Finance

Sherrod Brown pushes watchdog to keep crypto firms out of banking system

Sen. Sherrod Brown (D-Ohio)
Greg Nash

The chairman of the Senate Banking Committee pressed a top regulator Thursday to review national charters given to cryptocurrency firms and prevent any from going forward in the future.

In a Thursday letter, Sen. Sherrod Brown (D-Ohio) urged Acting Comptroller of the Currency Michael Hsu to take a closer look at decisions made by his predecessors to allow some crypto trading and custody firms to offer some banking services nationally.

Brown, a fierce critic of the banking and financial industries, argued that the Office of the Comptroller of the Currency (OCC) should not have granted national trust charters to three crypto companies — Anchorage Digital Bank, Protego Trust Bank, and Paxos National Trust — earlier this year.

“In many cases, the companies that seek access to the benefits of a bank charter do not meet the same set of regulatory and consumer protection standards that banks are required to meet. The recent OCC approvals of national trust charters for these cryptocurrency firms raise similar concerns,” Brown wrote.

“A firm that cannot meet the rigorous requirements applicable to other banks should not be allowed to present itself to the public as a bank,” he continued.

Some Democratic lawmakers and consumer rights groups argue that bank regulators should not give cryptocurrency firms the ability to market themselves given the anonymity, volatility and regulatory gaps associated with digital coins. 

Republicans counter that national charters for cryptocurrency firms help encourage innovation and protect consumers by bringing major businesses into a space under closer federal supervision.

Hsu, who took over the OCC last week, is likely to face increasing pressure from both sides over the agency’s stance on cryptocurrencies for however long he serves as acting comptroller.

President Biden has not yet named a nominee to serve as comptroller of the currency, a roll that has been filled by a series of acting officials for more than a year. 

Former President Trump tapped Brian Brooks to serve as acting OCC chief following the May 2020 resignation of Joseph Otting, the most recent Senate-confirmed controller. Brooks resigned on Jan. 13, a week before Biden took office, and was replaced by Blake Paulson, a career OCC official.

Hsu was appointed as the first deputy comptroller on May 10, replacing Paulson as acting comptroller.

Tags Anchorage Digital Bank Cryptocurrency digital currency Donald Trump Financial services Joe Biden occ Office of the Comptroller of the Currency Paxos National Trust Protego Trust Bank Sherrod Brown

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