Cryptocurrency

Banks Call on OCC to Expand Their Powers in the Cryptocurrency Industry

Members of the cryptocurrency industry have asked the Office of the Comptroller of the Currency (OCC) to allow banks to work with cryptocurrencies and blockchain.

Last month, the Office of the Comptroller of the Currency (OCC) allowed commercial banks to provide custody services for crypto assets. If banks manage risk effectively and comply with applicable laws, they will be able to store cryptographic keys for wallets. In response to this initiative, financial institutions working with cryptoassets have proposed to the regulator to expand their powers by allowing them to process cryptocurrency transactions and use blockchain technology.

For example, Silvergate Bank, which serves cryptocurrency companies, asked the OCC to integrate blockchain into banks’ business processes to increase the speed of interbank transfers and payments. According to the Silvergate management, blockchain has already proven its effectiveness in practice. Many financial institutions have successfully tested blockchain use cases, including using USDC and USDT stablecoins pegged to the US dollar. However, such firms are forced to conduct research under legislation that lacks clear regulations governing cryptocurrency activities.

The American advocacy group Blockchain Association has called on the regulator to allow banks to make payments and accept deposits in stablecoins pegged to the US dollar. These tokens must be OCC compliant. 

The Blockchain Association noted that cryptocurrency firms complying with US laws are unfairly deprived of basic banking services. End users suffer from this at unnecessary risk. In its request to the OCC, the Association highlighted the flexibility of the US Federal Reserve System, which is well positioned to bring about changes in the country’s banking system.

Coin Center, a nonprofit legal center for cryptocurrencies, believes that banks should support mixing technologies that increase the privacy of transactions, as well as use anonymous cryptocurrencies such as Zcash and Monero.

In May, OCC COO Brian Brooks proposed federal licensing of cryptocurrency startups so that they could be fully banking.

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