Tech industry groups sue CFPB over digital wallet rule—here’s why the rule’s future is so uncertain

The news: Tech industry trade groups TechNet and NetChoice sued the Consumer Financial Protection Bureau (CFPB) over its rule to regulate large payment apps like banks, per PYMNTS.

• The groups claim the rule, which took effect in December, “shoehorns” markets together and tries to fix a made-up problem.
• The groups also argue the rule will stifle innovation and said the agency failed to show a sufficient cost-benefit analysis of the rule-making.

Zooming out: The CFPB is about to undergo a dramatic transformation. Now that President Donald Trump is back in office, the CFPB’s leadership and policy directions will likely shift.

• Director Rohit Chopra, whom the lawsuit specifically names, will likely soon be forced out.
• His predecessor resigned less than an hour after President Joe Biden’s inauguration in January 2021 at Biden’s request.

That means recent rules like this one could soon be dumped.

Our take: It’s no surprise industry groups are fighting back against this rule.

The rule is likely burdensome for the payment apps and costly to comply with. But right now, it’s uncertain what will happen with this lawsuit, this rule, or any of the CFPB’s other recent rules given the shifting political environment.

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