No rush crypto tutorial due to crash
A rush to add new cryptoregulatory guidance has slowed as problems in the crypto space have made it a less urgent task, The Wall Street Journal (WSJ) wrote.
Federal agencies have seen less need to publish interagency guidance on how banks should treat crypto as the value of the assets has fallen recently, according to Michael Hsu, acting comptroller of the currency.
Hsu, speaking at a banking industry conference in New York on Wednesday (September 7), said there was “just a little bit more breathing room” now.
The overall crypto market capitalization was $960 billion on Wednesday, down from around $3 trillion in November.
The Office of the Comptroller of the Currency joined the chorus with the Federal Reserve Board and the Federal Deposit Insurance Corp. to announce a “policy sprint” for cryptoassets, promising more clarity on the matter.
Hsu said there was a period of “intense curiosity and questions” from banks around the digital assets – but this was before the turmoil that unfolded this year, with many bankruptcies and companies freezing withdrawals.
Hsu also warned that involvement in crypto could see risks for traditional financial institutions – internet forums have seen many stories of “ruined” investors. And banks that only want to be custodians of digital assets need to be aware of the difference from the regular assets they would protect before digital assets became big.
Regulators and banking institutions have issued statements before about the security of crypto and how to approach the issue.
Read more: OCC chief reiterates banking regulators’ cautious approach to crypto
PYMNTS recently wrote that, with recent events, the Office of the Comptroller of the Currency has seen its position that lenders should ask permission before participating in crypto, to show that it would all be completely safe.
Hsu, speaking at a Clearing House and Bank Policy Institute conference, said the collapse of Terra, along with subsequent failures and shutdowns, made the difference clear.
“The federally regulated banking system, on the other hand, has been largely unaffected,” Hsu said in his remarks at the event. “I believe this is due, at least in part, to the cautious and cautious approach that we adopted and intend to maintain for the foreseeable future.”
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