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According to a Thursday Bloomberg article, United States Senator Elizabeth Warren is continuing her anti-crypto campaign by putting out legislation that would essentially stop banks from offering bitcoin services.
Senator Warren, a member of the Senate Banking Committee, is urging committee members and senators to sign a letter to the Office of the Comptroller of the Currency (OCC) requesting that banks stop offering services related to cryptocurrencies, such as crypto custody, in order to keep Wall Street out of the cryptocurrency market. According to the banking committee, by drafting crypto regulations, regulators are allowing Wall Street institutions to enter the market and endangering the banking system.
In the letter, it is demanded that the OCC work with the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to create an alternative cryptocurrency strategy that effectively safeguards consumers and advances "safety and soundness of the banking system:
“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's final draft will be delivered to acting comptroller Michael Hsu of the OCC. As evidence of the agency's desire to change bank crypto guidelines, the OCC's response to Bloomberg's query cited recent comments made by comptroller Michael Hsu criticizing banks' expanding involvement in cryptocurrencies.
Regarding the penetration of cryptocurrency into traditional financial systems, Hsu has urged greater caution. Investment losses amounting to billions of dollars have been caused by the current cryptocurrency turmoil, which has prompted lawmakers and authorities to pay more attention to services associated to cryptocurrencies.
According to Warren's letter, the OCC's prior directives and regulations were insufficient to protect the financial system from recent crypto volatility. To stop banks from getting involved in cryptocurrencies, it proposes for modifying and abolishing crypto banking regulations. The paper also requests data on the current number of regulated institutions offering services connected to cryptocurrencies, as well as the overall dollar amount of those services.
The names of the senators who signed the letter are unknown because it has not yet been made public. Senator Warren has previously urged for increased regulation in the cryptocurrency industry and has been a prominent opponent of the technology.
She criticized the Ethereum network for its high costs and declared decentralized finance (DeFi) to be the "most harmful" aspect of cryptocurrencies in 2021. She also urged legislation to study the role of cryptocurrencies in ransomware. So it comes as no surprise that she took the opportunity to push for stricter regulations.
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