The news: Senators ask them Office of the Comptroller of the Currency (OCC) to reverse guidance given to banks on their crypto capabilities during the Trump administration, Per Yahoo! finance.
What’s happening? Led by Senator Elizabeth Warren, lawmakers sent a letter to the OCC asking it to repeal Trump-era guidelines for banks on permissible cryptocurrency activities. Under this guidance, state-licensed banks can get involved limited crypto practicesincluding:
- Provision of crypto asset custody services.
- Holding cash reserves to support stablecoins.
- Using blockchain technology and stablecoins to verify bank-to-bank payments.
The letter asked the OCC to consult with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve to refine how agencies oversee banks’ cryptocurrency trading. They indicated that banks and traditional financial markets should remain insulated from the crypto market turmoil. Lawmakers also wanted to know how many OCC-regulated banks currently have crypto activities.
OCC response: The OCC responded by repeating comments made by Michael Hsu, the currency’s acting comptroller, last week on hearing the letter was in circulation.
- hsu said Bloomberg: “I think we’re doing a pretty good job. See Exhibit A: A whole bunch of things just happened and the banking system is in pretty good shape, knock on wood. I think part of that is the actions we have taken.”
Last November, the OCC said it would not revoke its guidance but mandated that banks obtain OCC accreditation before engaging in crypto activities.
how did we get here We reported yesterday about the banks’ pleas for the Biden administration to play a bigger role in developing crypto regulation.
- Banks argue that the highly regulated sector is the safest place for crypto and digital asset innovation.
- They highlighted the risks consumers face when engaging in crypto activities with unregulated companies, noting that the strict regulatory environment in which they operate puts them at risk when it comes to opportunities in the cryptocurrency markets digital assets disadvantaged.
Bank advocates agree that operating in a regulated environment would make the crypto market less vulnerable to fraud and money laundering, and minimize threats to national security.
Opponents fear that allowing banks to participate in the crypto markets would expose them to greater risks of fraud and potentially jeopardize traditional financial markets.