Warren’s letter wants OCC to engage with the Fed and FDIC to devise an alternate cryptocurrency strategy “that appropriately safeguards consumers and banking safety and soundness.”
Bloomberg reported on Thursday that the United States Senator Elizabeth Warren is continuing her anti-crypto crusade by introducing legislation that would essentially shut down bank-provided cryptocurrency services.
Senator Warren, a member of the Senate Banking Committee, is pushing committee members and senators to sign a letter to the Office of the Comptroller of the Currency (OCC) requesting that banks quit offering crypto services such as crypto custody. The banking committee thinks that by publishing crypto rules, authorities placed the financial system at risk by allowing Wall Street institutions to join the market.
The letter invites the OCC to engage with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) to devise an alternate strategy for cryptocurrencies that appropriately protects customers and supports the “safety and soundness of the banking system:”
“We are concerned that the OCC has failed to adequately address the deficiencies of previous interpretative letters and the hazards connected with crypto-related banking operations, which have become more serious in recent months.”
The final form of the letter will be forwarded to Michael Hsu, the OCC’s acting comptroller. The OCC’s answer to Bloomberg’s question cited recent statements by comptroller Michael Hsu about banks’ expanding engagement in cryptocurrencies, suggesting the agency’s intent to amend bank crypto guidelines.
Hsu has advocated for more vigilance over the penetration of cryptocurrency to conventional banking institutions. Recent cryptocurrency volatility has resulted in billions of dollars in lost investments, pushing politicians and regulators to focus more on crypto-related businesses.
According to Warren’s letter, the OCC’s earlier directives and regulations were inadequate to protect the financial system from recent crypto volatility. It asks for the reform and elimination of crypto banking regulations to prohibit banks from engaging with cryptocurrencies. In addition, the paper requests information on the current number of licenced institutions that provide crypto-related services and the overall cash worth of such services.
As the letter has not yet been made public, its signatories remain unknown. However, Senator Warren has been an outspoken opponent of cryptocurrencies and has previously advocated for further regulation in the field.
During a committee hearing, she labelled decentralised finance (DeFi) the “most hazardous” aspect of crypto in 2021. She recommended legislation to investigate the role of crypto in ransomware, all while criticising the Ethereum network for its high costs. Therefore, it is unsurprising that she has grabbed the opportunity to argue for stricter regulations.
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