The lawmakers also raised a series of questions about the number of banks currently involved in cryptocurrencies.
U.S. Senses Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Richard Durbin (D-Ill.) and Sheldon Whitehouse (D-R.I.) Have asked the Office of the Monetary Regulator to rescind The letter interpreter allows banks to participate in crypto activities and explains how banks are involved in crypto-currencies.
In an open letter to Acting Editor Michael Hsu, the lawmakers said they were concerned that some of the interpretive letters published in 2020 and 2021 under former Acting Editor Brian Brooks (now The CEO of crypto company Bitfury) allows banks to provide custody of cryptocurrencies, issue payments in stablecoins, banks to issue stablecoins, and engage in other activities related to stablecoins. Cryptocurrencies “fundamentally granted banks an unfettered opportunity” to engage in questionable crypto activities. The legislators said the letters of interpretation, including one published during Hsu’s tenure, do not address any of the risks associated with crypto banking operations.
“Given the risks posed by cryptocurrencies to banks and their customers, we ask that you withdraw OCC Interpretation Letters 1170, 1172, 1174 and 1179 and coordinate with the Federal Reserve and the General Federal Deposit Insurance Corporation to develop a holistic approach to complete consumer protection and the safety and soundness of the banking system,” the letter reads.
The OCC issued these letters between July 2020 and January 2021, when Brooks led the regulator. At the time, the crypto industry saw how letters of guidance could potentially aid mainstream adoption of cryptocurrencies by allowing regulated institutions – banks – to become more involved. into the industry.
The legislators said crypto operations did little to protect retail, pointing to the collapse of Terra and Three Arrows Capital as well as the bankruptcy of C Network and Voyager Digital.
While you have stated that there is ‘no contagion from crypto to banking and traditional finance’ during this recent market turbulence, it is clear that there is a need, the lawmakers said. Stronger safeguards must be in place to reduce the risks of cryptocurrencies to the financial system and consumers.”
The senators also raised a series of questions about how many banks have been approved to engage in crypto activities, the types of services those banks provide, and the volume of dollars that banks provide. holding banks tied to cryptocurrencies and whether any of these banks are engaged in other crypto-related activities such as trading in derivatives.