US Bank Regulator OCC Asks for Public Input on Cryptocurrency Use in Financial Sector

One of the federal bank regulators in the U.S., and the only one that charters national banks, is seeking public input on how it regulates new technologies and digital banking activities, including cryptocurrencies and blockchain tools.

In an advanced notice of proposed rulemaking published Thursday, the Office of the Comptroller of the Currency (OCC) said it was reviewing its regulations around digital bank activities to ensure that these regulations “continue to evolve with developments in the industry.”

The notice, one of two published Thursday, was signed by Acting Comptroller of the Currency Brian Brooks, the former chief legal officer of Coinbase who took office at OCC last week.

In an emailed statement, OCC spokesperson Bryan Hubbard said:

“The request for stakeholder comment is part of the OCC’s commitment to responsible innovation and aligned with our understanding that banks must be able to evolve to meet the needs of the consumers, businesses, and communities that rely on them. Our role is to ensure there is a clear, supportive regulatory framework for banks to do so. The request for comments helps ensure we hear from stakeholders of all kinds on those important issues.”

The notice specifically asked what sort of cryptocurrency-related activities banks and other financial institutions are currently engaged in, and what activities customers engage in that impact banks.

It also asked:

“What are the barriers or obstacles, if any, to further adoption of crypto-related activities in the banking industry? Are there specific activities that should be addressed in regulatory guidance, including regulations?”

Separately from crypto assets specifically, the notice asked about the use of distributed ledger technology (DLT) in banking activities and – as with the crypto-related activities section – asked if there are any specific issues that need to be clarified.

“What new payments technologies and processes should the OCC be aware of and what are the potential implications of these technologies and processes for the banking industry? How are new payments technologies and processes facilitated or hindered by existing regulatory frameworks?” the filing said.

The notice also briefly addressed Brooks’ suggestion that his office could issue a national charter for cryptocurrency exchanges, which would essentially allow it to bypass the state-by-state framework that right now requires companies to secure 50 money services business (MSB) registrations to operate nationwide.

“The OCC is not seeking comment on its authority to issue a special purpose national bank charter,” it said.

In a statement, Blockchain Association executive director Kristin Smith said, “It’s heartening to see a top banking regulator understand the power of cryptocurrency. The notice today indicates that Acting Comptroller Brooks is serious about modernizing banking regulations so that innovators can bring new solutions to the legacy financial system.”

Individuals interested in providing public comment can email, mail, hand-deliver, fax or file feedback online.


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Source: CoinDesk Bitcoin Price Index

Market Wrap: Bitcoin Closing in on $9,900 as Crypto Market Volatility Persists

A quick rally followed by a sharp decline earlier this week in bitcoin prices spelled trouble for bulls. However, volatility is back in the spotlight and that could bring other opportunities, according to market players.

Bitcoin (BTC) was trading around $9,816 as of 20:00 UTC (4 p.m. ET), gaining 2.5% over the previous 24 hours.

At 00:00 UTC on Thursday (8:00 p.m. Wednesday EDT), the world’s largest cryptocurrency by market capitalization was changing hands around $9,655 on spot exchanges like Coinbase. The price stayed close to that level until 13:00 UTC (9 a.m. EDT), when the price traded up as high as $9,891. Bitcoin is now above both its 50-day and 10-day moving averages, indicating bullish sentiment.

Bitcoin trading on Coinbase the past three days
Source: TradingView

“Bulls had been shaken out in the last few days with the bull trap the bears set up,” said David Lifchitz, chief investment officer of quantitative trading firm ExoAlpha.

While the action over the past few days had seemed sleepy until Thursday’s breakout, steep price appreciations and subsequent drops are the norm for crypto traders. When compared to global stock markets, bitcoin is maintaining a higher level of volatility. Despite the recent global bout of economic turmoil, stocks are experiencing diminishing volatility.

“Bitcoin is realizing two to three times the volatility of the S&P 500, with altcoins registering well beyond that,” said Vishal Shah, an options trader and founder of a new crypto derivatives exchange called Alpha5. “By no means is crypto more stable, and there is no chance that it can be if it is to grow.”

Bitcoin volatility versus global stock indices since 5/1/20
Source: CoinDesk Research

Continued crypto volatility can partially explain why May was the best month ever for digital asset derivatives in May, to over $600 billion, according to data from aggregator CryptoCompare.

Monthly derivatives volumes on major venues since 10/1/19
Source: CryptoCompare

Volatility remains the name of the game for professional traders in the crypto market. Josh Rager, cryptocurrency trader and founder of educational platform Blackroots, throws out price movements in bitcoin that are rarely heard of in traditional markets.

“Bitcoin still has to break above $10,400 on a weekly chart for me to feel bullish,” Rager told CoinDesk. “I am looking to short if price hits the $9,800s again, and $8,500 needs to hold if it drops to there. Just taking it level by level.”

Bitcoin trading on Coinbase the past week
Source: TradingView

“Crypto traders have a high psychological threshold and expectation for volatility,” said Alpha5’s Shah. The market for derivatives will only grow because it gives traders something to do during flat trading. “When price action pauses for a few sessions, frustration channels into moans about the lack of opportunity,” Shah added.

Other markets

Digital assets on CoinDesk’s big board are mostly in the green Thursday. Ether (ETH), the second-largest cryptocurrency by market capitalization, climbed less than a percent in 24 hours as of 20:00 UTC (4:00 p.m. EDT).

Ether trading on Coinbase since June 2
Source: TradingView

Cryptocurrency winners on the day include decred (DCR) up 9%, cardano (ADA) climbing 5.6% and lisk (LSK) in the green 3%. One loser Thursday is neo (NEO), down 1%. All price changes were as of 20:00 UTC (4:00 p.m. EDT).

In commodities, gold is in the green, with the yellow metal gaining 1% and closing at $1,716 at the end of New York trading.

Contracts-for-difference on gold since June 2
Source: TradingView

Oil is climbing on the day, up 1.2% as a barrel of crude is priced at $37.21 as of press time.

In Asia, Japan’s Nikkei 225 of top companies by market capitalization ended its day flat, up less than a percent, although at a high not seen since February prior to global pandemic fears.

The FTSE Eurotop 100 closed the trading day in the red less than a percent as optimism of the European Central Bank’s €600 billion expansion plans lost momentum late in trading.

In the United States, the S&P 500 index closed in the red less than a percent as weekly unemployment claims came in at 1.877 million, higher than expected.

U.S. Treasury bonds were mixed Thursday. Yields, which move in the opposite direction as price, were up most on the 10-year, in the green 9%.

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