As the U.S. Senate Banking Committee begins routine hearings on banking regulator oversight on Thursday, a range of cryptocurrency topics have dominated the conversation, including a major stablecoin policy proposal from the Office of the Comptroller of the Currency.
On the eve of testimony from U.S. banking regulators to lawmakers, the OCC released a proposal to address most of the rulemaking requirements under the Stablecoin National Innovation Guidance and Establishment Act (GENIUS), the stablecoin law signed last year. The policy package will set standards for U.S. stablecoin issuers, such as their reserve requirements, how companies maintain custody of assets, how customers can redeem their tokens and the process for businesses seeking to register.
“The OCC has given thoughtful consideration to the proposed regulatory framework to enable the stablecoin industry to thrive in a safe and robust manner,” OCC CEO Jonathan Gould said in a statement. His agency noted that it has additional rules regarding money laundering and sanctions protections that it needs to develop with the broader Treasury Department.
While Gould and other regulators prepare to testify before senators, Fed Vice Chair for Supervision Michelle Bowman has released her testimony, which begins with a discussion of the Genius Act and digital assets.
She said the Fed is “working with other bank regulators to develop regulations that include providing capital and liquidity to stablecoin issuers as required by the Genius Act.”
Bowman, who oversees the Fed’s banking supervision, said the Fed is trying to “clarify how digital assets will be treated to ensure that the banking system is well-positioned to support digital asset activity.” This includes “clarity on the permissible activities and a willingness to provide regulatory feedback on proposed new use cases,” she said.
Prior to the OCC and Federal Reserve’s supportive sentiment toward cryptocurrencies, U.S. banking institutions for years had maintained a more hesitant approach to this emerging corner of the financial world, trying to prevent banks from getting involved without strict approval from government regulators.
But Sen. Elizabeth Warren, the ranking Democrat on the Banking Committee, sharply criticized the new friendly attitude on Thursday, demanding answers on the OCC’s swift approval of Erebor’s banking license, according to a letter sent to regulators.
Warren noted that the bank will be a technology-focused institution offering digital asset products and services, and its backers “have been major donors to President Donald Trump, Vice President Vance and the Republican Party.”
“Erebo will become the financial center for a series of interconnected Silicon Valley companies owned by these billionaires and their friends,” she wrote in the letter, noting that the lawyer who submitted the banking charter application was quickly hired by the OCC as senior deputy comptroller. “If my investigation reveals that Erebor’s national banking license was not granted in accordance with the law and regulations, but instead represents corrupt political support for the president’s billionaire backers in Silicon Valley, then it must be terminated.”
Federal Deposit Insurance Corporation Chairman Travis Hill also testified Thursday. Under his watch, his agency was the first to begin advancing the Genius Act proposal.
