US Regulator OCC Proposes ‘Fair Access’ to Banking Services For All Including Crypto Companies

The Office of the Comptroller of the Currency (OCC), the US’s national bank regulator, has proposed a rule that would forbid banks from providing their services to legal industries, including cryptocurrency companies.

As per the proposed rule, led by former Coinbase counsel Brian Brooks, fair access is promoted under which financial services could be denied by banks to customers only on the basis of “quantitative, risk-based standards established in advance.”

They can’t do so due to political pressures, to prevent the customer from entering or competing in a market or to benefit another person or business activity.

Published on Friday, the proposal does not explicitly mention cryptocurrency but is surely welcoming news for the industry, which has been time and again denied the services by the banks.

The proposal does mention Operation Choke Point, an initiative taken by the Justice Department under the Barack Obama presidency that reportedly aimed to shut down the fraudulent businesses and lenders.

It further reads that it has been revealed that the government agencies have pressured banks to sever their financial services access to “disfavored (but not unlawful) sectors of the economy.”

But neither OCC nor banks are well-equipped to balance these risks that are unrelated to the financial exposure, it said.

Marco Santori on US OCC
Source: @MSantoriESQ

“Fair access to financial services, credit, and capital are essential to our economy,” said Acting Comptroller of the Currency Brian P. Brooks.

“This proposed rule would ensure that banks meet their responsibility to provide their services fairly since they enjoy special privilege and powers because if the system fails to provide fairness to all, it cannot be a source of strength for any.”

The proposal is open for public comments until January 4, 2021.

This week, President Donald Trump nominated the acting Comptroller Brooks as the permanent head of the OCC, a five-year stint.

Read Original/a>
Author: AnTy

Members Of Congress Blasts Acting OCC For His “Unilateral Crypto Decisions”

On Tuesday, the acting Office of the Comptroller of the Currency (OCC), Brian Brooks, testified before the Senate bringing forward several proposals on the cryptocurrency and the digital assets market. However, multiple congress members have come forward criticizing Brook’s unilateral decisions in the digital assets space, stating the former Coinbase executive is “too focused on crypto.”

In a speech before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, Brooks highly praised the digital assets market and the importance of stablecoins. He praised the adoption rate of digital assets among Americans and the exponential growth of the cryptocurrency market, saying,

“These figures clearly illustrate that this payment mechanism is now firmly entrenched in the financial mainstream.

Cryptocurrency has become a popular mechanism for sending and receiving payments for goods and services because transactions post in real-time and provide convenience and security.”

Brooks is, however, facing a backlash from multiple members of Congress who view his crypto-related efforts as the head of OCC as “one-sided.” A letter signed by Congresswoman Rashida Tlaib (MI-13) and cosigned by Congressmen Stephen Lynch (MA-08) led a letter, which was cosigned by Reps. Jesús G. “Chuy” García (IL-04), Deb Haaland (NM-01), Barbara Lee (CA-13), and Ayanna Pressley (MA-07) blasted Brooks for his crypto-heavy leadership.

Read More: OCC Needs To Provide Regulation Clarity To Protect Users And Businesses

The letter argues that Brooks’ stance on digital assets should not take precedence in millions of Americans’ lives while there is an ongoing global pandemic. The members wrote,

“Arguably, the immediate needs of millions of at-risk individuals who have not yet received an economic stimulus check and/or cannot deposit their funds in a bank deserve greater attention than an effort to increase access to financial services to the ‘banked community’ via mobile phones.”

They further questioned his unilateral actions in the digital asset space, including “interpretive letters on cryptocurrency custody, stablecoins, and announced plans to start offering special purpose ‘payments’ charters.” Furthermore, they criticized Brooks’ plan to offer huge corporations such as Amazon and Facebook payment charters, claiming it would increase systemic risks, which could “expose the financial system to significant vulnerabilities.” The lawmakers wrote.

“Our concern regarding the OCC’s excessive focus on crypto assets and crypto-related financial services is shared by the American Bankers Association and other trade groups who have expressed similar reservations that such services move too far away from the core business of banking.”

Read Original/a>
Author: Lujan Odera

National Banks & FSAs Can Hold Reserves for Stablecoin Issuers: US Federal Banking Regulator & SEC

The Office of the Comptroller of the Currency (OCC) issued new guidance regarding stablecoins on Monday.

“National banks and federal savings associations currently engage in stablecoin-related activities involving billions of dollars each day,” said Acting Comptroller of the Currency Brian P. Brooks.

“This opinion provides greater regulatory certainty for banks within the federal banking system to provide those client services in a safe and sound manner.”

As per the letter from the US federal banking regulator, national banks and federal savings associations (FSA) are allowed to hold “reserves” on behalf of their customers who issue stablecoins, and those coins are held in hosted wallets, those controlled by a trusted third party.

This means unhosted wallets, which are controlled by the individual user who owns the cryptos being stored, are not part of this announcement.

The SEC also issued a response to OCC’s guidance, in which it says whether a stablecoin is security will depend on “facts and circumstances determination,” which will require the analysis of the instrument.

The regulator asked the market participants to structure and sell a digital asset in such a way that “it does not constitute a security and implicate the registration, reporting, and other requirements of the federal securities laws.”

Bullish!

Jeremy Allaire, the co-founder and CEO of Circle, which along with Coinbase, has launched its own stablecoins called USD Coin (USDC), called this a “significant progress for the advancement of digital dollar stablecoins in the US financial system.”

This will “help the United States and the US dollar to continue its leadership role in the world economic system,” he said.

According to him, national banks allowing to hold reserves for fiat-backed stablecoins will provide businesses, fintech firms, and banks have “more confidence in building on this innovation.”

In 2020, stablecoins have exploded, currently around $20 billion, with Tether (USDT) accounting for more than $15.5 billion of it and USDC with 500% growth YTD $2.3 billion.

Market participants see it as bullish news, with one trader commenting, “Basically enables a LOT more money to funnel into crypto, if stablecoin providers don’t have to scramble for banks to hold the reserves.”

Related: European Countries Support EU Stablecoin Regulation

Also Read: BoE Gov. Calls for Global Standards for Stablecoins, Instead of Playing Catch Up

Read Original/a>
Author: AnTy

U.S Banks and Big Tech Ask the OCC for More Clarification to Issue Crypto Services

The United States Office of the Comptroller of the Currency (OCC) has received over 90 responses from various stakeholders’ in the financial services sector on its advanced notice of proposed rulemaking (ANPR) issued last month.

This independent bureau which operates under the U.S Treasury made highlights in July after it was approved for banks within its jurisdiction to act as crypto custodians. From the responses on the ANPR, some banks including PNC and the U.S are actually interested in scaling operations into the crypto scene.

With the OCC still at the initial stages towards rulemaking, some figures in the industry believe that now is the best time for innovators to give their input to the agency. Prominent firms that aired their views on the OCC ANPR for digital currency policies include Visa, Facebook’s Novi, Stripe, ConsenSys and Google which even suggested that the OCC should incentivize FinTech developments through hackathons, pilots and innovation competitions.

Industry Stakeholders Take!

A few issues appeared to have been more common for most of the stakeholders who gave their feedback before the August 3 deadline. The American Bankers Association (ABA) which wrote a letter as part of its contribution mainly highlighted the need for a consensus in taxonomy and terminology amongst other areas for the integration to happen seamlessly. The ABA letter reads,

“Effective policy analysis on crypto assets is essential to maintaining banks’ capacity to innovate, but it may be inhibited by the lack of common terminology. A common taxonomy and understanding of crypto assets’ risks and features, broadly consistent and coordinated across all the relevant regulators, is essential to fostering prudent innovation within a sound risk management framework.”

User protection policies were also highlighted in terms of privacy and security given the delicate balance needed to maintain some fundamental aspects of cryptocurrencies. Coin Center’s Research Director, Peter Van Vulkenburgh, was of the opinion that banks can actually provide privacy and surveil their clients’ activities through private coin and other features within crypto ecosystems. These sentiments on privacy and security were also echoed by MasterCard’s Tina Woo as she went to highlight the underlying potential,

“We believe cryptocurrencies and blockchain technology hold the potential to enhance operational resiliency, improve auditability, and enable new functionalities.”

Finally, an interesting perspective was raised by 3rd party crypto service providers which appear to be in favor of banks sub-contracting for critical crypto services. BitGo which has been a crypto custodian for over a year is one of the stakeholders’ who are of this view. Interestingly, the firm has the backing of payments giants Visa and MasterCard which are both eyeing the crypto card market and have been making strategic moves in the recent past. Ky Tran-Trong, Visa’s VP for Global Regulatory Affairs, confirmed this position,

“Our objective is to enable digital currency users to spend from their digital currency balance using a Visa debit or prepaid credential anywhere Visa is accepted.”

Read Original/a>
Author: Edwin Munyui

US Regulator Authorizes National Banks and Federal Saving Institutions as Crypto Custodians

U.S. regulator, the Office of the Comptroller of Currency (OCC), allows federal banks and national savings institutions to officially custody cryptocurrencies for their customers. The statement released on July 22, confirms that any national bank or savings facility can now hold on to unique cryptographic keys of cryptocurrencies in their vaults pertaining to custody services.

According to the statement, the decision to allow banks to offer crypto custodial services follows a growing demand by investors to safely store their cryptographic keys, which, if lost, capitulates the value of the assets. This news opens up the field to large banks to provide these services, relieving current state-chartered crypto custodians such as Coinbase and Gemini.

Nonetheless, crypto custodial services differ from the traditional custody services banks offer, the statement explained. Given that the digital assets are not physical, digital wallets will be required to safely store the cryptographic keys.

The release, which comes a month after the OCC asked for public input on Crypto and DLT, further states that the increasing technological innovations in the financial world call for “banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers.”

A modern form of traditional banking activities

Discussing the new regulation, the author of the statement, Jonathan V. Gould, the Senior Deputy Comptroller & Chief Counsel, claimed that cryptocurrency custodial services Is a new form of already existing asset custodian businesses of national banks.

The OCC permits national banks and savings to hold their customers’ cryptocurrencies in both a fiduciary and non-fiduciary role. Banks holding crypto in a fiduciary capacity will need to manage them in the same way as they manage other assets while non-fiduciary capacity targets holding cryptographic keys that control the actual transfer of the cryptocurrency.

Manage your cryptocurrency risk

Brian Brooks, the current head of OCC and a former executive at Coinbase, however, warns on the risk management of custody services across national banks. Focusing on customer assets protection, Brooks said,

“This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”

The statement concludes by warning custodians to focus on risk management techniques, due diligence, and KYC/AML compliance as they begin the operations on holding crypto assets. No specific recommendation of customers was provided in the statement with banks open to deal with crypto institutions, as recently seen with JPMorgan onboarding Coinbase and Gemini.

This, however, should be done with the thought that cryptocurrencies do hold their risks and challenges. It states,

“A national bank or FSA engaging in new activities should develop and implement those activities consistent with sound risk management practices and align them with the bank’s overall business plans and strategies as set forth in OCC guidance.”

Read Original/a>
Author: Lujan Odera

US Federal Bank Regulator (OCC) Issues Notice for Feedback on Crypto and DLT Activity

The Office of the Comptroller of Currency (OCC) has asked for feedback in matters crypto and distributed ledgers according to two notices published on June 4. This U.S bank regulator and charter issuer now wants to engage the public in creating a stable digital currency ecosystem based on regulation.

Dubbed ‘Notice of Proposed Rulemaking‘ and an ‘Advance Notice of Proposed Rulemaking‘, these initiatives seek to create a conversation with the likes of federal saving associations and banks amongst other stakeholders. Notably, it is the latter notice which focuses on digital currency activity and the supporting tech, distributed ledgers. Bryan Hubbard, the OCC spokesperson, echoed in an email that it is in the regulator’s interest to spearhead this discussion,

“The request for stakeholder comment[s] is part of the OCC’s commitment to responsible innovation and aligned with our understanding that banks must be able to evolve to meet the needs of the consumers, businesses, and communities that rely on them.”

This move comes shortly after Brian Brooks took the helm at the OCC in an interim position. The former Coinbase Chief Legal Officer is optimistic that the regulator will learn what form of support banks and the crypto ecosystem need to thrive together. Speaking to Cointelegraph, Brooks said that the OCC will now consolidate quickly on its thoughts about the crypto space:

“The OCC, quickly under my watch, will get a position together as to what… we think about national banks as appropriate custodians for cryptocurrency. We don’t have a view on that and I don’t want to prejudge that but it is certainly an interest of mine from my past life that we need to come to ground on that.”

OCC’s Focus Area in Crypto and DLT’s

As highlighted earlier, this regulator presented some questions in the filing as it seeks to understand the space better. Basically, the main questions revolved around crypto activity and how adoption can be accelerated through regulatory support. For digital currencies, the filing reads:

“What types of activities related to cryptocurrencies or crypto-assets are financial services companies or bank customers engaged? To what extent does customer engagement in crypto-related activities impact banks and the banking industry? What are the barriers or obstacles, if any, to further adoption of crypto-related activities in the banking industry? Are there specific activities that should be addressed in regulatory guidance, including regulations?”

On distributed ledgers, the filing asks almost similar questions with a focus on their potential to disrupt the current banking ecosystems:

“How is distributed ledger technology used, or potentially used, in banking activities (e.g., identity verification, credit underwriting or monitoring, payments processing, trade finance, and records management)? Are there specific matters on this topic that should be clarified in regulatory guidance, including regulations?”

The OCC has since directed interested stakeholders to share their views via mail, email, fax, hand-deliver, or simply file the feedback online.

Read Original/a>
Author: Edwin Munyui