The US senators requested Key Bank Regulator remove cryptocurrency guidelines.
The Senators also requested information on the number of banks participating in cryptocurrency.
Senators Elizabeth Warren, Bernie Sanders, Richard Durbin and Sheldon Whitehouse have requested the Headquarters of the Comptroller of the Currency (OCC) to eliminate the messages describing the cooperation process of banks within crypto regulations. They also asked to stop the letters which discuss how participating banks are in the transition to cryptos these days.
In a public letter to Deputy Governor Michael Hsu, the members of congress voiced their concerns. They also mentioned that vice Deputy Governor Brian Brooks (now CEO of crypto corporation Bitfury) wrote many explanatory notes in 2020 and 2021. These notes enabled financial institutions to provide different services as below:
- They are providing crypto custody services on behalf of clients. Crypto custody service is the process of securing a client’s fund.
- They can create payments with stablecoins; stablecoins are digital currencies that the government can generate a stable exchange rate in the country for them compared to other countries exchange rates.
- Provide stablecoin issuer by banks; a stablecoin issuer is not a bank nor deposit receiving institute. It mainly enables the customers a quick, affordable and adaptable payment method, mostly on stablecoins,
- Specifically, their main concern is that banks can participate in questionable digital currency regulations.
- They also voiced their concern about engaging banks in other crypto-related activities, which they did not make clear.
Interestingly, in this interpretative letter and Hsu’s lecture, Senators did not specify any risk related to cryptocurrency banking.
There are some risks that financial institution and their client will face due to cryptocurrency regulations; the reason why senators had such a request will mention as below:
“We request that you withdraw OCC Interpretive Letters 1170, 1172, 1174, and 1179 and coordinate with the Federal Reserve and the Federal Deposit Insurance Corporation to increase a detailed achievement that sufficiently gives protection and security and reliability to the digital financial mechanism.”
The OCC published these letters from July 2020 to January 2021, when Brooks was in charge of the regulatory agency. Meanwhile, as lawmakers wrote in this letter, the crypto sector will possibly promoting the broader of cryptocurrency users. This possibility would happen by allowing regulated entities like banks to become more engaged in cryptocurrency.
They also reminded the failures of Terra and Three Arrows Capital and the bankruptcies of Celsius Network and Voyager Digital to ask for more protective rules for retail users of crypto.
“Since you stated that ‘there has been no transmission from digital currencies to ordinary finance and banking during the current market turbulence, it is obvious that more safeguards are required to reduce crypto’s concerns to the financial system and users,” the senators voiced.
Senators inquired how many banks have been permitted to participate in crypto operations, what kind of services banks need to provide, how much money the banks stored in crypto, and if the financial institutions are participating in other crypto-related operations like trade futures.