OCC Mulling Partnership with Feds and FDIC To Regulate Crypto
- US financial regulators are ramping up efforts to regulate the burgeoning crypto industry.
- The new head of the Office of the Comptroller of Currency (OCC), Michael Hsu, has made this known in a recent House Committee on Financial Services hearing.
Joint Task Force On Crypto
According to the Treasury Secretary Janet Yellen appointee, a combination of the OCC, Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) may soon end cryptocurrencies' regulatory uncertainty.
Hsu mentioned this in a virtual hearing titled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions.”
According to Hsu, the OCC has spoken with the Feds and the FDIC to create an “interagency sprint team.” The joint task force would focus on creating a regulatory framework for the nascent industry.
This was in response to Rep. Tom Emmer (R-MN), who pressed each regulator on what their respective agencies were doing to combat bad practices in the crypto space.
Also in attendance was Vice-Chair of the Federal Reserve Board of Governors Randal Quarles and FDIC Chair Jelena McWilliams.
Confirming Hsu’s comments, Quarles said that the agencies in question were focused on the crypto issues at hand and aim to have answers and joint views soon.
The lack of regulatory clarity has served as a red flag to institutional investors from staking in the emerging technology.
Calls for a dynamic regulatory framework have been on for some time, with Securities and Exchange Commission (SEC) commissioner Hester Peirce saying the SEC needs to step up to the task.
But Hsu said that a “fragmented” approach to crypto regulation might not work out in the long term. He is deeply concerned as the lack of collaboration among regulators on this financial innovation is a pain point for many investors.
Too Many Cooks Spoil The Broth
The US crypto space has been fraught with many views on how cryptocurrencies should be regulated. Each government agency has used an independent rule book in determining what constitutes a security or a commodity.
An example is the SEC classifying Ripple’s XRP a “security” and the Commodity Futures Trading Commission (CFTC) calling Bitcoin and Ethereum “commodities.”
These disjointed efforts by regulators have seen many crypto startups setting up elsewhere, as noted by Ripple CEO Brad Garlinghouse.
But the most pro-crypto regulatory agency has been the OCC under the helms of new Binance US head Brian Brooks. Brooks, who had a stint with US largest crypto exchange Coinbase, permitted banks in an interpretive letter to offer crypto custodial services to their clients. Alongside this, he also said they could issue their stablecoins – digital assets that monitor fiat price action.
But the new OCC head may not continue on this lane as he has called for a staff review of the agency’s actions in the crypto space.