US regulatory boots on the ground as three major regulators, including the Federal Reserve, set to create a unified banking services framework for cryptocurrencies

The U.S. Office of the Comptroller of the Currency has expressed its desire to work with the Federal Reserve and the Federal Deposit Insurance Commission (FDIC) to establish a unified banking services framework for cryptocurrencies.

US regulatory boots on the ground as three major regulators, including the Federal Reserve, set to create a unified banking services framework for cryptocurrencies

Acting Comptroller Michael Hsu of the Office of the Comptroller of the Currency (OCC) has expressed his desire to work with other regulators to create a unified framework for banking services for cryptocurrencies.

Hsu’s cryptocurrency comments during a Wednesday hearing on virtual currencies before the U.S. House Financial Services Committee focused on what he described as the “fragmented” regulation of the asset class by federal regulators.

The hearing brought together the independent regulators overseeing U.S. national banks in a hearing titled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity and Accountability of Depository Institutions.

U.S. Rep. Tom Emmer (R-MN) urged each attendee to describe their agency’s work related to creating cryptocurrency rules today. Federal Reserve Board Vice Chairman Randal Quarles (R-KY) and Federal Deposit Insurance Commission (FDIC) Chair Jelena McWilliams (D-WI) focused on internal efforts, which focused on requesting comments from the industry as well as research on emerging technologies related to central banking digital currencies (CBDC) and other innovations.

But Hsu’s response was inherently more collaborative. According to Hsu, he, McWilliams and Quarles have been discussing the possibility of creating a “cross-departmental sprint group” to regulate cryptocurrencies. Quarles later reiterated that the three are currently “working together” to come up with a unified definition related to cryptocurrencies.

Quarles said.

“We are very focused on these cryptocurrency issues and the goal is to get answers and a common view very quickly. I think that’s achievable.”
According to Hsu, the lack of cooperation among federal regulators on crypto issues is a sore point.

He said.

“I’m concerned that regulators are taking a piecemeal, agency-by-agency approach to this technology-driven change that’s happening today.”
Hsu’s testimony comes on the heels of his announcement today of a review of measures taken by the previous OCC office. This includes pending actions related to cryptocurrencies, including interpretive letters related to bank custody of stablecoins, stablecoin reserves, and banking services federal banking charter application pieces for crypto companies. The review is scheduled to be completed this summer, Hsu said.

Former OCC Comptroller Brian Brooks made great strides on crypto, though some in Congress accused him of overstretching the powers of the U.S. banking regulator. Hsu’s testimony suggests that he is interested in reviewing all actions to more fully hear from “all stakeholders.

As Rep. Warren Davidson (R-OH) pointed out, some cryptocurrency companies may need guidance from the Federal Deposit Insurance Commission (FDIC) now that they have applied for a federal charter for banking services. Currently, the FDIC does not provide insurance for cryptocurrency deposits. His questions to McWilliams were submitted for the record and will likely be answered in writing in the future.

Similarly, the Federal Reserve has just released guidance on “new types of institutions,” including criteria for some newly formed OCC-chartered firms to access the Fed’s services. The regulator is currently seeking public comment on the guidance.

Hsu said U.S. banking regulators need to provide some pathway to approval for cryptocurrency and fintech companies, and should not ignore the growing interest in bank charters as a pathway to compliance. Hsu said the OCC is reviewing upcoming actions to re-examine the need for and impact of cryptocurrency bank charters in other areas.

“That’s why we’re re-examining [the OCC’s actions on cryptocurrencies] to strike that balance in the right way,” Hsu said, adding.

“And we’re doing this together, because it’s not just the OCC that’s acting. Other regulators are doing the same.”

Posted by:CoinYuppie,Reprinted with attribution to:
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