Senate hearing on U.S. banking regulators elevates cryptocurrency to a prominent position.

Before the Senate Banking Committee commenced its banking oversight hearing, cryptocurrency issues garnered significant attention, particularly during an OCC policy initiative.

U.S. Comptroller of the Currency Jonathan Gould introduced notable stablecoin regulations ahead of the Senate Banking Committee’s Thursday hearing. (Jesse Hamilton/CoinDesk)

Key points:

• Prior to the commencement of its regular hearing with banking agencies, the U.S. Senate Banking Committee was already set to address various cryptocurrency topics that would capture the interest of lawmakers and regulators present.
• The day before the hearing, the Office of the Comptroller of the Currency unveiled regulatory proposals aimed at implementing the previous year’s GENIUS Act to oversee stablecoin issuers.

As the U.S. Senate Banking Committee initiated its standard hearing on oversight of the banking regulators on Thursday, numerous cryptocurrency subjects had already taken center stage, including a major stablecoin policy initiative from the Office of the Comptroller of the Currency.

On the eve of the U.S. banking regulators’ testimonies to lawmakers, the OCC released a proposal to fulfill many of its rulemaking obligations under the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the stablecoin legislation enacted last year. This set of policies aims to establish standards for U.S. stablecoin issuers, including their reserve requirements, asset custody protocols, customer token redemption processes, and the registration procedures for businesses.

“The OCC has given careful consideration to a proposed regulatory framework that would allow the stablecoin sector to thrive in a secure and sound manner,” stated OCC chief Jonathan Gould. His agency emphasized that it still needs to finalize some rules concerning money laundering and sanctions protections in collaboration with the broader Treasury Department.

While Gould and other regulators were preparing to provide testimony to the senators, Federal Reserve Vice Chair for Supervision Michelle Bowman had already shared her testimony, which began with remarks on the GENIUS Act and digital assets.

She mentioned that the Fed is “working with other banking regulators to formulate regulations that encompass capital and liquidity requirements for stablecoin issuers as mandated by the GENIUS Act.”

Bowman, who oversees banking regulation for the Fed, indicated that the institution aims to “offer clarity regarding the treatment of digital assets to ensure the banking system is adequately positioned to support digital asset activities.” This includes, she noted, “providing clarity on the permissibility of activities and a willingness to give regulatory feedback on proposed new use cases.”

The supportive stance towards cryptocurrency from the OCC and Fed comes after years during which U.S. banking authorities adopted a more cautious approach toward this developing sector, striving to prevent banks from engaging without thorough oversight from their regulatory bodies.

However, the ranking Democrat on the banking panel, Senator Elizabeth Warren, continued her strong criticism of this newfound approach on Thursday, expressing a demand for explanations concerning the swift approval of Erebor Bank’s charter by the OCC, as cited in a letter to regulators.

The supporters of that bank, which is intended to be a technology-oriented institution providing digital asset products and services, “have been significant contributors to President Donald Trump, Vice President Vance, and the GOP,” Warren stated.

“Erebor would act as the financial center for a connected group of Silicon Valley companies owned by these billionaires and their associates,” she wrote in the letter, noting that the attorney who submitted the bank’s charter application was soon appointed by the OCC as a senior deputy comptroller. “If my inquiry uncovers that Erebor’s national bank charter was not granted in accordance with law and regulation, and instead represented a corrupt political favor to the President’s billionaire supporters in Silicon Valley, it would need to be rescinded.”

Federal Deposit Insurance Corp. Chairman Travis Hill also provided testimony on Thursday. Under his leadership, his agency was the first to begin advancing proposals related to the GENIUS Act.