The new efforts reflect a break with the Trump administration, which in some cases has encouraged the use of cryptocurrencies in the financial system. But they could take a long time to bear fruit as US regulators struggle to determine who has the legal authority to monitor the volatile market.
In an interview with the Financial Times, Michael Hsu, who was installed this month as acting currency controller, said he hoped U.S. officials would work together to define a “regulatory perimeter” for them. cryptocurrencies.
“It really comes down to interagency coordination,” said Hsu, who heads the Treasury Department office that oversees national banks. “Just by talking to some of my peers, there’s an interest in coordinating a lot more of these things. “
Cryptocurrencies have been a roller coaster ride this year. In February, the price of Bitcoin soared after Tesla founder Elon Musk said the company invested $ 1.5 billion in cryptocurrency and hit a record high of over $ 60,000. in April.
But the price plunged after Chinese regulators reported a crackdown on the use of digital coins, while Musk overturned the decision to allow bitcoin payments for Tesla cars, citing environmental concerns. Other cryptocurrencies have experienced similar volatility.
A sign of the new U.S. approach came this month with the first meeting of a cross-agency crypto “sprint” team, involving officials from the three major regulators of federal banks – the Office of the Comptroller of the Currency of Hsu, the Federal Reserve and the Federal Reserve. Deposit Insurance Corporation.
Hsu said the team’s goal was not to develop a policy, but to “bring some ideas to the agencies for consideration” as they try to catch up with the growth of cryptocurrencies.
“It’s small and it’s senior,” Hsu said of the task force. “The idea is that time is running out and if it’s too big it becomes more difficult. “
The Securities and Exchange Commission and the Commodity Futures Trading Commission have also discussed how to protect investors in the crypto market.
Gary Gensler, the chairman of the SEC, told a House committee last week that there were “loopholes in our current system,” highlighting the potential need for legislation to specify which regulator should oversee the exchanges. cryptographic.
Gensler said its aim was to bring “similar protections to exchanges where you trade crypto assets as you might expect on the New York Stock Exchange or the Nasdaq.”
Gensler said the Treasury Department has focused on “combating money laundering and protecting against illicit activity” in the crypto market. Janet Yellen, the Secretary of the Treasury, said she feared bitcoin would be used “often for illicit financing”.
By installing Hsu at OCC, Yellen also signaled a change in approach to crypto. Hsu is, in his own words, “a career civil servant and a banking supervisor in my heart.” His OCC predecessors under Donald Trump included Brian Brooks, former legal director of Coinbase, a crypto exchange, who is now CEO of Binance. US, a rival crypto exchange.
As one of Hsu’s first acts at the OCC, he asked staff to review a Trump-era decision to give national charters of trust to companies that provide custodial services for cryptocurrencies. .
While Hsu believes there is no looking back on innovations like the blockchain technology used in cryptocurrencies, he said in testimony to Congress this month that the current enthusiasm for the banking innovation reminded him of the years leading up to the financial crisis.
The danger is that new and improved techniques will give rise to “a large and less regulated shadow banking system”. Today, fintechs and technology platforms are designing payment processing tools that “are very promising,” he said, “but also risk.”
“For me, it’s hard not to feel a sense of déjà vu,” Hsu told lawmakers.