US Senators Warren and Sanders Call on a Key Banking Regulator to Rescind Cryptocurrency Guidance

Lawmakers also asked a series of questions about how many banks are currently involved in crypto.

US Senators Elizabeth Warren, Bernie Sanders, Richard Durbin and Sheldon Whitehouse called on the Office of the Comptroller of the Currency to rescind the interpretive letters and not allow banks to engage in crypto activities and explain how the banks involved are going crypto.

In an open letter to Acting Comptroller Michael Hsu, the lawmakers said they were concerned that several interpretation letters released in 2020 and 2021 under former Acting Comptroller Brian Brooks (now CEO of cryptocurrency company Bitfury) that allowed banks provide cryptocurrency custody services, issue stablecoin payments, bank stablecoin issuers and engage in other cryptocurrency-related activities “unrestricted opportunity essentially given to banks” to engage in problematic crypto activities. The interpretive letters, which also include one published during Hsu’s tenure, did not address any of the risks linked to crypto banking activities, lawmakers said.

“Given the risks that cryptocurrencies pose to banks and their customers, we ask that you withdraw OCC Interpretative 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, soundness of the banking system,” the letter said.

The OCC issued these letters between July 2020 and January 2021, when Brooks headed the regulatory agency. At the time, the cryptocurrency industry felt that the guidance letters could help mainstream cryptocurrency adoption by allowing regulated institutions (banks) to get more involved in the industry.

Crypto activities do not have many retail protections, lawmakers said, pointing to the collapse of Terra and Three Arrows Capital, and the ongoing bankruptcies of Celsius Network and Voyager Digital.

“While stating that ‘there has been no contagion from crypto to traditional banking and finance’ during this recent market turmoil, it is clear that stronger protections are needed to mitigate the risks of crypto 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 kind of services those banks provide, the dollar volumes the banks have tied to cryptocurrencies, and whether any of these banks are involved in other cryptocurrencies. crypto activities related activities, such as derivatives trading.

Reference: coindesk.com

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