The weekend before President Trump’s historic second inauguration, all eyes turned to Washington’s first-ever “Crypto Ball.” Filled with prominent tech entrepreneurs and investors, the soiree celebrating the pro-crypto president’s victory even featured a performance by Snoop Dogg. Yet while the new administration and Congress’ more friendly approach to cryptocurrencies and artificial intelligence (AI) has seized headlines, little attention has been paid to a popular and oftentimes essential financial technology: digital payments.
Nearly every American today uses a digital payment platform in some shape or form. Whether it’s a direct deposit paycheck or splitting a dinner bill via Venmo, these tools have become ingrained in everyday life. And much like carrying cash in your purse or back pocket, sometimes these services are imperfect. If you don’t double-check the number or name you’re sending to, you might accidentally pay rent to the wrong person or request $100 from an unknown stranger. These mistakes are frustrating. That’s why platforms like Venmo offer double authentication and always include an “Are you sure?” type question before moving any money.
Yet in the eyes of the now-departed Biden administration, businesses’ clear attempts to minimize consumer negligence were not enough. Before the Trump team was sworn in, the Consumer Finance Protection Bureau (CFPB) under Director Rohit Chopra established new rules regarding oversight of digital payment platforms and sued JPMorgan Chase, Bank of America, and Wells Fargo for fraud incidents involving Zelle.
Rather than support financial firms through enforcement resources, the CFPB under Chopra chose to demonize American banks and technology companies as responsible for the mistakes of consumers.
While various fraud prevention tactics — including forms of oversight surveillance and identity authentication — would reduce incidents of mis-transferred money, the expansion of fruitless bureaucracy does not.
Creating greater regulatory burdens for financial technology would only stifle innovation and startup growth. Similar to the disparate impact of AI “safety” laws, the CFPB’s rulemaking and legal challenges would shape the market to favor incumbent major firms. The compliance costs pose little burden to corporate giants like JPMorgan Chase but could make or break budding entrepreneurs.
It’s great that conservatives recognize the harm of “debanking” and that the SEC’s hamstringing of cryptocurrency is a priority issue for many consumers; they shouldn’t neglect the issue of financial technology (namely digital payments) and fraud. Venmo, Zelle, and other similar platforms have become critical to American culture — from facilitating simple social activities such as dining out and splitting bills to fostering a robust freelance and independent contracting sector of our economy.
Confronting the burdens of regulatory madness that weighs down financial technology firms first and foremost will allow this emerging industry to refocus its time, attention, and resources to best serve its customers.
Scammers and legitimate instances of fraud are serious and should be addressed. But these are issues best left to the Department of Justice, not CFPB bureaucrats attempting to place blame on businesses for consumers’ misuse of their products.
Already the Trump administration has temporarily replaced Chopra with Treasury Secretary Scott Bessent, shuttered the CFPB’s office, and paused all work tasks. New leadership at the CFPB, SEC, and agencies like these — in whatever form they exist following DOGE organizational restructuring — should focus on collaboration with American companies, not punishment.
Providing insight into the latest means of financial crimes and technological issues will assist banks and digital payment platforms in how to prevent these issues. Close communication between regulators, law enforcement, and the private sector will help to quickly block false transactions and identify those behind acts of fraud.
The lesson is simple: You get more flies with honey. Hostility toward American businesses will do little to protect consumers and only harms our financial firms and technology startups along the way. Financial technology has improved tremendously in the past decade. It will continue to do so in years to come, so long as we let it.
READ MORE from Sam Raus:
Google’s Plight: Toxic Search for Antitrust Remedies
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Sam Raus, a recent graduate of the University of Miami, is a Tech and Consumer Freedom Fellow with Young Voices. Follow him on Twitter: @SamRaus1.
