The proposals to regulate cryptocurrency that have been circulated so far on Capitol Hill have largely been favorable to the industry, but opposition to that approach is beginning to organize.
In what is almost certainly a first step toward building a coalition in favor of tough regulation, Sen. Elizabeth Warren of Massachusetts is circulating a letter among her colleagues that calls on Acting Comptroller of the Currency Michael Hsu to revoke the pro-crypto ruling that would allow banks to become more deeply involved with digital assets.
The three interpretive letters, issued by then-Comptroller Brian Brooks between July 2020 and January 2021, give banks permission to custody crypto for clients, hold stablecoin reserve accounts, and use stablecoins to make payments and settle transactions. Brooks had been public crypto exchange Coinbase’s chief legal officer before being appointed acting comptroller.
In the letter she wants other senators to sign, Warren said Hsu’s earlier decision allowing the rulings to stand but telling banks to seek the permission of the Office of the Comptroller of the Currency (OCC) didn’t go far enough, Bloomberg reported.
Citing the recent $48 billion collapse of a stablecoin and subsequent bankruptcies at crypto lenders, the letter said those rulings have exposed banks to unnecessary risk — even though Hsu’s stance has been widely interpreted as ask first so we can tell you no — as they don’t “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.”
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