Anti-crypto Senator Elizabeth Warren is currently whipping up support among senatorial colleagues to sign a letter to the OCC asking for banks to have a far tighter regulatory regime around their dealings with crypto companies.
Senator Warren’s stance
Senator Warren is well-known for her vehement dislike of the cryptocurrency industry. She has often called for more protections for investors, and also for the banking system, which she believes could suffer contagion from a potential crypto collapse.
She appears to be determined to oblige the OCC (Office of the Comptroller of the Currency) to go back on its commitments, made during the Trump era, for banks to offer crypto services such as custody for their clients.
A letter to the OCC
According to a Bloomberg article earlier today on the subject, Warren wants the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC), to supersede the interpretations on banks holding stablecoin reserves, and replace them with a path towards “adequately protect[ing] consumers and the safety and soundness of the banking system.”
The letter, of which a final version will be sent to the OCC soon, highlights how the TerraUSD collapse, together with the bankruptcies of several digital asset platforms “may have exposed the banking system to unnecessary risk”.
The letter also seeks to underline what it perceives as the OCC’s failure to address these risks:
“We are concerned that the OCC has failed to properly address the shortcomings of the preceding interpretive letters and the risks associated with crypto-related banking activities, which have grown more severe in recent months,”
The letter closes with some questions, which include asking the OCC to name the regulated banks that are providing crypto-related services, and also an estimation of the amount in dollars that these activities encompass.
That Senator Warren should be interested in protecting investors can only be applauded. However, if this means hobbling them with extremely restrictive regulations, and preventing them from interacting with crypto platforms is another thing entirely.
That she should be concerned about keeping the banking system safe and sound though at the expense of cryptocurrencies is also a very debatable question.
Obviously, the recent turmoil among certain cryptocurrency platforms does not inspire confidence, but given that this is such a nascent industry, these issues are bound to happen.
The cryptocurrency industry has arrived precisely because of the dreadful dangers the legacy financial system is subjecting everyone to. What is happening in crypto markets is as nothing compared to the approaching systemic failure of banks and other financial institutions on a scale that can only be likened to Armageddon.
Allowing banks to integrate with crypto platforms is one way that they might be saved. Otherwise, the course they are currently following will only lead to a complete financial breakdown, and the ensuing poverty and chaos that this would bring about.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.