Several senators are calling for a cancellation and a broader update to the Office of the Comptroller of the Currency’s Digital Asset Guidance, citing volatile market conditions and greater risks for financial institutions.
As an independent office within the Department of Treasury, the OCC oversees foreign banking activities and regulatory compliance. Executive Controller Michael Soo has been asked by Censor Elizabeth Warren, D-Mass., to restrict cryptocurrency transactions within the banking system; Dick Durbin, D-Ill.; Bernie Sanders, I-Vt.; and Sheldon Whitehouse, D-Ri.
“In light of the recent turmoil in the crypto market, we are concerned that the OCC’s actions in relation to crypto have exposed the banking system to unnecessary risk and ask that you withdraw existing clarification letters asking banks to use certain crypto permits, to engage in related activities,” the letter reads.
Lawmakers specifically targeted a series of clarifying letters that the OCC had previously issued to banks that allowed them to conduct digital currency transactions – provided a bank could demonstrate that the transactions were financially sound.
Letters 1170, 1172, 1174, and 1179 all allow banks to engage in cryptocurrency transactions, which lawmakers describe as “autocratic” and “problematic” behavior. They cite the recent volatility in the cryptocurrency markets, namely the volatility of digital coin prices, as the main reason that warrants more careful scrutiny.
“We are concerned that the OCC has not adequately addressed the deficiencies of previous briefing papers and the risks associated with crypto-related banking, which have become more serious in recent months.”
The senator is calling for the OCC to withdraw letters authorizing cryptocurrency transactions, followed by coordination with the Federal Deposit Insurance Corporation and the Federal Reserve to implement a robust cryptocurrency consumer protection framework.
The letter also sought a full list of OCC-regulated banks offering cryptocurrency deposit and custody services, the total amount of cryptocurrency custody currently held in dollars at participating banks, and other information related to digital currency transactions. .
An OCC spokesman said next government While the OCC does not comment on Congressional correspondence, Hsu has previously advocated a strong, coordinated federal approach to curbing the risks associated with cryptocurrency banks.
“To the extent that OCC’s previous communications have been interpreted as implicit inducements to engage in crypto activities, an upcoming release will make it clear that security and soundness are of paramount importance,” he said in a remark before the Federal Reserve Bank of Philadelphia.
The federal government has been eager to explore regulations for the fast-growing cryptocurrency market to prevent widespread instability in the financial system.
While regulation is generally dismissed by industry players, some crypto firms welcome the oversight. Georgia Quinn, previously chief legal officer at OCC-licensed crypto trading platform Anchorage Digital, said more regulations will ensure a safer digital currency industry. She also said that the cancellation of the OCC’s letters allowing cryptocurrency trading would stop firms like Anchorage from demanding a federal charter.
“Recent calls by the OCC to withdraw its crypto guidance for banks will result in fewer institutions seeking a Bundesbank charter and less consumer protection,” she said in a statement. “If we really want to protect consumers, we need to pave a practical path for regulated institutions to offer crypto services, which was the original intent of the OCC guidance.”