In a significant policy shift, the Consumer Financial Protection Bureau (CFPB) has proposed regulations that would hold crypto wallet providers like MetaMask and Phantom accountable for on-chain fraud and erroneous transactions. This move, initiated by Rohit Chopra, the CFPB director and an ally of Elizabeth Warren, aims to classify digital asset wallets as financial institutions under the Electronic Funds Transfer Act. Such classification would allow the Bureau to regulate these wallets and potentially hold them liable for unauthorized transactions. While the CFPB claims legal grounds for this proposal, it opens a two-month public comment period for feedback. Critics from the crypto sector quickly condemned the rule, equating it to unnecessarily penalizing tool manufacturers for misuse. They suggest that the outgoing Biden administration’s stance represents a broader hostility toward the crypto market. With the upcoming Trump administration poised to assume power, the future of these regulations is uncertain, as Chopra could be dismissed, aligning with long-standing Republican opposition to the CFPB's existence.

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