OCC: Bank Regulation Would Mitigate Crypto Risk
On November 3, Acting Comptroller of the Currency, Michael J. Hsu, remarked at the BritishAmerican Business Transatlantic Finance Forum 2021-2022 Executive Roundtable about the regulation of stablecoins and other crypto-assets (we discussed Hsu’s previous remarks on crypto trends and risks in earlier Consumer Finance & FinTech Blog posts here, here, and here). In his remarks, Hsu emphasized the following:
Large U.S.-based multinational corporations are beginning to accept cryptocurrency payments and several publicly traded companies now hold Bitcoin in their investment portfolios. Additionally, 16% of U.S. adults say they have owned, traded, or used some form of crypto, while 37% of underbanked and minorities indicated owning crypto.
Mainstream adoption of crypto means regulatory focus should be shifted to stablecoins, where regulating stablecoin issuers as banks could enable more innovation in crypto and make those innovations more durable. Hsu remarked that regulating stablecoins would give holders confidence that those coins were as reliable and “money good” as bank deposits.
There needs to be stronger collaboration among regulators to ensure a financial system free and clear from organized crime and money launderers.
Hsu applauded the agencies for laying out a roadmap for regulation (which we previously discussed here) and referred to recently released Interpretive Letter 1179 reminding banks that permissibility of engaging in crypto activities is conditional on them demonstrating that they can do it safely and soundly (which we previously discussed here).
Putting It Into Practice: This latest statement carries the reminder that institutions seeking to engage in crypto-asset related activities must provide coordinated and timely clarity where appropriate to promote safety and soundness, consumer protection, and compliance with applicable laws and regulations, including anti-money laundering and illicit finance statutes and rules. These institutions should also pay special attention to the developing regulatory framework in the U.S. and beyond. We plan to provide those updates as they become available.