- The Office of the Currency Auditor has proposed a rule to prevent national banks from discriminating against companies based on factors other than risk.
- This has ramifications for cryptocurrency companies and money service providers who have problems accessing banking services.
- The U.S. Treasury Department is headed by Brian Brooks, former Coinbase Chief Legal Officer.
The Office of the Currency Checker (OCC), a U.S. tax office now headed by former Coinbase executive Brian Brooks suggested regulatory changes that would allow cryptocurrency companies better access to banking services.
The proposed rule change would limit the ability of national banks to deny financial services services to cash services companies such as cryptocurrency companies or other business units if they fail to meet certain quantitative, risk-based criteria.
The OCC says it has pushed this line for most of the decade:
“In accordance with the mandate of the Dodd Frank Act for Fair Access to Financial Services, and since at least 2014, the OCC has repeatedly stated that while banks are not required to offer their customers certain financial services, they must provide the services they offer available to all customers except to the extent that risk factors are specific to an individual Customers dictate otherwise. “
In other words, banks need to apply risk assessments to individual companies, not companies Categories.
However, the OCC said, “Some banks continue to use category-based risk assessments to deny customers access to financial services.”
The OCC has compiled reports on independent ATM operators, family planning organizations, private prisons, arms sellers, and money service providers who are excluded from financial services.
Marco Santori, chief legal officer for Kraken cryptocurrency exchange, tweeted on his public account that this is effectively including crypto companies.
“Crypto OGs know that the main obstacle to widespread adoption has been and is lack of access to banking services,” he said. “In the beginning, Bitcoin was in operation [Choke Point]and crypto in the broader sense is still caught up today. “
Operation Ooke Point, mentioned in the OCC proposal, was an Obama-era Justice Department pressure campaign to, as the OCC put it, “block access to financial services to disadvantaged (but not illegal) sectors of the economy. ”
While it ended in 2017, the OCC appears to have reason to believe that such discrimination is still taking place without government pressure. It was referred to reports by representatives of the Alaskan Congress that large US banks had stopped lending to oil and gas companies involved in drilling in the Arctic. This was a controversial political issue, but it may not be financially or legally risky.
The OCC believes that this is often based on personal political beliefs rather than risk assessments. “In some cases,” it said, “banks appear to have denied people access to financial services without attempting to rank the financial services to reflect perceived risk.”
The new rule, signed by Brooks, states that OCC-backed banks should “make any financial service they offer available to anyone in the geographic market.” In addition, a financial service cannot be refused in order to prevent competitors such as monetary service companies.
While the proposed change is broad in its application, it doesn’t take much to consider it a cry for the cryptocurrency industry. Brooks is Coinbase’s former Chief Legal Officer and spent much of his tenure as Comptroller of the Currency driving changes in the way banks handle digital assets.
The letter was publicly commented on until January 4, 2021.