Monday, April 10, 2023
The FSOC was created by the 2010 Dodd-Frank Act to identify and propose steps regulators can take to quash threats to economic stability posed by financial services firms. It is organizationally part of the U.S. Treasury Department, is chaired by the Treasury Secretary and includes 11 financial regulatory agencies as voting members.
"We have to think about P2P [person-to-person payment] apps," Chopra said, noting that billions of dollars move through these networks. "[I]t's not necessarily clear if these funds are insured, and what would happen if there were a run," he added. "We want to make sure there are safeguards in place so people have the confidence that their money is always there for them."
Chopra said he is particularly concerned about runs related to stable coins. Stable coins, which are pegged to stable assets (such as the U.S. dollar) are used for trades on crypto exchanges and can serve as underlying assets for crypto loans. But just like banks, stable coins are susceptible to runs, especially if holders fear there aren't sufficient assets to back them.
That happened following the collapse of Silicon Valley Bank when the value of U.S. Dollar Coin (a stable coin meant to mimic the dollar) fell below its peg, to 87 cents, after it was revealed the company behind USDC had billions of dollars in reserves deposited at SVB.
Chopra stated he is also concerned about the financial sector's reliance of cloud services operated by bi tech firms, suggesting it poses grave risks.
"I worry that if something were to happen, could it take down a lot of the core financial structure. And what might be the consequences of that for the economy and society?" Chopra asked. "There is so much concentrated with a few large cloud providers. We need to look at resiliency from a financial stability viewpoint."
Another issue raised by the consumer protection chief: financial privacy. "When someone can track every financial interaction [a consumer makes] that's scary," he said. :That information should only be made available to those people [a consumer] wants it to be made available to."
Chopra noted that the CFPB also has questions about how some tech firms decide to kick merchants or users off their platforms.
Back in 2021, the CFPB ordered six large tech and peer-to-peer platforms that operate payment services (Amazon, Apple, Facebook, Google, PayPal and Square) to provide detailed answers to questions about their business practices, including the way they collect and use data, and rules for removing individuals or businesses from their platforms. Then last fall, it sent out a call for public comments. Chopra mentioned no specific plans yet for dealing with any perceived problems.
He also said that it's not just the financial sector and its customers that could be put at risk by big tech risk, either. Other critical industries, like healthcare and energy, also are put at risk by big tech services like the cloud, Chopra stated.
"When it comes to the growing power of tech firms, whether in payments or the cloud, every regulator is a little concerned," Chopra told Yahoo Finance. 
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