REGULATORY DEVELOPMENTS

ACTING COMPTROLLER DISCUSSES CRYPTO-ASSETS AND REGULATION

On January 13, 2022, Acting Comptroller of the Currency Michael J. Hsu encouraged regulation for stablecoin issuers, similar to banks, at the BritishAmerican Business Transatlantic Finance Forum 2021-2022 Executive Roundtable.

Comptroller Hsu noted the importance of stablecoins in the crypto-ecosystem, linking cryptocurrency value to traditional forms of currency. Currently, he stated, there are no standardized mechanisms for backing these assets, comparing the current stablecoin space to the United States’ pre-Civil War banking environment. He expressed concern that a lack of regulation could lead to a “run” in the crypto space if enough users lose the confidence that their digital holdings will be fully redeemed.

Comptroller Hsu addressed concerns that regulations would stifle innovation, noting that “solid foundations” can create trust among users while providing a stable environment for innovation. “Stablecoin issuers subject to bank regulation would give holders of those stablecoins confidence that those coins were as reliable and ‘money good’ as bank deposits.”

OCC AND CFPB ADJUSTS CIVIL PENALTY AMOUNTS FOR 2022

On January 12, the OCC published a notice adjusting the maximum amount of each civil money penalty (CMP) within its jurisdiction. This revision does not affect the OCC’s discretion to assess a CMP in an amount lower than the maximum allowed. The adjusted maximum penalties became effective as of January 12, 2022, for violations occurring on or after November 2, 2015.

On January 14, the CFPB announced the annual adjustments for inflation to the maximum amount of each civil penalty within the CFPB’s jurisdiction to maintain the deterrent effect of civil penalties and to promote compliance with the law. These adjustments were calculated, pursuant to the Inflation Adjustment Act and Office of Management and Budget guidance, by multiplying each civil penalty amount by the “cost-of-living adjustment” multiplier, rounded to the nearest dollar. The new penalty amounts became effective on January 15, 2022.

“This mainstreaming of crypto has occurred despite regulatory and legal uncertainty, and a series of scams, hacks, and other disruptive events. For financial regulators like me, this presents a host of questions.”
– Acting Comptroller Michael J. Hsu