Brian Brooks, former acting director of the U.S. OCC: Not everything in cryptocurrency needs to be regulated

Brian Brooks, former CEO of Binance.US and former acting director of the U.S. Office of the Comptroller of the Currency (OCC), said at the SALT conference that the current approach of U.S. regulators is problematic and not everything in cryptocurrency needs to be regulated.

“I don’t start with regulation, I start with: ‘What is the activity that we are doing here and what aspects of it should be regulated?’ And I don’t assume that everything that happens in the crypto space should be subject to banking or securities regulation,” he said.

Brooks believes that regulations are about dealing with problems caused by people, but cryptocurrency and blockchain technology are about code.

Crypto regulation is at a turning point in the United States as companies complain about a lack of clear guidelines.

Last week, major exchange Coinbase sparred with the Securities and Exchange Commission over a loan product it wanted to launch. Ripple Labs is defending a $1.3 billion lawsuit filed by the SEC over its XRP token product. And major financial regulators are meeting behind closed doors to decide how to handle stablecoins.

Brian Brooks said we're all doing it wrong, like requiring a health permit for a kid who sells lemonade to his neighbors. "It's a weird question: 'Hey, what are you doing. Let me see what regulations you're following.'"

Brooks, a cryptocurrency progressive who came under fire for expanding opportunities for digital asset companies during his tenure at the OCC, made a larger point that disintermediation eliminates “negligence, fraud, and self-dealing.” All that’s left to regulate, then, are rules for compensating for damages and setting cybersecurity standards.

Brett Tejpaul, who oversees sales, trading and custody at Coinbase, said some brave companies will fill the regulatory gap. He pointed to his 25 years as an investment banker at firms such as Barclays and JP Morgan, where he connected institutional investors with emerging asset classes. “During those years, regulation usually accompanied innovation,” he said. “So at any given time, it’s not clear what the regulatory context is that will prompt the influx of capital.”

Brooks, who served as head of the OCC under President Trump, blamed Democrats for overzealous restrictions. He pointed to SEC Chairman Gary Gensler's remarks yesterday before the Senate Banking Committee, claiming that Democrats "believe that every activity involving value should be subject to securities regulation."

“We either do something that’s going to impact the future and keep our very important competitive advantage in funding and technology, or we risk losing that advantage,” said Glenn Barber, head of sales and business development at crypto custody firm Copper.