US banking regulator seeks public input on digital currencies, DLT

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The U.S. federal regulator in charge of all national banks is seeking public input on the use of digital currencies in the country’s financial services sector. The Office of the Comptroller of the Currency (OCC) is also seeking comments on the use of distributed ledger technology in finance.

The OCC, which is an independent agency under the U.S. Treasury, oversees all national banks in the country. It’s the agency that regulates the largest banks in the country, including JPMorgan, Wells Fargo and Citibank. It’s now interested in the impact that digital currencies have on banks according to its notice.

The OCC published a notice of proposed rulemaking for public comments on June 4. This public input will help the agency as it updates its policies for national banks and federal savings associations.

On digital currencies, the OCC seeks to know “what activities related to cryptocurrencies or cryptoassets are financial services companies or bank customers engaged in,” as well as “to what extent customer engagement in crypto-related activities impacts banks and the banking industry?”

It also invites comments on “the barriers or obstacles to further adoption of crypto-related activities in the banking industry.” Members of the public can also comment on what regulations the government should put in place to facilitate digital currency adoption.

The OCC notes that digital currencies have become increasingly popular in the country.

“The first cryptocurrency was created in 2009; there are now over 1,000 rival cryptocurrencies, and approximately eight percent of Americans own cryptocurrency.”

On distributed ledger technology (DLT), the OCC is seeking to know:

“How is distributed ledger technology used, or potentially used, in banking activities (e.g., identity verification, credit underwriting or monitoring, payments processing, trade finance, and records management)? Are there specific matters on this topic that should be clarified in regulatory guidance, including regulations?”

The OCC has adopted a more friendly stance towards digital currency after David Brooks took over as the acting comptroller. Brooks previously served as the general counsel for Coinbase before joining OCC as the chief operating officer. He is also closely affiliated with the Treasury Secretary Steven Mnuchin, and is therefore likely to play a critical role in the Treasury’s regulations for the digital currency industry.