When the US Senate Banking Committee opened its routine hearing on the oversight of banking regulators on Thursday, an avalanche of crypto topics had already dominated the conversation, including a major stablecoin policy proposal from the Office of the Comptroller of the Currency.
On the eve of U.S. banking regulators’ testimony before lawmakers, the OCC issued a proposal to address most of its regulatory requirements under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the stablecoin law signed last year. The policy package would institute standards for US stablecoin issuers, such as their reserve requirements, how companies will maintain custody of assets, how customers will redeem their tokens, and the process by which companies will apply for registration.
“The OCC has carefully considered a proposed regulatory framework in which the stablecoin industry can flourish safely and robustly,” OCC head Jonathan Gould said in a statement. His agency noted that it still has some other rules on money laundering and sanctions protection to work through with the broader Treasury Department.
While Gould and other regulators were set to testify before senators, Federal Reserve Vice Chair for Supervision Michelle Bowman had already released her testimony, which began with a discussion of the GENIUS Act and digital assets.
He said the Federal Reserve is “working with other banking regulators to develop regulations that include capital and liquidity for stablecoin issuers as required by the GENIUS Act.”
Bowman, who heads banking regulation at the Federal Reserve, said he 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, he said, “clarity on the permissibility of activities and a willingness to provide regulatory feedback on proposed new use cases.”
The sentiments of support for cryptocurrencies from the OCC and the Federal Reserve come after years in which U.S. banking agencies maintained a more hesitant stance on this emerging corner of the financial sector, trying to prevent banks from intervening without the close approval of their government watchdogs.
But the banking panel’s top Democrat, Sen. Elizabeth Warren, maintained her harsh criticism of that newfound friendship Thursday, saying she is demanding answers about the OCC’s rapid approval of Erebor Bank for incorporation, according to a letter sent to regulators.
The backers of that 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 Republican Party,” Warren noted.
“Erebor would serve as a financial center for an interrelated set of Silicon Valley companies owned by these billionaires and their friends,” he wrote in the letter, noting that the lawyer who filed the bank’s incorporation application was soon hired by the OCC as a senior deputy comptroller. “If my investigation reveals that Erebor’s national bank charter was not granted in accordance with law and regulation, and instead represented a corrupt political favor for the president’s billionaire supporters in Silicon Valley, it would have to be canceled.”
Federal Deposit Insurance Corp. President Travis Hill also testified Thursday. Under his leadership, his agency was the first to begin promoting GENIUS Act proposals.
