US Senators Warren & Sanders Ask Bank Regulator To Rescind Crypto Guidance

August 12, 2022 3:29 pm Comments

It looks like US Senators Elizabeth Warren and Bernie Sanders have asked a key bank regulator to rescind letters that would allow banks to participate in crypto-related services and activities.

Apparently, these law makers are becoming concerned about the big banks getting involved with things such as crypto custody services and stable coins.

Essentially, they are claiming these types of crypto related activities to be “problematic” and want to stop all progress that is being made despite the overwhelming demand for digital assets.

Whether or not the bank regulators will actually listen to these Senators is another story thankfully.

Yahoo reports:

In an open letter addressed to Acting Comptroller Michael Hsu, the lawmakers said they were concerned that several interpretative letters published in 2020 and 2021 under former Acting Comptroller Brian Brooks (now CEO of crypto company Bitfury) that allowed banks to provide crypto custody services, issue payments with stablecoins, bank stablecoin issuers and engage in other crypto-related activities “essentially granted banks unfettered opportunity” to engage in problematic crypto activities.

The interpretative letters, which also includes one published during Hsu’s tenure, did not address any of the risks tied to crypto banking activities, the lawmakers said.

“Given the risks posed by cryptocurrencies to banks and their customers, we request that you withdraw OCC Interpretive Letters 1170, 1172, 1174, and 1179 and coordinate with the Federal Reserve and the Federal Deposit Insurance Corporation to develop a comprehensive approach that adequately protects consumers and the safety and soundness of the banking system,” the letter said.

The purpose of the guidance letters is that they would allow for the continual mainstream adoption of digital assets by letting regulated institutions get involved in the space as well.

This was seen as beneficial as it would put more rules in place as well as provide a lot more capital inflow into the new industry.

Still, the senators have ignored such reasons and continue to inquire about why there is no concern over “investor protection”.

However, the crypto community has already shared their opinions in the past and have debated if “investor protection” is really the true reason for over-regulation.

Yahoo concludes:

“While you declared that ‘there has been no contagion from cryptocurrencies to traditional banking and finance’ during this recent market turmoil, it is clear that stronger protections are necessary to mitigate crypto’s risks to the financial system and consumers,” the lawmakers said.

The senators also asked a series of questions about how many banks have been approved to engage in crypto activities, what kinds of services those banks provide, the dollar volumes the banks hold tied to crypto and whether any of these banks are involved in other crypto-related activities such as trading derivatives.

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