Why the Former CFPB Director Doesn’t Want Big Tech to Issue Stablecoins  

Does the U.S. consumer have a potential stablecoin problem?

Rohit Chopra, who was the third director of the Consumer Financial Protection Bureau (CFPB) and previous member of the Federal Trade Commission (FTC), hinted that they just might during a keynote at Stablecon on Thursday (May 29).

Stablecoins have emerged as a potential disruptor to the traditional banking system, and that emergence holds implications that go well beyond the obvious. While their primary utility has often been linked to trading within cryptocurrency markets, a growing body of use cases suggests that stablecoins are beginning to transcend their original context.

Chopra is especially concerned about the prospect of large technology firms like Meta, Amazon or Google entering the stablecoin space.

“It is not a great idea to have big tech giants become a major issuer of stablecoins. It raises so many issues with privacy, surveillance and competition,” he said.

The U.S. has long maintained a separation between payments and commerce to prevent companies from leveraging their dominance in one area to gain unfair advantage in another. Allowing tech giants to issue stablecoins could remove that firewall.

Big Tech firms, for their part, already collect vast troves of personal data from their platforms. Combining that with transactional data from stablecoin payments could give them unprecedented surveillance power over users’ financial behavior. Chopra draws a sharp contrast with China’s tech-dominated payments system:

“We see that in China with AliPay and WePay — we don’t want to copy-paste that model. We want to chart our own course,” he said.

Read also: Understanding the Anatomy of a Successful Stablecoin Payment

The U.S. banking system is deeply intertwined with the health of the real economy. Deposits held in banks fuel loans to families, entrepreneurs and businesses. When that liquidity begins to shift into digital tokens issued by private companies — especially those with no banking charter or public oversight — it could risk undermining this foundational role.

“We need banks, and we need banks to lend,” Chopra said. “We need people to have a safe place to put their money — and that is starting to change.”

Chopra’s concern isn’t with digital innovation per se. In fact, he supports modernization.

“We have an antiquated system of moving money around,” he noted. “Many banks are holding onto a system where they can assess tolls and rents.”

Chopra’s apprehension also stems from a broader regulatory vacuum. Currently, there’s ambiguity over who can legally issue a stablecoin. In theory, any company — from a retailer to a FinTech startup — could try their hand at creating a digital currency. But Chopra argued this Wild West approach is not sustainable.

“The bigger issue is who is going to become an issuer,” he said. “We don’t want issuers to advantage other parts of their business through issuing stablecoins.”

Chopra sees promise in stablecoins backed by tokenized bank deposits. These would be covered by deposit insurance and subject to the same regulatory scrutiny as banks, providing more safety for consumers and better alignment with the financial system’s public purpose.

He pointed out that even regulated money market funds — often seen as safe — have required government intervention in times of stress.

“I think the largest banks will succeed as stablecoin issuers,” Amias Gerety, former assistant secretary of the Treasury, told PYMNTS in a separate interview posted this March.

Read more: Why America’s Biggest Banks Want to Reinvent the Stablecoin

From identity verification to interoperability standards, public infrastructure is key to ensuring that digital finance works for everyone. Not just dominant players.

For stablecoins to become a core part of the consumer payment mix, trust and reliability should potentially match or exceed what people expect from banks and credit cards. Otherwise, the most vulnerable users — those with the fewest financial options — could pay the price when things go wrong.

The marketplace is responding with innovations. Worldpay on Tuesday (May 27) teamed with cryptocurrency bank BNVK to promote stablecoin payouts; while stablecoin-focused cross-border payments platform Conduit raised $36 million in new funding Wednesday (May 28).

Meanwhile, legislation is advancing through the U.S. that would create frameworks for issuers, and banks are exploring a consortium approach to develop an interoperable stablecoin.

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