Recently, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), addressed the Aspen Security Forum to discuss cryptocurrency and its regulations, and Congress has included key pieces of policy regarding the space in its trillion-dollar mega-infrastructure package. Add in the comments Acting Comptroller of the Currency Michael J. Hsu made recently while testifying before the Senate Committee on Banking, Housing and Urban Affairs to discuss his agency’s role in integrating fintech into the U.S. banking system, it is clear that the federal government is no longer complacent sitting on the sidelines.
Many cryptocurrency diehards will tell you that regulation is the antithesis to the spirit of decentralized digital money. However, others will contend that regulation offers both protection to consumers and signals wide scale acceptance. In either case, the attention fintech and crypto is getting at the highest levels of government is hard evidence that digital currency and its supporting technology is here to stay.
“Ultimately we will look back on this as one of the most positive events, holistically speaking, that we’ve had so far in terms of the industry's interactions with the government. @jchervinsky in his comprehensive recap of the infrastructure bill. https://www.coindesk.com/podcasts/the-breakdown-with-nlw/jake-chervinsky-infrastructure-bill-crypto-industry-battle"
While crypto’s integration into the U.S. economy and banking system is all but settled business, exactly what that looks like remains to be seen. So far, policy positions coming out of Washington have focused primarily on consumer protection, taxation and fraud prevention, but those areas only represent a part of the picture.
One area that is starting to get more attention is the relationship between legacy banks and emerging technology, which Hsu discussed at length during his testimony.
“ …We—financial regulators—must collectively adapt to the digitalization of banking and finance and determine how fintechs, payment platforms, and digital assets fit into the regulated system,” said Hsu in his oral statement. “When I took office, I paused approvals of novel charters pending an internal review of the OCC’s licensing framework and of recent interpretive letters. In June, the OCC, FDIC, and Federal Reserve established a ‘sprint team’ to provide greater clarity and collaboration around digital assets and cryptocurrencies.”
Further, he added, in July his office was added to the President’s Working Group to help evaluate the risk of implementing stablecoins, and to help develop policy and suggestions to mitigate those risks. “These efforts seek to adapt to a rapidly changing landscape, in a coordinated manner across agencies, to facilitate responsible innovation while limiting regulatory arbitrage and races to the bottom,” he said.
Going forward, there are still a great many unknowns that will come out of the myriad U.S. agencies, offices and governments dealing with fintech and cryptocurrency. However, these recent developments show a willingness to at least attempt to develop a framework and build a modern economic system that acknowledges technological advancements and the public’s appetite for cryptocurrency. Even with the infringement on the purity of cryptocurrency’s autonomy, this still likely bodes well for the crypto bulls.