Banks’ Ability to Conduct Cryptocurrency Transactions Comes Under Senators’ Fire

A number of senators are asking for a rescission and extra complete updates on the Workplace of the Comptroller of the Forex’s digital asset steerage, citing risky market situations and better threat for monetary establishments.

An unbiased workplace inside the Treasury Division, the OCC oversees banking exercise and ensures regulatory compliance. Appearing Comptroller Michael Hsu was requested to restrict cryptocurrency transactions inside the banking system by Sens. Elizabeth Warren, D-Mass; Dick Durbin, D-Ailing.; Bernie Sanders, I-Vt.; and Sheldon Whitehouse, D-RI.

“In gentle of latest turmoil within the crypto market, we’re involved that the OCC’s actions on crypto could have uncovered the banking system to pointless threat, and ask that you simply withdraw present interpretive letters which have permitted banks to interact in sure crypto-related actions,” the letter reads. 

Lawmakers particularly focused a sequence of interpretive letters the OCC beforehand issued to banks that allowed them to interact in digital foreign money transactions––offered a financial institution can show the transactions are financially sound. 

Letters 1170, 1172, 1174, and 1179 all allow banks to interact in cryptocurrency transactions in what lawmakers say is “unfettered” and “problematic” habits. They reference the latest volatility in cryptocurrency markets, specifically the fluctuating costs of digital cash, as the important thing cause warranting extra cautious oversight.

“We’re involved that the OCC has didn’t correctly handle the shortcomings of the previous interpretive letters and the dangers related to crypto-related banking actions, which have grown extra extreme in latest months.”

The senators ask for the withdrawal of the OCC’s letters concerning cryptocurrency transaction permissions adopted by coordination with the Federal Deposit Insurance coverage Company and Federal Reserve to implement a stronger shopper safety framework concerning cryptocurrencies. 

The letter additionally asks for a whole listing of banks regulated by the OCC which might be foreign money offering cryptocurrency deposit and holding providers, whole greenback quantities of cryptocurrency custodies at the moment deposited in taking part banks, and different data surrounding digital foreign money transactions. 

A spokesperson for the OCC instructed Nextgov that whereas the OCC doesn’t touch upon congressional correspondences, Hsu has beforehand advocated for a robust, coordinated federal strategy to stop dangers related to cryptocurrency banking. 

“To the extent the OCC’s prior communications have been interpreted as tacit encouragement to interact in crypto actions, the forthcoming releases will make clear that security and soundness is paramount,” he mentioned in remarks earlier than the Federal Reserve Financial institution of Philadelphia. 

The federal authorities has been more and more eager on exploring laws for the booming cryptocurrency market to stop broad destabilization within the monetary system. 

Whereas regulation is usually met with pushback by business gamers, some crypto corporations welcome the oversight. Georgia Quinn, basic counsel on the first OCC-approved crypto buying and selling platform Anchorage Digital, mentioned that extra laws guarantee a safer digital foreign money business. She additionally mentioned that rescinding the OCC’s letters allowing cryptocurrency transactions would decentivize corporations like Anchorage from looking for federal charters.

“Latest requires the OCC to withdraw its crypto steerage for banks would end in fewer establishments looking for federal banking charters, and fewer shopper protections because of this,” she mentioned in a press release. “If we really need to shield shoppers, we have to pave a workable path ahead for regulated establishments to offer crypto providers, which was the very intent of the OCC’s steerage.”