U.S. regulators have largely fenced off the banking system from heavy involvement in the crypto industry, and that’s a status that the acting head of the Office of the Comptroller of the Currency intends to maintain.
Michael Hsu, the acting chief of the banking agency for most of President Joe Biden’s administration, is critical of crypto and had been quick to reverse course for the agency, which under previous management was the most welcoming corner of the federal government for digital assets.
The OCC – followed by the other banking regulators – established policies that insisted any lender has to ask permission before dipping a toe into any cryptocurrency activity, and they have to demonstrate that the activity will be totally safe.
Recent events have reinforced that position, he said Wednesday at a Clearing House and Bank Policy Institute conference – one of the largest annual events to discuss banking policy. Hsu cited the collapse of Terra and the LUNA token in May, which he said “sparked contagion across cryptocurrencies, resulting in several crypto platforms failing, forcing numerous exchanges to close, and driving large losses and reductions of staff at a number of publicly traded companies.”
“The federally regulated banking system, by contrast, has been largely unaffected,” he said. “I believe this is due, at least in part, to the careful and cautious approach that we adopted and intend to maintain for the foreseeable future.”
The OCC, Federal Reserve and Federal Deposit Insurance Corp. are all involved in U.S. government discussions over how to address oversight of stablecoins, such as Tether’s USDT and Circle Internet Financial’s USDC. The tokens – designed for steady valuation by being tied to assets such as the dollar – are the object of ongoing legislative efforts, but the federal agencies are also considering how they might be dealt with as a financial stability concern.
DISCLOSURE
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Jesse Hamilton
Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.
Follow @jesseahamilton on Twitter
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
@2022 CoinDesk
