Three U.S. banking regulators have published a joint statement on the state of digital currency regulations in the country. The three revealed that they intend to publish guidance for banks on how to handle stablecoins and the custody of digital assets in 2022 in a long-term regulation strategy after the policy sprints of earlier this year.
The statement was from the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), the three regulators that oversee the American banking industry.
— Federal Reserve (@federalreserve) November 23, 2021
The regulators were forced into policy sprints earlier this year as more banks sought clarity on digital currency involvement. These sprints focused on defining the vocabulary for the sector, identifying and assessing key risks, and analyzing how current regulations apply to digital currencies.
Digital asset custody, facilitation of digital asset trading, and lending collateralized by digital assets and stablecoins were among the activities on which the regulators offered some clarity.
This preliminary work has given the three regulators a roadmap on the most essential issues they must address in 2022. It includes digital asset custody and safekeeping, ancillary custody services such as staking, issuance, and distribution of stablecoins and digital asset loans.
“The agencies also will evaluate the application of bank capital and liquidity standards to cryptoassets for activities involving U.S. banking organizations and will continue to engage with the Basel Committee on Banking Supervision on its consultative process in this area,” according to the statement.
The three regulators said they would continue to monitor the fast-evolving industry and address other issues as they emerge. In addition, they would engage with other relevant authorities and stakeholders as appropriate.
United statement, but fragmented approach
Though united in their statement, the three regulators have taken different approaches to the regulation of digital currencies.
There’s the OCC, which is now under the Acting Comptroller Michael Hsu. Hsu has been quick to hit pause on many of the progressive moves that his predecessor had initiated regarding digital currencies. Brian Brooks held the office before Hsu, fresh off a senior role at Coinbase and then moving on to serve as the Binance U.S. head, albeit for a short stint.
Hsu called for a review of the OCC’s digital currency rulemaking in May, saying that the office must focus on “encouraging reasonable innovation.” He cast doubt on the moves made by Brooks, saying they “were not done in full coordination with all stakeholders. Nor do they appear to have been part of a broader strategy related to the regulatory perimeter.”
Hsu, who has called digital currencies fool’s gold (and he may be right about that), is keen to clamp down harder on banks’ involvement in digital currencies. He may not be in his position long enough to effect much change, however, as Saule Omarova has been nominated to replace him, and she could be even tougher.
The FDIC, on its part, has been a bit more open to digital assets. Led by Jelena McWilliams, it has made it clear that it wants a seat at the digital currency regulation table.
As CoinGeek reported, McWilliams recently stated that her agency’s role would mainly be on guiding banks in implementing existing regulations to their digital assets’ activities. She is, however, concerned with the rise of stablecoins, saying that if one of them were to rise to prominence, it could threaten the U.S. dollar and the entire banking sector.
Jerome Powell, who has recently been nominated for a second term at the helm of the Fed, isn’t a big fan of stablecoins. While he has recently made it clear that he won’t ban them, he believes that a digital dollar will bring them to extinction fairly soon. Before that happens, he has called for more stringent regulations for stablecoin issuers.
Watch: CoinGeek New York panel, Tokenized Assets, Stablecoins and Custody with BSV
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