Washington’s remaining hopes of warming up to cryptocurrencies were quashed after Joe Biden nominated Saule Omarova last week to lead the Office of the Comptroller of the Currency (OCC).
The nomination confirms that US financial regulators won’t entertain cryptocurrency proponents at least for the next three years.
Omarova, a Cornel University law professor, is a long-time critic of digital currencies, which makes her fit in with the regulator’s recent statements about digital assets. Gary Gensler, Securities and Exchange Commission (SEC) chair, says the cryptocurrency marketplace is awash “with fraud, scams, and abuse”. So, it’s rife for more scrutiny.
Michael Hsu, OCC’s acting chief, recently warned that cryptocurrencies are dangerous and more likely to ignite a financial crisis — akin to the 2018 financial crisis.
Crypto is slow, steady, and grinds down everything
Jim Angel, Georgetown University associate professor, said regulators took ages to see cryptocurrencies for what they are: bulldozers moving slowly and steadily, and about to grind down everything on their path.
The OCC’s work is to regulate national banks such as Citigroup, JPMorgan Chase & Co. During the Trump administration, OCC had a different outlook toward crypto until recently when the office took a different and new stand on the issue.
Back in January, when OCC was under Brian Brooks — a former Federal Reserve official — cryptocurrency firms received limited bank charters irking Wall Street players. Fearing they might soon face new competitors in the financial markets.
Brace for stricter oversight of digital tokens
If the US Senate confirms Omarova, OCC is likely to impose stricter oversight of digital tokens. Further initiating even tougher cryptocurrency rules — much to the happiness of Washington and its officials.
SEC chair, Gensler, wants cryptocurrencies — like securities — subjected to strict regulations. A section of financial agencies also wants guardrails imposed around Tether and its Stablecoins peers.
Meanwhile, the Federal Reserve is working on establishing its virtual currency, a worthy competitor of other Stablecoins that traders use to buy and sell digital assets.
Stablecoins — pegged on the value of the dollar to avoid wild price swings — are currently top on the agenda of US financial regulators. The Treasury Department is planning recommendations on how to oversee them.
According to some congressional aides privy to the matter say Treasury hopes to issue a report by late October on Stablecoins oversight. Other important concerns also addressed are that Tether and its peers will create chaotic investor runs similar to those (currently) affecting money market mutual funds.
