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Senator Elizabeth Warren (Democratic Massachusetts) circulate a letter Bloomberg News reported on Aug. 4, among colleagues in the Senate withdrawing legal guidance for banks holding and trading cryptocurrencies.
The letter tells the Office of the Comptroller of the Currency (OCC) to work with the Federal Reserve (FRB) and Federal Deposit Insurance Corporation (FDIC) to make Trump-era regulation of cryptocurrency custody services more consumer-centric. It is reportedly calling for it to be replaced by approach.
Bloomberg, citing a senator’s aide, who is a member of the Senate Banking Committee, reported that senators are gathering signatures from their colleagues before the final version is sent to the OCC.
According to Bloomberg, known details in the letter indicate Warren’s concern that OCC has failed to adequately address the risks associated with crypto-related banking activities.
The letter reportedly contains a series of questions to the OCC, including the names of regulated banks currently offering cryptocurrency-related services and the estimated total volume of their activity.
When asked about the issue, OCC Acting Administrator Michael Hsu said he had not received the letter, although it was an interesting topic to reply to, Bloomberg reports.
When interviewed at the Philadelphia Federal Reserve Board’s sixth annual fintech conference on Thursday, Michael said:
I strongly believe that anything that flows into the banking system with cryptocurrencies must be safe, sound and fair, and do what it needs to do in a sustainable, durable and robust way. I think we’re doing a pretty good job, a lot of things just happened and the banking system is in pretty good shape, and I think part of that is the actions that we’ve taken.
In the final year of the Trump administration, the OCC Established The National Bank provides cryptocurrency custody services on behalf of its clients and provides authorized banking services to legitimate businesses, including cryptocurrency businesses, as long as it manages risks effectively and complies with applicable laws. Bloomberg reported that it could.
The Biden administration reportedly clarified the rule when new acting supervisor Sue explained that banks must give written notice that they have no objections from the supervisory authority.
Banks interested in offering cryptocurrency custody also had an obligation to demonstrate their willingness to conduct these activities safely by implementing appropriate risk management systems.
