As the US Senate Banking Committee opened its routine hearing on oversight of banking regulators on Thursday, a flurry of crypto topics had already dominated the conversation, including a significant stablecoin policy proposal from the Office of the Controller of the Currency.
On the eve of the US banking watchdogs’ testimony to lawmakers, the OCC issued a proposal to address most of its rulemaking requirements under the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, the stablecoin law signed into law last year. The package of policies would introduce standards for US stablecoin issuers, such as their reserve requirements, how the firms will maintain custody of assets, how customers will redeem their tokens and the process by which firms will seek registration.
“The OCC has considered a proposed regulatory framework in which the stablecoin industry can flourish in a safe and sound manner,” OCC Chief Jonathan Gould said in a statement. His agency noted that it still has some other rules on money laundering and sanctions protection that need to be worked out with the broader Treasury Department.
While Gould and other regulators were scheduled to testify before the senators, Federal Reserve Vice Chair for Supervision Michelle Bowman had already released her testimony, which opened with discussion of the GENIUS Act and digital assets.
She said the Fed is “working with the other banking regulators to develop rules that include capital and liquidity for stablecoin issuers as required by the GENIUS Act.”
Bowman, who heads banking regulation for the Fed, said it is trying to “provide clarity on the treatment of digital assets to ensure that the banking system is well positioned to support digital asset activities.” That includes, she said, “clarity about the legality of activities and willingness to provide regulatory feedback on proposed new use cases.”
The crypto-supportive sentiments from the OCC and Fed follow years in which the US banking agencies maintained a more hesitant stance on this burgeoning corner of the financial sector, trying to prevent banks from jumping in without close approval from their government watchdogs.
But the banking panel’s ranking Democrat, Sen. Elizabeth Warren, maintained her sharp criticism of the new friendliness Thursday, saying she demands answers about the quick approval of Erebor Bank for charter by the OCC, according to a letter sent to regulators.
The backers of the bank, which will be a technology-focused institution offering digital asset products and services, “have been major donors to President Donald Trump, Vice President Vance and the GOP,” Warren noted.
“Erebor would serve as the financial hub for an interconnected set of Silicon Valley companies owned by these billionaires and their friends,” she wrote in the letter, noting that the attorney who submitted the bank’s charter application was soon hired by the OCC as a senior deputy comptroller. “If my inquiry reveals that Erebor’s national bank charter was not awarded in accordance with law and regulations, and instead represented a corrupt political favor for the president’s billionaire supporters in Silicon Valley, it would have to be terminated.”
Travis Hill, chairman of the Federal Deposit Insurance Corp., also testified Thursday. Under his watch, his agency was the first to begin advancing GENIUS Act proposals.
