Massachusetts senator Elizabeth Warren has started a campaign to drive the replacement of existing crypto rules concerning banks. The senator wants her colleagues to support her motion to withdraw legal backing, allowing banks to offer crypto products.
According to a Bloomberg report, Warrant issued a letter calling for the Comptroller of the Currency (OCC) office to collaborate with the Federal Reserve and its sister agency, the Federal Deposit Insurance Corp (FDIC). The senator wants the agencies to replace the Trump administration policies on crypto custodial offering.
Senator Warren Wants to Address the Bank’s Crypto Risk
According to reports, the senator is banking on the support of her colleagues in the senate before she sends the letter to the OCC’s office for review. Leaked details revealed Warren’s concern with the inability of the OCC to tackle the risks of crypto transactions in conventional banks.
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The letter wants the OCC to address why unregulated banks offer digital asset services and the trading volume of such transactions.
Commenting on Senator Warren’s move, OCC’s current comptroller revealed that he has yet to receive the said letter. However, as reported by Bloomberg, Michael Hsu added that this would have been interesting to talk about.
Speaking in Philadelphia, Michael reiterated his beliefs in safe and controlled crypto trading.
According to him, any transactions in the banking ecosystem involving cryptocurrency must be safe and secure, and the OCC is doing its best to ensure compliance. Furthermore, a lot is happening in the financial sector involving banks, and the OCC is working on ensuring the banking sector is in good condition.
US Position On Banks’ Offerings Of Crypto Custodial Products
During President Donald Trump’s era, the United States has implemented several guidelines to oversee the activities of the crypto industry. Similarly, the OCC announced that any national bank could offer crypto custodial services on behalf of its customers.
In addition, the banks can choose any permissible business to invest in on behalf of their customers, including cryptocurrency.
Bloomberg reported that all of these are approved by the OCC, subject to complying with the laws, and can control the risks associated with the investments.
Likewise, Hsu disclosed that the Biden administration also agreed with the rules. Banks only need written approval from the supervisory office before offering custodial services.
Thus, banks seeking to offer such services must show their capacity to manage these investments safely. They are required to put in place risk control mechanisms to protect investors.
Despite the laws above, Senator Warren is not convinced that the existing regulations are well placed to protect consumers. As a result, she wants the OCC to do away with the previous guidelines by updating them to be more customer-centric.
The senator is convinced that the existing regulations are not robust enough to protect crypto customers from the risks associated with banks.
It will be interesting to see how far Warren’s proposal will go before the OCC accedes to the changes.