The Biden administration is closing in on its nomination for chair of the Workplace of the Comptroller of the Foreign money, a job with a dramatically greater profile given the maturation of challenger banks, cryptocurrency and safety dangers.
The brief checklist consists of Michael Barr and Mehrsa Baradaran, with Barr thought of the favourite whereas Baradaran is most well-liked by the Democratic Get together’s liberal wing. Barr is dean of the College of Michigan’s public coverage college, and served within the Treasury Division underneath Clinton and Obama. Baradaran teaches on the College of California at Irvine Legislation Faculty and is an knowledgeable on the racial gap in monetary companies.
Biden’s earlier financial services regulatory picks embody Rohit Chopra to move the Shopper Monetary Safety Bureau and Gary Gensler to move the Securities and Trade Fee. The Senate has confirmed Janet Yellen as Treasury Secretary.
The OCC nomination will come as corporations energetic within the funds business, corresponding to Sq., Stripe and Walmart, nudge nearer to conventional banking. On the identical time, cryptocurrency and blockchain initiatives abound, necessitating a brand new slate of rules and protections towards cash laundering. And the flexibility of the OCC to implement coverage itself can also be in flux, because it considers licenses for fintechs and cost corporations.
“The approaching years shall be extra fascinating for the OCC,” mentioned Robert Hockett, a legislation professor at Cornell College. “New banking platforms and related types of fintech are forcing new regulatory selections, and the OCC shall be taking the lead position in all of that deciding.”
The OCC lately allowed banks to process stablecoin payments, a transfer that would make it simpler for banks to associate with rising initiatives such because the Fb-affiliated Diem stablecoin (previously Libra).
The crypto-friendly stance was tied to Brian Brooks, the previous performing head of the OCC underneath the Trump Administration, who stepped down in January.
Brooks, the previous chief authorized officer at Coinbase, promoted cryptocurrency throughout his time period. In July 2020 the OCC permitted banks to hold cryptocurrency property, and in September 2020 the OCC pushed further, permitting banks to carry cryptocurrency on behalf of purchasers. Brooks was additionally tied to the OCC’s “fair access” rule, which is designed to make it tougher for monetary establishments to bar clients based mostly on political opposition. The destiny of that rule is in play with the change in OCC management.
Like Brooks, Barr has expertise on the earth of cryptocurrency, having served as anadvisor to Ripple, which is affiliated with the XRP token. The blockchain know-how that underlays XRP has helped Ripple construct a global enterprise streamlining funds by avoiding intermediaries that handle elements of the transaction. The College of Michigan, the place Barr is a dean, in 2019 acquired a $1 million donation from Ripple to fund fintech-related tutorial work. Barr has additionally served on the board of LendingClub and the Invoice and Melinda Gates Basis’s fintech advisory council.
Baradaran, who’s extra intently aligned with the Elizabeth Warren/Sherrod Brown wing of the Democrats, can be extra more likely to take a tougher stance towards cryptocurrency and initiatives like Fb’s Diem.
“Barr is predisposed to rising digital currencies, crypto exchanges, fintechs and extra,” mentioned Charles Delingpole, CEO of ComplyAdvantage, including Barr will doubtless help insurance policies that can facilitate the use and development of crypto and different associated monetary companies. “That reinforces the significance of getting strong ‘know your financial institution’ and ‘know your buyer’ anti-money laundering processes and frameworks in place by crypto exchanges and wallets. To mitigate potential compliance infraction.”
Whatever the chair appointment, the perform and authority of the OCC might broaden or be reined in. The 6-3 conservative Supreme Court docket majority might curtail the OCC’s means to supply a neater path to national licensing for fintechs and cost corporations, thus avoiding the necessity to receive 50 state licenses. A bunch of states is difficult the fintech and cost charters in courtroom. Fintech does not simply match into pink and blue camps, however a conservative court can be liable to restrict the OCC’s energy in favor of extra state autonomy.
The enlargement of crypto and fintech are migrating cash laundering and different monetary crime away from money, Delingpole mentioned, which portends more difficult AML compliance.
“Whereas money is definitely king for laundering, criminals will attempt to use these new monetary companies to conduct unlawful actions which is why crypto corporations have to arrange and look forward and perceive that governments will evolve their regulatory insurance policies as extra adoption of those companies and currencies happen,” Delingpole mentioned.
