Catenaa, Monday, April 07, 2025- The US Consumer Financial Protection Bureau (CFPB) is expected to reduce its involvement in cryptocurrency regulation due to Trump administration budget cuts as other federal agencies take on more roles.
Ethan Ostroff, a partner at Troutman Pepper Locke law firm, told CoinMarketCap that CFPB will step back as other federal agencies, such as the Securities and Exchange Commission (SEC), and state-level regulators take on more responsibilities.
Russell Vought became the head of the CFPB in February and quickly introduced major funding cuts to streamline the agency, which is a part of the Trump administration’s focus on cutting government spending and restructuring regulatory bodies.
The CFPB’s shift away from crypto regulation comes as the SEC and state regulators are expected to play a larger role.
It is expected that state agencies such as the New York Department of Financial Services (NYDFS) and the California Department of Financial Protection and Innovation (DFPI) are going to assume some of the regulatory responsibilities the CFPB will no longer oversee, under the Consumer Financial Protection Act.
Despite this reduced role, the CFPB will retain some regulatory authority over crypto due to its statutory obligations. These obligations cannot be altered without Congressional approval, which means the agency will still maintain control over some aspects of cryptocurrency regulation.
The reduction in the CFPB’s regulatory role marks a significant shift in how cryptocurrency will be regulated in the United States. With the SEC and state agencies now taking center stage, the crypto industry may face a more fragmented regulatory landscape.
As the regulatory environment evolves, the future of cryptocurrency oversight remains uncertain. Industry stakeholders will be closely watching how these changes affect market stability, investor protection, and innovation in a sector that is already known for its volatility.
