CFPB May Back Off Crypto Regulation, Lawyer Says

The future of this federal regulator is now in question as the Trump administration cuts back on the executive bureaucracy.

The future of this federal regulator is now in question as the Trump administration cuts back on the executive bureaucracy. According to Ethan Ostroff, a partner at the law firm Troutman Pepper Locke, the Consumer Financial Protection Bureau (CFPB) is likely to see a diminished role in cryptocurrency regulation, while other federal agencies such as the Securities and Exchange Commission (SEC) and state regulators will play a larger role in cryptocurrency policy.

“My sense under the current administration is that we are likely to see a significant step back from the CFPB in the context of the activities of other regulators,” Ostroff told Cointelegraph in an interview.

The attorney said that under the Consumer Financial Protection Act (CFPA), state regulators also have the authority to assume some of the CFPB’s regulatory responsibilities, but added that certain regulatory functions will continue to fall within the CFPB’s purview under established law. Ostroff mentioned the New York Department of Financial Services (NYDFS) and the California Department of Financial Protection and Innovation (DFPI) as regulators to watch that could become leaders in cryptocurrency regulation at the state level.

However, the attorney clarified that while the CFPB may play a smaller role during the Trump administration, the agency will not be completely disbanded during the current regime because statutory obligations and requirements require an act of Congress to change.

Trump Administration Targets CFPB in Efficiency Initiative

The Trump administration targeted the CFPB as part of a broader effort to cut government spending and reduce federal debt under the Department of Government Efficiency (DOGE).

New CFPB head Russell Vought announced major funding cuts and operational downsizing for the agency within days of taking office in February 2025.

Massachusetts Senator Elizabeth Warren criticized Elon Musk for dismantling the CFPB, which she co-founded in 2007.

Warren compared Musk to a bank robber and claimed that the Trump administration's dismantling of the CFPB was an effort to remove consumer protection rules and increase control over the financial system.

In a February 12 interview with Mother Jones magazine, the senator stressed that the executive branch does not have the statutory authority to completely dismantle the CFPB, which can only be achieved through congressional approval.