The Future of CFPB in Jeopardy

The future of the Consumer Financial Protection Bureau (CFPB) appears to be in jeopardy.

Acting head of the agency, Russell Vought, a conservative analyst involved in the Project 2025 policy initiative, has reportedly instructed employees to “cease all supervision and examination activity” and pause enforcement actions. Vought announced on X that the agency would not request future funding from the Federal Reserve, potentially affecting the agency once its ample 2025 funding runs dry.

Tyler Winklevoss, CEO of crypto exchange Gemini, welcomed the news with a post on X, stating, “CFPB Unplugged,” accompanied by a picture of a 404 page on the agency’s website.

Coinbase CEO Brian Armstrong condemned the agency more directly, claiming, “100% the right call,” and describing the CFPB as unconstitutional. He asserted that the Department of Justice can prosecute fraud and other financial regulators exist, suggesting the CFPB is an activist organization that has harmed the country.

In July 2023, the agency stated that its enforcement actions have returned $17.5 billion to American consumers since its founding after the 2008 financial crisis, sending over 4 million complaints to companies on behalf of consumers.

Elon Musk also supported the move, stating, “They did above zero good things, but still need to go.” He previously labeled the CFPB as a “duplicative regulatory agency.”

The Supreme Court has frequently debated the agency’s constitutionality, particularly since its funding comes from the Federal Reserve rather than Congressional appropriations. In May 2024, the Supreme Court affirmed the constitutionality of the CFPB’s funding mechanism in a 7-2 decision.

While this funding method safeguards the CFPB’s budget from Congressional restrictions, the acting head can request less funding to diminish the bureau’s effectiveness, as has currently occurred.

Coinbase’s Complaint Count

A larger share of CFPB complaints involve Coinbase compared to its competitors serving U.S. clients. According to the CFPB’s database, there are over 7,600 complaints mentioning Coinbase, contrasted with 487 complaints for Gemini and 297 for Kraken.

A subreddit moderated by a Coinbase account has users discussing their experiences with filing reports to the CFPB, which promises a 15-day response time to official complaints. The subreddit was locked six days ago, allowing only approved users to post with no new posts published in that time.

Coinbase’s customer support has faced criticism from users and security researchers. Notably, blockchain sleuth ZachXBT reported that Coinbase users lost over $65 million to social engineering scams since last December. Representatives from Coinbase and Gemini did not respond immediately to requests for comment.