine the exact final amount that recipients of remittances will receive before they are sent.
The Hill reported that the CFPB received 42,774 complaints about banks and lenders in April, representing a 15 percent increase from 36,690 complaints in March. The increment is in line with the serious effect of COVID-19 pandemic on the economy.