Withdrawing OCC interpretive letters regarding cryptocurrency would not benefit consumers and investors or promote a safe and secure marketplace, the American Bankers Association and the Bank Policy Institute said today in a letter to Acting Comptroller Michael Hsu. The associations are responding to a recent request from four U.S. senators to Hsu to withdraw the interpretive letters, claiming that “the OCC’s actions on crypto may have exposed the banking system to unnecessary risk” given “current turmoil” in the crypto market.
In 2020 and 2021, the OCC issued several interpretive letters clarifying that many crypto activities are merely modernized versions of permissible traditional banking activities. ABA and BPI urged Hsu to reject the lawmakers’ request to withdraw the interpretive letters, reaffirming that certain crypto activities are within the scope of permissible traditional banking activities for national banks. The trade groups said the OCC’s technology-neutral approach to permissible banking activities enables banks to meet customer demand for modernized services within the robust supervisory and regulatory framework in which banks operate.
The appropriate way to address the risks highlighted in the congressional letter is through “appropriate regulation of nonbank crypto firms and products that are currently largely unregulated,” the associations said. “Banks are subject to comprehensive and robust risk management, supervision and examination processes, and have substantial experience with incorporating new technologies into the business of banking,” they wrote. “The public and the broader financial system benefit from banks’ involvement in the activities described in the interpretive letters.”
ABA and BPI said a consistent approach from federal banking regulators regarding permissible crypto activities for banks and related risk management expectations would benefit institutions and their customers. They recommended the agencies continue working to provide clarity on crypto activity permissibility and risk management expectations.