A number of senators are asking for a rescission and extra complete updates on the Workplace of the Comptroller of the Foreign money’s digital asset steering, citing risky market circumstances and higher danger for monetary establishments.

An unbiased workplace inside the Treasury Division, the OCC oversees banking exercise and ensures regulatory compliance. Appearing Comptroller Michael Hsu was requested to restrict cryptocurrency transactions inside the banking system by Sens. Elizabeth Warren, D-Mass; Dick Durbin, D-In poor health.; Bernie Sanders, I-Vt.; and Sheldon Whitehouse, D-RI.

“In gentle of current turmoil within the crypto market, we’re involved that the OCC’s actions on crypto might have uncovered the banking system to pointless danger, and ask that you simply withdraw current interpretive letters which have permitted banks to interact in sure crypto-related actions,” the letter reads. 

Lawmakers particularly focused a collection of interpretive letters the OCC beforehand issued to banks that allowed them to interact in digital foreign money transactions––supplied a financial institution can show the transactions are financially sound. 

Letters 1170, 1172, 1174, and 1179 all allow banks to interact in cryptocurrency transactions in what lawmakers say is “unfettered” and “problematic” habits. They reference the current volatility in cryptocurrency markets, particularly the fluctuating costs of digital cash, as the important thing purpose warranting extra cautious oversight.

“We’re involved that the OCC has did not correctly tackle the shortcomings of the previous interpretive letters and the dangers related to crypto-related banking actions, which have grown extra extreme in current months.”

The senators ask for the withdrawal of the OCC’s letters concerning cryptocurrency transaction permissions adopted by coordination with the Federal Deposit Insurance coverage Company and Federal Reserve to implement a stronger client safety framework concerning cryptocurrencies. 

The letter additionally asks for an entire listing of banks regulated by the OCC which might be foreign money offering cryptocurrency deposit and holding companies, complete greenback quantities of cryptocurrency custodies presently deposited in taking part banks, and different info surrounding digital foreign money transactions. 

A spokesperson for the OCC informed Nextgov that whereas the OCC doesn’t touch upon congressional correspondences, Hsu has beforehand advocated for a powerful, coordinated federal strategy to forestall dangers related to cryptocurrency banking. 

“To the extent the OCC’s prior communications have been interpreted as tacit encouragement to interact in crypto actions, the forthcoming releases will make clear that security and soundness is paramount,” he mentioned in remarks earlier than the Federal Reserve Financial institution of Philadelphia. 

The federal authorities has been more and more eager on exploring rules for the booming cryptocurrency market to forestall broad destabilization within the monetary system. 

Whereas regulation is often met with pushback by business gamers, some crypto companies welcome the oversight. Georgia Quinn, basic counsel on the first OCC-approved crypto buying and selling platform Anchorage Digital, mentioned that extra rules guarantee a safer digital foreign money business. She additionally mentioned that rescinding the OCC’s letters allowing cryptocurrency transactions would decentivize companies like Anchorage from looking for federal charters.

“Current requires the OCC to withdraw its crypto steering for banks would end in fewer establishments looking for federal banking charters, and fewer client protections because of this,” she mentioned in a press release. “If we really need to defend shoppers, we have to pave a workable path ahead for regulated establishments to offer crypto companies, which was the very intent of the OCC’s steering.”