Senator Warren wants OCC to withdraw crypto guidance for banks: Report

Senator Elizabeth Warren of Massachusetts is gaining support among colleagues on Capitol Hill for a letter that would ask the Office of the Comptroller of the Currency (OCC) to withdraw crypto guidance banks have relied on.

Warren is asking other senators to sign the letter, according to reporting from Bloomberg Newsand plans to send a final version of it soon to Acting Comptroller of the Currency Michael Hsu, who heads the office.

The legal guidance targeted by Warren considers it appropriate for banks to hold deposits that act as reserves that support stablecoins, laying the groundwork for banks to offer other crypto-related services to customers. The request, reviewed by Bloomberg Newsasks the OCC to work with the Federal Reserve and the Federal Deposit Insurance Corporation to develop a new approach.

An outspoken advocate for regulation of the crypto industry, Warren has pushed agencies to establish better protections for consumers. The letter being circulated reportedly says, “Cryptocurrencies are highly volatile assets that offer little, if any, protection to retail investors.”

Warren has raised several questions in relation to cryptocurrency, between how it can allegedly be used by Russian oligarchs for avoid financial sanctions, to the negative environmental impacts of mining digital assets. As a member of the Senate Banking, Housing and Urban Affairs Committee, she accused Wall Street firms of profiteering from crypto fraud at a recent hearing.

The legal interpretations identified in Warren’s letter were established under the Trump administration, when the OCC was chaired by Brian Brooks, a former Coinbase executive who would later serve as CEO of Binance US for three months. Brooks was acting head of the OCC for eight months before stepping down from the role, despite being nominated for a full term.

While leading the office, the OCC supported crypto innovation and legalized it interpretation that it was okay for banks to use blockchain technology and stablecoins to facilitate payments. After Brooks left the agency, Hsu called for a review of guidance on digital assets issued by his predecessor.

“My broader concern is that these initiatives were not done in full coordination with all stakeholders,” Hsu wrote in prepared remarks to the House Committee on Financial Services. “Nor do they appear to have been part of a broader strategy related to the regulatory perimeter.”

In November, the OCC issued a joint statement with the Board of the Federal Reserve System and the FDIC, outlining a roadmap for determining whether banks engaging in crypto in certain ways are legally permitted, including the issuance and distribution of stablecoins and loans backed by crypto assets.

However, the opinion did not change the legal interpretation of any guidance issued by the OCC under Brooks. The office clarified its position website“The statement by the agencies does not change existing agency rules or regulations.”

A recent decline in the price of most digital assets is cause for concern that the OCC has left the US banking system vulnerable to crypto with “unnecessary risk”, amid insolvency of several firms operating in the industry, the letter said.

In accordance Bloomberg Newswrote Warren, “We are concerned that the OCC has failed to address the deficiencies in the previous interpretive letters and the risks associated with crypto-related banking activities, which have become more serious in recent months.”

The letter concludes with a series of questions posed to the OCC related to regulated banks involved in crypto. It asks the OCC to name which ones offer services related to digital assets and detail the estimated volume of those activities, according to Bloomberg News. Elizabeth Warren’s office did not immediately respond to requests for comment.