Anti-crypto Senator Elizabeth Warren is currently rallying senators to sign a letter to the OCC requesting that banks implement a far stricter regulatory regime in their dealings with cryptocurrency companies.
Senator Warren’s viewpoint
Senator Warren is well-known for her staunch opposition to the cryptocurrency industry. She has frequently advocated for greater safeguards for investors as well as the banking system, which she believes could be harmed by a potential crypto collapse.
She appears determined to force the OCC (Office of the Comptroller of the Currency) to backtrack on its commitments made during the Trump administration for banks to provide crypto services like custody to their clients.
A letter to the OCC
According to a Bloomberg article on the subject published earlier today, Warren wants the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to replace the interpretations of banks holding stablecoin reserves with a path toward adequately protecting users and the safety and soundness of the banking system.
The final version of the letter which will be sent to the OCC soon, emphasizes how the TerraUSD failure, as well as the bankruptcies of several digital asset platforms, may have jeopardized the banking system to unneeded risk.
The letter also seeks to highlight the OCC’s perceived failure to address these risks:
We are worried that the OCC has failed to adequately address the shortcomings of the preceding interpretive letters as well as the risks associated with crypto-related banking activities, which have become more severe in recent months.
The letter concludes with some questions, including requesting that the OCC name the regulated banks that provide crypto-related services, as well as an estimate of the amount in dollars that these activities enclose.
Opinion
Senator Warren’s interest in protecting investors can only be praised. However, if this means impeding them with extremely stringent regulations and preventing them from interacting with crypto platforms, this is a completely different story.
It is also debatable whether she should be worried about keeping the banking system safe at the expense of cryptocurrencies.
It is obvious that the recent turbulence among certain cryptocurrency platforms does not inspire confidence, but given the nascent nature of the industry, such issues are unavoidable.
The cryptocurrency industry has emerged precisely because of the terrible risks that the legacy financial system exposes everyone to. What is happening in crypto markets pales in comparison to the impending systemic failure of banks and other financial institutions on a scale comparable to Armageddon.
Enabling banks to integrate with crypto platforms is one way to save them. Otherwise, the current path they are on will only lead to a complete financial breakdown, as well as the ensuing poverty and chaos.
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