Lawmakers urge OCC to rescind, replace cryptocurrency guidance

U.S. Sens. Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sheldon Whitehouse (D-RI), and Bernie Sanders (I-VT) recently forwarded correspondence to the Office of the Comptroller of the Currency Acting Comptroller of the Currency Michael Hsu, advocating for the previously issued cryptocurrency guidance to be rescinded and replaced.

“We write to inquire about the Office of the Comptroller of the Currency’s (OCC) November 2021 interpretive letter authorizing banks to engage in certain cryptocurrency (crypto) activities and the activities that banks have been permitted to engage in under OCC’s guidance,” the legislators wrote. “Each of the prudential regulators, including the OCC, is responsible for safeguarding our financial system from undue risk and ensuring the safety and soundness of the banking system. In light of recent turmoil in the crypto market, however, we are concerned that the OCC’s actions on crypto may have exposed the banking system to unnecessary risk and ask that you withdraw existing interpretive letters that have permitted banks to engage in certain crypto-related activities.”

Under the previous acting comptroller, the OCC issued several interpretive letters related to cryptocurrency, which determined that banks were authorized to engage in certain crypto-related activities that included providing cryptocurrency custody services for customers, holding deposits that serve as reserves for certain stablecoins, and using independent node verification networks (INVNs) and stablecoins for payment activities.

“Given the risks posed by cryptocurrencies to banks and their customers, we request that you withdraw OCC Interpretive Letters 1170, 1172, 1174, and 1179 and coordinate with the Federal Reserve and the Federal Deposit Insurance Corporation to develop a comprehensive approach that adequately protects consumers and the safety and soundness of the banking system,” the legislators concluded.