As the U.S. Senate Banking Committee opened its routine hearing on oversight of banking regulators on Thursday, a host 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 watchdogs’ testimony before lawmakers, the OCC released a proposal to address most of its regulatory requirements under the Directing and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the stablecoin law signed last year. The set of policies would establish standards for U.S. stablecoin issuers, such as their reserve requirements, how companies will provide 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 within which the stablecoin industry can thrive in a safe and healthy manner,” OCC head Jonathan Gould said in a statement. His agency said it still has other rules on anti-money laundering protections and sanctions to work out with the Treasury Department as a whole.
While Gould and other regulators were scheduled to testify before senators, Federal Reserve Vice Chair for Supervision Michelle Bowman had already released her testimony, which opened with a discussion of the GENIUS Act and digital assets.
She said the Fed 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 for the Fed, said she was trying to “provide clarity regarding the treatment of digital assets to ensure that the banking system is well-positioned to support digital asset activities.” This includes, she said, “clarity on the lawfulness of activities and a willingness to provide regulatory feedback on proposed new use cases.”
The crypto-supportive sentiments from the OCC and Fed follow years in which U.S. banking agencies have maintained a more hesitant posture toward this emerging sector of the financial industry, seeking to prevent banks from launching without the close approval of their government watchdogs.
But Democratic Sen. Elizabeth Warren, the top Democrat on the banking panel, maintained her sharp criticism of the new friendly attitude Thursday, saying she demanded answers about the OCC’s quick approval of Erebor Bank’s charter, according to a letter sent to regulators.
Backers of the bank, which is to 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 interrelated collection of Silicon Valley companies owned by these billionaires and their friends,” she wrote in the letter, noting that the lawyer who submitted the bank’s charter application was quickly hired by the OCC as its principal deputy comptroller. “If my investigation reveals that the Erebor National Bank charter was not granted in accordance with law and regulation, and instead represents a corrupt political favor in favor of the president’s billionaire supporters in Silicon Valley, it must be stopped.”
Federal Deposit Insurance Corp. President Travis Hill also testified Thursday. Under his leadership, his agency was the first to begin advancing the GENIUS Act proposals.
