In April of last year, we wrote about the report released by the Consumer Financial Protection Bureau (“CFPB”) in which the CFPB stated that it was “monitoring markets” to determine what further actions it might take to regulate non-traditional digital asset markets, such as video game and crypto accounts.
True to its word, on January 15, 2025, the CFPB released a proposed interpretive rule that directly targets video game, crypto, and other accounts utilizing digital currencies.
The Electronic Fund Transfer Act and Regulation E
The new interpretive rule specifically focuses on how the CFPB defines the terms “funds” and “accounts” in the Electronic Fund Transfer Act (the “EFTA”). Congress enacted the EFTA in 1978 to govern the rights and responsibilities of consumers and financial institutions engaged in electronic fund transfers (“EFTs”). Regulation E, which implements the EFTA, establishes a regulatory framework for EFTs by setting standards for disclosures, dispute resolution, and other consumer safeguards against fraud and misuse.
Interpretive Dance of “Funds” and “Accounts”
The EFTA does not directly define the term “funds.” However, the CFPB has previously interpreted “funds” broadly to include not only fiat currency but also any resource convertible to cash.
The CFPB’s new interpretive rule further broadens the term to encompass digital assets, such as in-game currencies purchased with real money or holding monetary value. This interpretation extends the definition to include “assets that are or are used like money, in the sense that they are accepted as a medium of exchange, a measure of value, or a means of payment.”
The CFPB’s proposed expansive definition shifts the focus to how an “account” is defined since the rule applies only to EFTs between accounts. While the rule primarily addresses traditional banking accounts, it now interprets the catch-all term “other asset account” broadly. This expanded interpretation includes prepaid accounts used for paying for goods or services from multiple merchants, withdrawing funds or obtaining cash, or conducting person-to-person transfers.
The CFPB does not mince words on the targets here, stating that the new interpretation would encompass anything “used to purchase virtual items from multiple game developers or players; virtual currency wallets that can be used to buy goods and services or make person-to-person transfers; and credit card rewards points accounts that allow consumers to buy points that can be used to purchase goods from multiple merchants.”
What this Means for Crypto and Video Games
The broadening of the terms “funds” and “accounts” places many new transactions under Regulation E’s purview. This change introduces new compliance mechanisms, such as disclosure requirements, error resolution mechanisms, and other safeguards against unauthorized transactions, mirroring those required for debit and ACH transactions.
This interpretation most directly impacts crypto—including stablecoins—that have historically remained outside Regulation E’s scope.
However, the proposed interpretation’s implementation could lead to overly broad applications, particularly in video games. Modern video games, especially Massively Multiplayer Online (“MMO”) games, feature complex economies involving paid and free currencies used to purchase virtual items between players or within a developer’s ecosystem. A literal reading of the rule could affect numerous in-game transactions.
Does this Affect Gambling Laws?
As noted in our April 2024 blog, “something of value” is a term of art in gaming law, and the CFPB’s expansion of what it considers “funds” conflicts with current gaming caselaw. Specifically, the Ninth Circuit distinguished in Kater v. Churchill Downs Inc. that virtual chips lack intrinsic value unless convertible back to fiat currency. Other cases, such as Mai v. Supercell Oy (N.D. Cal. 2023), Taylor v. Apple, Inc. (N.D. Cal. 2021), and Doe v. Epic Games, Inc. (N.D. Cal. 2020), have similarly avoided ruling that in-game currencies and digital purchases constitute a “thing of value.”
While the CFPB and EFTA do not directly implicate any immediate change of course for this caselaw, the downstream implications of broadening what the CFPB considers “funds” could start to bleed over into other practice areas—perhaps unintentionally.
Public Engagement and Next Steps
The CFPB has opened the proposed rule for public comment until March 31, 2025. This comment period allows consumers, industry leaders, and other stakeholders to provide feedback on the proposed reinterpretations.
