Nearly 90% of Americans are concerned that crypto and fintech companies aren’t held to the same regulatory standards as traditional banks, according to a Consumer Bankers Association (CBA) survey released Tuesday.
Concern is elevated with age, with 46% of baby boomers and 42% of Gen Xers concerned about lack of federal oversight at crypto and fintech firms. Fewer millennials and Gen Zers — 24% and 18%, respectively — said they are concerned. Meanwhile, a greater percentage of college graduates (42%) said they are more likely to be concerned than nongraduates (30%).
“These findings demonstrate that consumers want and need policymakers to ensure large financial services providers operate within the well-regulated, well-supervised financial system,” CBA CEO Lindsey Johnson said in a statement. “Doing so will provide hardworking Americans the ability to safely benefit from innovations in the highly competitive financial marketplace, with the necessary regulatory transparency, oversight, and consumer protections.”
The survey, which gathered answers online from more than 1,000 adults over a three-day span this month, was conducted while a storm brewed in the crypto world.
Weeks prior, crypto exchange FTX filed for bankruptcy despite founder and then-CEO Sam Bankman-Fried’s assertion of solvency.
Survey results were released days after Reuters reported that federal prosecutors were eyeing up crypto exchange Binance and its founder Changpeng Zhao for potential money laundering charges, and one day after the arrest of Bankman-Fried on charges including wire fraud.
The CBA also found that 56% of those surveyed want Congress and the Consumer Financial Protection Bureau (CFPB) to implement more safeguards to protect users from “harm and abuse.” That compares with 24% who believe enough is being done.
The House Select Subcommittee on the Coronavirus Crisis this month found some fintech companies failed to stop “obvious and preventable fraud” in administering Paycheck Protection Program (PPP) loans, “leading to the needless loss of taxpayer dollars.”
Two fintechs, Blueacorn and Womply, were suspended from working with the Small Business Administration “in any capacity” over their failure to “implement systems capable of consistently detecting and preventing fraudulent and otherwise ineligible PPP applications.”
Overall, consumers see banks in a more favorable light than crypto and fintech firms. Net favorability of credit unions and Federal Deposit Insurance Corp. (FDIC)-insured banks came in at +60 in CBA’s survey, with fintechs’ net favorability at +32, and crypto firms at -7.
FDIC-insured banks hold a 13:1 advantage in consumer trust, compared with crypto and fintech companies, the trade group said.