The U.S. Consumer Financial Protection Bureau is being sued for treating digital wallets as banks

ChainCatcher news, two technology trade organizations, TechNet and NetChoice, have filed a lawsuit against the Consumer Financial Protection Bureau (CFPB) challenging its regulatory approach of treating payment applications and digital wallets as banks. The lawsuit opposes the new rule released by the CFPB in December, which aims to expand regulation over "general digital consumer payment applications," primarily targeting large payment applications and non-bank financial service providers like digital wallets.

Although the rule does not involve cryptocurrency wallet providers or decentralized wallets, its focus is on large non-bank companies. NetChoice litigation director Chris Marchese stated that the CFPB's expansion of power undermines the rule of law and could lead to higher prices and reduced choices.