Senator Warren proposes reducing Wall Street’s involvement in crypto

Senator Warren proposes reducing Wall Street’s involvement in crypto
Senator Warren proposes reducing Wall Street’s involvement in crypto

US Senator Elizabeth Warren is continuing her anti-crypto campaign, this time proposing legislation that would effectively shut down bank-provided cryptocurrency services, according to a Bloomberg report on Thursday.

To keep Wall Street out of the cryptocurrency market, Senator Warren, who sits on the Senate Banking Committee, is urging committee members and senators to sign a letter to the Office of the Comptroller of the Currency (OCC) asking banks to stop offering crypto. services such as crypto depository. The Banking Committee believes that by issuing crypto guidelines, regulators are allowing Wall Street banks to enter the market and endanger the banking system.

The letter urges the OCC to work with the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) to develop an alternative cryptocurrency approach that adequately protects consumers and promotes “safety and soundness of the banking system:”

“We are concerned that the OCC has failed to address the deficiencies of the previous interpretive letters and the risks associated with crypto-related banking activities, which have become more serious in recent months.”

The final version of the letter will be sent to OCC Acting Comptroller Michael Hsu. The OCC’s response to Bloomberg’s inquiry referenced recent comments by Comptroller Michael Hsu regarding banks’ increased crypto involvement, demonstrating the agency’s desire to change bank crypto guidance.

Hsu has called for greater caution when it comes to crypto diffusion into mainstream financial systems. The recent cryptocurrency turmoil has resulted in billions of dollars in lost investments, prompting lawmakers and regulators to increase their attention on crypto-related services.

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The OCC’s previous instructions and rules have been insufficient to protect the financial system from recent crypto volatility, according to Warren’s letter. It calls for changes and removal of crypto banking policies to prevent banks from getting involved in cryptocurrencies. The document also seeks information on the current number of regulated banks providing crypto-related services, as well as the total dollar value of the services provided.

Related: Senators Stabenow, Boozman Introduce Crypto Bill Expanding CFTC’s Regulatory Powers

Since the letter has not yet been made public, it is unclear which senators have signed it. However, Senator Warren has been a vocal critic of cryptocurrencies and has previously called for more regulation in the space.

She has called decentralized finance (DeFi) the “most dangerous” element of crypto in 2021 and proposed legislation to investigate crypto’s role in ransomware, all while lambasting the Ethereum network for its costly fees during a committee hearing. So it is no surprise that she has seized the opportunity to advocate for stricter rules.