Brian Brooks, who heads the US Office of the Comptroller of the Currency, said crypto regulation could focus on participant security or thwart all progress in the sector
The last half of 2020 was marked by record prices for Bitcoin (BTC) and a number of important regulatory Golden Profit developments, such as the approval of crypto custody services in national banks by the Office of the Comptroller of the Currency, or OCC. However, at the moment, legislation in the digital asset sector has an uncertain future ahead, as several government roles are set to change in early 2021, is the view of former Coinbase executive and current OCC director, Brian Brooks.
“I can’t talk about specific price movements, but I’ll tell you what worries me,” Brooks explained on Friday in an interview with CNBC, during a discussion centred on the new records set by Bitcoin. Brooks commented:
“This is all happening in the context of an upcoming transition of presidential administrations and Capitol Hill is under pressure to remove some of the regulatory protections that we’ve put in place.”
In recent weeks, there have been several regulatory proposals related to the crypto industry, including rumours of a ban or limitations on self-custodian crypto wallets. Several members of Congress have reacted by expressing concerns about the potential measure. In addition, a new bill aims to impose strict regulatory requirements on stablecoins.
“My office has been trying to make stablecoin services more secure in national banks,” Brooks said. “We’ve talked about banks supporting some of these stablecoin projects. If these protections are not in place, I’m really concerned about the environment in which these initiatives operate.” Brooks added that he wants to maintain security within the crypto landscape.
In early November, Brooks’ big steps towards security and growth in the crypto industry were met with critical reactions expressed in a letter written by several members of Congress. Some political leaders pushed back, suggesting that the OCC under Brooks’ leadership had focused too much on the industry.
In his interview with CNBC, Brooks pointed out that crypto is at a crossroads in terms of regulation: “Right now we’re at a really critical turning point,” he explained . “It’s kind of a crossroads.” One of these paths aims to improve security in the market by working on the ecosystem around illegal crypto transactions, and banks are a vital part of the equation.
The second path appears more tragic for the industry. “The other route, which is currently a very real possibility, is the politicisation of some of these technical issues, whether it’s crypto or fintech more generally,” Brooks warned, adding:
“Politicisation would cause the undoing of all the good work that this administration has done to make the industry safer, more real. If we do things like that, such as those suggested recently in Maxine Waters’ letter, I’m not sure there’s enough of a base to move forward. It all depends on consolidating the regulatory advances and consumer protections that we’ve been trying to implement.”
In early December, Waters sent a letter requesting a halt to financial regulatory developments until government positions are consolidated in 2021. Back in 2019, Waters intervened in the crypto sector by halting Facebook’s Libra project (now called Diem) following the publication of its white paper.