The crypto industry can likely look forward to two more agencies falling into line on its digital assets policy aims: the Office of the Comptroller of the Currency, which is one of the chief U.S. banking regulators, and the Consumer Financial Protection Bureau, where the lights are effectively being shut off.
The sector’s dicey relationship with U.S. banking can be expected to be further mitigated with the arrival of a new stand-in chief at the OCC, Rodney Hood, the crypto-friendly former chairman of the U.S. credit-union watchdog. As with other key financial oversight positions, President Donald Trump has tapped somebody who embraces cryptocurrency technology.
When running the credit-union agency in 2021, he’d said, “Cryptocurrency needs to be a part of the credit union system. If you don’t have it, it’s going to hurt your ability to compete with other financial services providers.” Substituting banks for credit unions in that sentiment could mean a rethinking of the OCC’s guidance to banks in 2021 that contributed to the rift between crypto firms and U.S. banking services.
The main thrust of the 2021 guidance from the OCC, Federal Deposit Insurance Corp. and the Federal Reserve was that banks shouldn’t get into crypto business without getting a formal sign-off from their regulators that the products or services could be handled without risking the institution. But the industry has argued that the resistance from the agencies went even farther than that and pushed banks away from digital assets entirely.
Trump’s new acting head of the FDIC, Travis Hill, has already said he’s ordered “a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services” with the aim of opening a path for banks to engage with digital assets.
With the removal, also, of the Securities and Exchange Commission’s crypto accounting policy that effectively piled additional capital requirements on banks that wanted to handle crypto for clients, the banking impediments for digital assets may be falling away.
Read More: Crypto’s U.S. Banking Problem Likely Among the First Things Tackled Under Trump
At the Consumer Financial Protection Bureau, the watchdog established after the global financial meltdown in 2008, is seeing its very existence under assault from Republicans who have long had issues with the agency’s fights with corporations. Trump installed his budget chief, Russ Vought, as the acting head of CFPB, and he’s moved to choke off its financing and cripple its operations.
A cheer went up from certain figures in crypto, including Brian Armstrong, the CEO of Coinbase. His company was a frequent subject of consumer complaints logged on the agency’s database — almost 8,000 at last count. Armstrong said in a post on social media site X that the agency “should be deleted,” calling it an unconstitutional “activist organization that has done enormous harm to the country.” (Though the U.S. Supreme Court ruled last year that the CFPB’s operation doesn’t run afoul of the Constitution.)
Apart from what past leadership saw as its duty to protect consumers harmed by crypto firms, the agency was also seeking some additional policy authority over the industry. In January, its now-dismissed previous director pushed for a stablecoin regulation that the industry felt was an overreach that also threatened self-hosted wallets. But the proposal is unlikely to move further now that the agency’s activity has been frozen in the Trump administration.
The administration’s CFPB attack has drawn resistance from Democratic lawmakers, including Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, and Representative Maxine Waters, who occupies that same role at the House Financial Services Committee.
“Elon Musk and the guy who wrote Project 2025, Russ Vought, are trying to kill the Consumer Financial Protection Bureau,” Warren said in a video released on Monday, criticizing Trump’s administration for its pursuit of the consumer agency. “This is the payoff to the rich guys who invested in his campaign and who want to cheat families — and not have anybody around to stop them.”
Democrats intend to hold a rally at the CFPB later Monday afternoon.
Also on Monday, Waters released the text of the stablecoin bill she’d worked out with her previous Republican counterpart on the committee, former Chairman Patrick McHenry. This more bipartisan compromise effort, though, isn’t what’s currently on offer from Republicans. However, if both chambers eventually seek a bipartisan agreement on stablecoins that can comfortably pass muster in the Senate, it may have to address Democrats’ concern about giving the states a high level of supervisory authority over stablecoin issuers.
